Christensen's Disruptive Innovation Model

£687. Then £542. Then £498. I watched the prices bounce around like a kangaroo drinking Red Bull as I searched for summer flights to Tenerife. A decade ago, this kind of price comparison would have meant dozens of browser tabs or trudging between high street travel agents. But here I was, courtesy of Edinburgh-based Skyscanner, watching an entire industry's pricing laid bare in real-time. This everyday experience - now so normal we barely think about it - got me thinking about the nature of disruptive innovation and how fundamentally it changes not just industries, but human behaviour.

As I looked deeper into how Skyscanner transformed from a simple Excel spreadsheet in 2001 to a company that China’s CTrip acquired for £1.4 billion in 2016, I found myself revisiting Clayton Christensen's theory of disruptive innovation. There's something particularly compelling about how this Scottish tech company, initially serving budget-conscious travellers ignored by traditional travel agents, ended up reshaping how we all think about travel planning. 

Understanding True Disruption

The Skyscanner story hit me with the force of the obvious: this was a classic case of what Clayton Christensen called disruptive innovation. Not the tired, overused version where any new product gets labelled 'disruptive', but the real deal. A simple solution that started by serving people traditional travel agents ignored - those of us willing to spend hours hunting for the best deal - and ended up transforming the entire industry.

Christensen's model, first published in 1995, suggests that truly disruptive innovations share specific characteristics. They typically enter at the bottom of a market, offering a simpler, cheaper (and often initially inferior) alternative to existing products or services. The established players, focused on their most profitable customers, tend to dismiss these newcomers. Big mistake.

This isn't just about technology. The psychological aspect fascinates me - why do smart, successful companies miss these threats? The answer lies partly in what psychologist Daniel Kahneman calls the 'status quo bias'. We're hardwired to prefer things as they are. Traditional travel agents, comfortable with their high-margin business customers, saw no reason to change. Meanwhile, Skyscanner quietly built something that would eventually make much of their business model obsolete.

“We can be blind to the obvious, and we are also blind to our blindness.” Daniel Kahneman

When Giants Miss the Signs

The pattern repeats across British industry. Take ARM Holdings in Cambridge. While Intel focused on making ever-more-powerful processors for PCs, ARM took a different path. They designed chips that sipped power rather than guzzled it. At first, their processors weren't powerful enough for desktop computers - but they were perfect for mobile phones. Now, their technology runs 95% of smartphones worldwide.

This illustrates what Christensen called the two types of disruption. Skyscanner represents new-market disruption - creating new customers by making something previously complex simple and accessible. ARM shows low-end disruption - starting with less demanding customers and gradually moving upmarket.

But here's where it gets interesting. Market leaders don't just miss these shifts because they're blind or stupid. They miss them because they're doing exactly what business schools taught them: listening to their best customers, investing in improvements their market research supports, protecting their highest margins. The very things that made them successful make them vulnerable to disruption.

Philosopher Thomas Kuhn's work on scientific revolutions offers a parallel. He showed how established scientific paradigms resist change until the evidence becomes overwhelming. The same happens in business. Traditional travel agents couldn't see Skyscanner as a threat because it didn't fit their paradigm of what travel booking should look like.

The Resistance to Change

Inside Britain's boardrooms, resistance to disruption follows predictable patterns. Take Marks & Spencer's digital transformation struggles. Despite early warnings about online retail's growth, they spent years defending their traditional store model. By 2019, their online sales were just 18% of clothing and home revenue - while competitors like Next had reached 50%.

The psychology behind such resistance runs deeper than simple stubbornness. Behavioural economist Dan Ariely's research shows how organisations become trapped by sunk costs. M&S's vast property portfolio became an anchor, making it harder to pivot to digital. Each store represented not just financial investment, but emotional investment in a particular way of doing business.

“We tend to overvalue the things we already own, even if their actual worth is minimal.” Dan Ariely

GAME's response to digital distribution offers another telling example. When Steam began transforming PC gaming, GAME doubled down on physical stores. Their leadership saw digital as a threat to their core business model rather than an opportunity to evolve. This cognitive bias, what psychologists call "threat rigidity," led them to strengthen their traditional approach precisely when they needed to change it.

The same pattern played out at Debenhams. While Amazon was revolutionising retail, Debenhams invested in more stores and longer leases. Their 2019 administration wasn't just about changing consumer habits - it was about institutional resistance to seeing those changes coming. But I do miss that ‘get everything from one store’ model!

"The greatest danger in times of turbulence is not the turbulence itself, but acting with yesterday's logic," Peter Drucker noted. This perfectly captures how WHSmith initially responded to Amazon. They saw themselves as book retailers rather than what they could become - travel retail specialists. Only by eventually abandoning "yesterday's logic" did they find a sustainable future.

Even successful companies show this resistance. Sainsbury's early online efforts were hampered by trying to protect existing store sales. They created separate teams for digital and physical retail, leading to competing internal priorities. This organisational resistance to change, what Christensen called "the innovator's dilemma," nearly cost them their competitive position in online grocery.

The newspaper industry's response to digital disruption offers a masterclass in resistance. The Guardian's former editor Alan Rusbridger recalls how many newspapers saw their websites as "vanity publications" that might damage print sales. This mindset persisted even as classified advertising, their traditional profit engine, migrated online.

These examples show how resistance to disruption often masquerades as prudent business management. Leaders focus on protecting existing revenue streams, maintaining proven business models, and serving current customers. Each decision makes sense in isolation. Together, they create a pattern of systematic resistance to necessary change.

Success Through Disruption

The success stories are equally telling. Consider Metro Bank. When it opened in 2010, it was Britain's first new high street bank in 150 years. Traditional banks scoffed at their seven-day-a-week branches and dog-friendly policies. But Metro understood something fundamental about disruption - it often starts with changing the customer experience rather than the core product.

The philosophical implications run deep. Martin Heidegger's concept of 'ready-to-hand' versus 'present-at-hand' offers insight here. We don't think about our tools when they're working well - they become invisible, ready-to-hand. Only when they break do we notice them. Similarly, established businesses often can't see their model's limitations until it's too late. The old way of doing things becomes invisible, unquestioned.

This blindness affects entire industries. When Octopus Energy entered the market, the Big Six energy providers saw them as just another small supplier. They missed how Octopus's tech platform, Kraken, would transform customer service and operational efficiency. Now other energy companies are licensing Kraken - a classic example of the disruptor becoming the new standard.​​​​​​​​​​​​​​​​

The human cost of disruption is too often swept under the carpet. When HMV went into administration, it wasn't just a business going bust - it meant 4,350 redundancies, decades of expertise rendered useless, and our high streets changed forever. Organisational psychologist Edgar Schein's work on career anchors becomes particularly relevant here. People build their professional identities around specific skills and knowledge. When disruption hits, it doesn't just threaten business models - it threatens people's sense of self.

This links to a commonly misunderstood bit of Christensen's theory. Disruption isn't about sudden, dramatic change. It's more like coastal erosion - gradual, relentless, and fundamentally reshaping the landscape. When Spotify launched in Britain in 2009, it didn't immediately devastate music shops. But year by year, stream by stream, it changed how we listen to music.

The next wave is already building. Artificial Intelligence isn't just another bit of tech - it's reshaping fundamental assumptions about work and value creation. British AI firm DeepMind's breakthroughs in protein folding show how disruption can come from unexpected quarters. Traditional pharmaceutical research methods, refined over decades, suddenly look sluggish and expensive  compared to AI-driven approaches.

But let's be precise here. Not every innovation disrupts. When Rolls-Royce improves their jet engines, that's sustaining innovation - making good products better for existing customers. True disruption changes the game entirely. Think how mobile phones initially competed not against other phones, but against cameras, maps, calculators, and watches.​​​​​​​​​​​​​​​​

Managing the Change

Solutions aren't simple. The government's push for "digital transformation" across the public sector shows how tricky managing disruption can be. The NHS's patchy record with digital innovation illustrates this perfectly. Despite investing millions in new systems, many trusts still struggle with basic digital integration. It's not about the technology - it's about changing ingrained ways of working.

Professor Rosabeth Moss Kanter's work on organisational change offers useful insight. She found that most change efforts fail not because of poor strategy, but because organisations underestimate the emotional energy required. You can't just tell people to work differently - you need to help them unlearn established habits.

"Change is a threat when done to us, but an opportunity when done by us." Rosabeth Moss Kanter

Look at Britain's banking sector. Traditional banks didn't lack the resources to create online-first services. They lacked the cultural capability. Their processes, reward systems, and organisational structures all reinforced old ways of working. Meanwhile, Monzo and Starling built their entire culture around digital service from day one.

The philosophical question at the heart of this is one that economist Joseph Schumpeter grappled with: is disruption simply creative destruction in modern dress? Are we merely watching the same pattern of industrial evolution that turned Manchester from textile mills to media city, or is something fundamentally different happening in our digital age?​​​​​​​​​​​​​​​​

The real challenge for organisations isn't spotting disruption - it's responding appropriately. Take Tesco's launch of Jack's stores to counter Aldi and Lidl. Despite Tesco's massive resources, they couldn't replicate the German discounters' success. They closed the venture after just four years. The lesson? You can't fight disruption by copying it.

Better examples exist. The Financial Times faced digital disruption head-on by fundamentally rethinking their business model. Rather than simply putting newspapers online, they developed a data-driven subscription model that transformed how readers engage with news. They didn't just survive disruption - they thrived through it. This brings us back to Christensen's core insight. The hardest part isn't the technology - it's changing mindsets. British Airways discovered this when low-cost carriers emerged. Their initial response, Go Fly, failed because they couldn't operate with the lean mentality required. The parent company's cost structure and thinking kept creeping in.

The most successful responses often come from unexpected quarters. When Jamie Oliver's restaurant empire collapsed, independent restaurants didn't celebrate - they innovated. They saw the warning signs and adapted, improving their delivery options and social media presence long before Covid made these changes essential.​​​​​​​​​​​​​​​​

Key Takeaways

1. Look in the blind spots. Virgin Atlantic didn't try to beat British Airways at their own game. They found gaps in the market - routes and services BA overlooked - and built from there. True disruption rarely starts by challenging market leaders head-on. It begins in overlooked corners, serving customers others ignore.

‍2. Question your assumptions about user behaviour. HMV believed people would always want to browse physical music stores. Woolworths thought British shoppers would always want pick 'n' mix and cheap homewares on the high street. Both were wrong. Your customers' current behaviour isn't the same as their fundamental needs.

3. Watch for technologies becoming 'good enough'. Disruption often happens when a technology reaches a tipping point. Electric cars became viable when batteries got good enough. Video streaming took off when broadband became fast enough. The key isn't spotting new technologies - it's spotting when existing ones cross crucial thresholds.

‍4. Create separate spaces for disruptive projects. When Reuters wanted to respond to digital disruption, they created a distinct unit away from their main business. Physical separation matters - new ideas get suffocated when forced to live by established processes. Give disruptive projects different metrics, different timelines, different rules.

5. Look for business model innovations, not just technical ones. Pret a Manger disrupted fast food not through new technology, but by rethinking the entire model of food preparation and service. Sometimes the most powerful disruptions come from reimagining how value is created and delivered.

These lessons matter now more than ever. Every major shift in British business - from the industrial revolution to today's AI transformation - shows that disruption is inevitable. The choice isn't whether to face it, but how. As Skyscanner showed us, sometimes the simplest solutions - if properly executed - can reshape entire industries. The trick isn't just spotting these opportunities; it's having the courage to pursue them when they look small or uncertain by current standards.​​​​​​​​​​​​​​​​