What is the difference between disruptive innovation and solving keystone problems? Keystone problems are the things that must be overcome so that companies who have a nascent technology can actually gain the market through that technology. The rate at which some technologies get better may be faster than what the market needs. Simplicity, convenience, accessibility, and affordability are just some of the barriers to be overcome to steal the market.

Dolby B introduced noise reduction, and made the cassette a dominant technology… until CDs, of course.

Harvard Professor Clayton Christensen who coined the term “disruptive innovation, talks about how IBM had a breakthrough technology when it developed the disc drive. Over time, however, they lost the market to smaller companies.

The potential for disruptive innovation typically emerges when you lack the quality or value to lead the field and gain a superior position in the overall market – but you can adequately serve a small niche. If the niche you occupy continues to grow fast enough and your technology progressively improves, you’ll overtake the leaders – disrupting their established market position. Disruption can come about by accident or through an intentional effort.

Here’s another great example:

Newspapers used to reap major revenues from selling classified ads. Then Craigslist came along and offered consumers a free version of classifieds. In doing so Craigslist disrupted a long-established mainstream market. Craig initially provided his list to friends as a convenience and community service, so his disruption was not really intentional. But after his idea worked he realized its value and began to engage in purposeful, deliberate disruptive innovation.