What is Disruptive Innovation?

A disruptive innovation is an innovation that transforms an existing market or sector – or creates a new one – by introducing simplicity, convenience, accessibility, reliability, and affordability, where before the product or service was complicated, expensive, and inaccessible.

In his 1997 bestseller, The Innovator’s Dilemma, Clay Christensen introduced Disruptive Innovation Theory to describe a process by which a product or service takes root initially in simple applications and then is upgraded and improved until it eventually displaces established competitors. Because companies tend to innovate faster than their customers’ lives change, they eventually end up producing products or services that are too good, too expensive, and too inconvenient for many customers. By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations” – products that provide the same service in a new way, without all the bells, whistles and infrastructure. Cell phones, charter schools, walk-in clinics and discount airlines are classic examples of Disruptive Innovations.

What can the non-profit world learn from Clay Christensen?

For years, non-profits have thrived by designing their services according to the direction and financial support of government agencies and major donors. As funding streams appeared, programs were designed to capture the money and keep it flowing. Times are changing. Government budgets have shrunk, and donations have fallen. As a result, non-profits in our community have been unable to maintain their services. Agencies have been forced to reduce their services; some are closing their doors. The needs of our most vulnerable residents are going unmet. Non-profits must regroup to continue their vital work. Rather than try to replicate the service models of the past, the concept of Disruptive Innovation would suggest that the sector needs to envision a new perspective and a different framework.

Disruptive Innovation at The Health Trust

The Health Trust is one of just a few foundations working to translate Disruptive Innovation theory into the social services sector.  In 2012, The Health Trust brought Dr. Christensen to Silicon Valley to educate local nonprofit and government leaders about Disruptive Innovation theory. The Health Trust then sought proposals from organizations with disruptive ideas that would address health disparities in the community.  In order to qualify for funding, agencies had to be more than innovative. Simply doing what they do better or more efficiently was not enough. They had to show that their innovations would be “disruptive”, meaning they would serve an untapped market at a reduced cost (usually utilizing technology) and provide a “good enough” service that would improve the well being of low-income individuals and communities.  Seven projects have been funded so far and The Health Trust is currently accepting Letters of Intent for projects that follow the Disruptive Innovation theoretical framework.