Questions
Reading 2/2:
Passage 2
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1. Ask anyone in the field of business management what's necessary for a new company's success, and they'll tell you: innovation, processes, or products that lead to economic growth.Innovation happens everywhere: Sometimes a completely new technology is created; other times, an old process is improved upon. Innovation has become such a central focus in business that schools now offer special courses in it, and business leaders try to describe sure ways to make it happen. One such example of this is the theory of disruptive innovation, developed by Clayton M. Christensen of Harvard Business School.
2. Disruptive innovation has been a powerful theory in business management for decades. Many entrepreneurs have used this idea to create their companies. According to Christensen,
disruptive innovation is a process that enables businesses to provide products or services that are less expensive and more easily bought because of new technology. By doing so, the
innovation creates a larger market, that is, more people buy the product than before. First, according to the theory, the new product is not as good as other products in the market. Over time,
Unpacking the Theory of Disruptive Innovation
however, its quality gets better, much better. At this point it can compete with others.3. Christensen's theory can be difficult to understand, so people often use it to describe businesses that are not actually disruptive. To make his idea clearer, let's look at Netflix and Uber.4. Netflix is a world leader in streaming media, providing its service in nearly 200 countries. But at first, it was a company that provided movie rentals. Unlike traditional movie rental businesses, such as Blockbuster, Netflix was a bit different: For a monthly fee, which was usually less than people were already paying to rent movies, the company sent subscribers movies directly to their homes, as many movies as they wanted. Most subscribers did not mind waiting, and they were able to select the movies through the Internet, something that other companies did not offer. At this point. Netflix's customers were different from Blockbuster's customers; therefore, a new market was created.
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5. Netflix is a good example of a disruptive startup because it found a cheaper way for customers to rent movies, it created a new market for movie renting, and it used technology to do so.After much success in the new market, it began to compete with the more traditional companies and took away their business, too.6. A second example that people often use is Uber, the taxi app. But is Uber a disruptive innovation according to Christensen's theory? In short, no. Uber is missing two of the main parts of disruptive innovation: First, it did not create a new market. When Uber started, it simply made finding taxis more convenient. Uber customers were people who already used taxis, and so no
new market was created. Also, Uber didn't start selling a lower quality product. Instead, it provided a product that was better than traditional taxis. The only use of technology.only disruptive thing about Uber was its Uber was certainly innovative-a useful transportation service
7. In sum. Netflix is a disruptive innovator while Uber is not, according to Christensen's theory. But what difference does it make?now exists. In fact, if Uber had tried to be disruptive, it probably would not work. Imagine a low-quality taxi service with cheap, but dirty, taxis. Would people want that? Would the company have made money? Probably not. Designing a product using the theory of disruptive innovation may not be the best way for some companies to innovate, but for others, it's what makes them work.
1) According to the theory of disruptive innovation, what is the primary outcome of using new technology?
A. Less expensive but more accessible products B. Higher quality products at a premium price
C. Creating new jobs in the industry D. Improved customer service experiences
2) What is the main idea of reading passage?
