Which term describes the innovation that allows a company to create a new market and displace established companies?

Disruptive innovation is the term that describes a type of innovation that significantly alters the market landscape, often creating a new market altogether and enabling a new company to displace established businesses. This form of innovation typically begins at the lower end of a market, where it may initially appeal to a niche audience or address an overlooked need. Over time, disruptive innovations improve in quality and appeal, gradually capturing a larger market share and challenging established players who may not adapt to these changes.

For instance, consider how digital photography disrupted the traditional film photography industry. Initially, digital cameras were seen as inferior, but as technology advanced, they offered far greater convenience and versatility, leading to the decline of many established film companies.

Incremental innovation refers to smaller, more gradual improvements made to existing products or services, which do not significantly shift market dynamics. Radical innovation, while it can be transformative, is often associated with breakthroughs that change technology or society broadly rather than specifically fostering new market creation in the same way. Continuous innovation generally pertains to ongoing enhancements that aim to keep a product relevant without fundamentally changing market structures.