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Disruptive Innovation

by Sally Schroder

Harvard Business professor Clayton Christensen developed the theory of “disruptive innovation,” postulating that markets can be upended by better or more convenient offerings.

In 1994, Blockbuster led video rentals with 33 percent of the market, 3,700 stores and more cardholders than American Express. It contributed more to Hollywood film studios than box office sales.

In 1997, Reed Hastings was irked by a late fee at Blockbuster, so he launched a video rental business offering DVDs. His “store” was a website, and his distribution system was the U.S. Postal Service. He called it Netflix.

Innovation need not be high-tech to be disruptive.

– Kip Caffey, Cary Street Partners

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