Since the purpose of the report is to provide a clear picture of the current state of the academic foundation of “Disruptive Innovation” topic area, the methodology of the literature review has been chosen as a ‘Hybrid review: a combination of descriptive and critical’ (Xiao & Watson 2019). Such type allows to informally extract data from academic materials, gather contextual arguments of authors and compare them to find the most acceptable narratives.

What is a Real Disruptive Innovation?

Prior research has investigated a disruptive innovations from two perspectives: the definition of what is genuinely disruptive (Christensen 1997, 2015; Muller 2019) and the impact of disruptive innovation on the global business arena. (Tan et al. 2020; Palmie et al., 2019).

The basis and mainstay of most scientific papers on the topic of “Disruptive Innovation” in business was the book “The Innovation Dilemma.” (Christensen 1997). In this comprehensive summary, Professor Christensen aimed to approach the phenomenon of disruptive innovation by answering the most important, even rhetorical question: “Why do successful and well-organised companies fail?”. The answer was that well-managed organisations tend to consolidate their development in so-called ‘sustaining technologies’, which are characterised by incremental improvement of the performance and a focus on their current customer needs. Despite its’ stability, such tendency loses to disruptive technologies which Christensen (1997) summarised in a framework of four principles, that explains why relying on existing technologies are counterproductive in comparison to disruptive ones: 1) Disruptive company relies on customers and investors. 2) Small markets are neglected by large companies. 3) Big company can’t analyse markets that do not exist yet. 4) Market demand and technology supply could be different.

This led researchers to treat disruptive technology mainly as technology from the bottom (from the emerging economies, cost or reverse innovations) (Corsi and Minn 2014). However, the concept was not clear and did not provide an accurate characterization to distinguish normal innovations from disruptive ones. Corsi and Minn (2014) were trying to define the concept through the direction of the product’s supply. They assumed, that disruptive innovation happens when MNC developing emerging markets, aiming to access local market or to gain a comparative advantage (low-cost personnel). The opposite has been defined as reverse innovation that occurs when emerging economies gain access to a developed market.

As it could be seen, the situation in the academic environment was uncertain, and the rapid development of tech industry created a gap between the academical base and the business world. The controversy stemmed from what was often called “disruptive” companies or technologies that were not disruptive but simply successful, or the term was used too broadly to describe industry shocks caused by new companies, as can be seen in the aforementioned paper by Corsi and Minn (2014).

After 20 years from the moment of the first approach to the issues related to the disruptive technologies, Christensen (2015) in his Harvard Business Review article had to re-characterize and clarify concept of ‘Disruption Theory’. Professor has utilised a 20-year experience of global business and figured out the two crucial components of genuinely disruptive technology – type of market and market segment, where disruption occurs. He noticed a remarkable pattern in the marketplace, where incumbents tend to target the most profitable customers, often neglecting a low-end segment. It is this gap, that opens a door for disruptive companies, which come with imperfect but new and cheap product, able to quickly consolidate a new market. In other words, Christensen (2015) stated, that disruptive innovation is the one, which allows to turn non-customers into customers or to occupy a low-end market, which is out of the attention of successful companies. Boston-Fleischauer (2015) agreed with Christensen on the point, that disruptive innovation do not simply aim to improve products or services, but rather, it focuses on identifying the needs of people and categorically eliminates the status quo of incumbent technologies.

However, Ho (2021) argued that disruptive innovation should not be limited to the low-end segment because many types of innovation have a potential to be disruptive and proposed a “Diffusion Theory” to investigate high-end market opportunities for disruptive innovation. In this vein, the “high-end disruption” has been redefined in terms of diffusion, meaning that in the process of incremental product development, performance and design have a chance to outperform incumbent products, slowly trickle down to the mainstream line, which is also known as fermentation stage. Ho (2021) also stated that the process of innovation is the result of the interaction between the customers and technological development, and it does not matter from which side the product approaches the mainstream line to become disruptive, either high-end or low-end.

As soon as a concept was clearly identified and characteristics refined, O’Reilly and J.M. Binns (2019) began to investigate how to manage disruption to help leaders find a balance between short-term results and long-term attractive but uncertain payoffs. They discovered that the key indicator of disruptive company’s viability is the ability to scale and leadership. Taking these aspects into account, they developed and applied a managerial framework of processes such as: design thinking, lean start-up and open innovation to address weaknesses of disruptive organisations. Kaltenecker, Hess and Huesig (2015) in turn, developed a set of strategies for managing disruptive companies: Spin-off strategy, Leader strategy, Expert Opinion strategy, Trial and Error strategy.

Were Uber, iPhone, Airbnb Genuinely Disruptive?

Using real companies as an example, the Christensen (2015) concluded that Uber was not a disruptive company, although it was positioned in the market as such. In his opinion, Uber did not have any of the disruptive components: Uber did not turn non-customers into customers and did not offer significant price reductions compared to existing taxi services. However, Muller (2019) critically challenged the professor’s argument and adjusted established theoretical foundation in this area made by Christensen (2015). He has brought the notion and importance of post-adoption behaviour, which lead to reconsider the term ‘disruptive’ to characterise by this only those technologies, which changes the behaviour of stakeholders related to the industry.

It can be seen, that for these 4 years, since M. Christensen (2015) publication, the industry and Uber has undergone major changes. In 2015, Professor Christensen considered Uber in a view of sustaining innovation, depreciatingly describing features such as “Taps on smartphone” and cashless payments. In 2019, Muller had to bring facts from market and claim, that Uber was indeed disruptive company. Uber has disrupted the whole industry and stakeholders’ behaviour: speed of overtaking an existed taxi industry, growing of the market (from 520.000 in 2015 to 947.000 in 2019), and rooting of technology in social and business spheres.

Muller (2019) extended argumentation by bringing a case of iPhone and Airbnb. From his point of view, the iPhone was a significant disruption since it clearly affected and changes the behaviour of stakeholders. However, Airbnb was not a disruptive business, because the change in user behaviour was subtle (users had previously booked hotel rooms through similar platforms).

Commercial and Military Disruptive Innovations.

The McKinsey Global Institute in 2013 determined the most significant technologies that bring disruption in business, economic and social areas: Mobile Internet, Internet of Things, Autonomous Vehicles, Renewable energy, and Cloud Technology (Rao et al., 2019). However, Lele (2019) found, that disruptive technology can be viewed not only from a commercial but also from a military point of view.

The act of declaring a war is an Ultima Ratio Regum, the Latin for “The last argument of kings”, which is why developing disruptive military innovations is an ongoing task of government and consumes the largest share of the budget in many countries (Rao et.al., 2019). Despite that research in defence and security is limited by government regulations, there still can be traced a different approach to manufacture, consumption, and supply chain (Lele 2019). While in the commercial world, disruptions are a means of replacing existing technology (mobile phones have replaced landline telephones), disruption in the military leads to a change in the code of conduct in conflict, ultimately changing the way war is waged. Due to the significant development and innovative capabilities of ICT, modern military conflicts have become more network-oriented than weapons-oriented. Lele (2019) determined the main disruptive military technologies of the 21^st century as tanks, and transportation systems.

Disruptive Ecosystems. New Cambrian Explosion?

Despite that disruptive innovations leave a noticeable mark on the field of global business, Palmie et al. (2020) identified the gap in academical research of the main disruption contributors – ecosystems and described a current business environment as a set of interdependent actors without a systematic management and governance, however rapidly evolving. Tan et at. (2020); Bauer and Trap (2019); Palmie et al. (2020) concentrated the research on the fact that a single company in the current market environment is incapable of being truly disruptive, and connections with other microorganisms forming more complex ecosystems is a key. This picture of the modern global technological environment has much in common with the Cambrian explosion 540 million years ago, when a transition from the dominance of single-celled organisms to multicellular complex animals took place in the biosphere and a physical ecosystem was created (Fox 2016; Zhang et al., 2013). One of the triggers for this transition then was the appearance of predators, which led to the oxidation of the ocean.

Today, there is clearly seen a parallel with the Cambrian explosion in the global business arena, especially in the tech industry and its’ derivatives: FinTech, InsurTech (Peer-to-peer insurance services for technological products), RegTech (Regulation procedures in innovative technology), Digital Ecosystems and Communication (Tan et al., 2020; Bauer and Trapp 2019; Palmie et al., 2020).  With this approach, academics have identified the most disruptive technological ecosystems: E-payments, Blockchain, Cryptocurrencies, Artificial Intelligence, 3G (5G) networks. Study of Tan et al. (2020) identified an increased degree of complexity in an ecosystem that relies on technology alliances with a powerful and centralized mechanism in the form of the Chinese government. This complexity has proven to be extremely effective and has helped create a strong competitive advantage in communications technology and the creation of global network systems.

Current Disruptive Technologies: Blockchain, Artificial Intelligence, Decentralised Autonomous Organisations (DAO)

One of the most prominent innovation that keep disrupting a technological landscape is a Blockchain and its’ implications: NFT, Cryptocurrency, Smart contracts, Supply Chain.  Suyambu, Anand and Janakirani (2019) positioned blockchain as the most disruptive technology, however, Frizzo-Barker et al. (2020) attributed the Blockchain as an emerging, but still potentially disruptive. The latter statement is more accurate because, despite the fact that public and social media call Blockchain as a solution to the  poverty, inflation and other acute problems, technology is still at an early stage of integration into the global tech ecosystem, but has the potential to reconfigure the global socio-economic landscape (Frizzo-Barker et al., 2020).

Researchers take a current state of Blockchain technology art as a starting point and develop research in two directions: either consider blockchain capabilities in terms of combinations with other disruptive technologies or narrow the focus in depth, finding unusual revolutionary implications of the technology (N.Dinh and T.Thai 2018). Thus, there is a study of the possibilities for a disruptive marriage of two technologies: Blockchain and Artificial Intelligence (N.Dinh and T.Thai 2018). AI has recently expanded its capabilities in following areas: autonomous cars, machine learning (especially deep learning) and smart assistants. However, the authors do not romanticize AI, saying that although the technology has a great potential, it still does not keep up with the enormous complexity of the human world. Rather, they consider combination of Blockchain and AI in order to mutually mitigate weakness of each technology. From this point of view, the Blockchain will help to bring transparency and trustworthy to AI’s algorithms. On the other hand, AI will facilitate automation, simplify decisions, and improve performance for Blockchain structures.

By deepening the research into the foundations of Blockchain, the academics discover such radically new forms of organizations: Decentralised Autonomous Organisations (DAO). Sims (2019), Mehar et al. (2019) found, that such blockchain-based ecosystems allow people to co-ordinate their decisions and actions by using two types of smart-contracts: for transaction and for organisational rules of DAO. Sims (2019) found that idea of decentralised organisations initially appeared in 2013, with a first notion of Bitcoin, however, received a significant boost and was officially manifested in 2016 as an automated investment fund build on Ethereum blockchain.

DAO is fundamentally different from traditional organizations due to a different approach to decision making. In traditional company employees do not have a right to vote or make a decision unless they are told to do so, or they are shareholders or directors. DAO utilises a decentralised approach in distribution of right-to-vote and have more in common with crowdfunding approach (Mehar et al., 2019). Since DAO are built on the blockchain, the decision-making process done automatically and voting results are visible to every member of the organisation. Also, the organisational structure of DAO is determined through voting as well, the result of which is executed automatically.

Although DAO has not yet shown signs of success, this disruptive organisational form of ecosystem is currently in the experimental stage and searching for points of introduction into the global ecosystem. The experiment is still attractive due to many significant advantages such as: DAO eliminates a need in costly directors, it gives a confidence that decisions will be implemented, and generally provides greater autonomy and efficiency (Mehar et al. 2019; Ryan 2021).