Ethical Disruption

What is Ethical Disruption?

The idea of disruption and disruptive business model innovation has profoundly impacted how entrepreneurs and investors think about business since Clayton Christensen introduced the concept in 1995. Christensen, Raynor, and McDonald summarized their refined theory of innovative disruption in 2015:

“Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously. Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred. (

“Ethical disruption” is a concept that directs our attention specifically to the opportunities created by delivering ethical value propositions that have been “overlooked” in favor of the most profitable business activities.

Changing The Game

Ethically disruptive innovations function just like any other disruptive innovations, but they challenge core strategic norms that can limit the options of traditional businesses attempting to adapt. The most adaptive response for a conventional enterprise faced with ethical disruption would be to copy the tactics of the disruptor. This can be pretty challenging, however, especially if the disruptive value propositions conflict with the wealth consolidating goals of owners and investors. Traditional owners and investors may fold or sell before accepting a restructuring as a mutual to deliver more ethically competitive value propositions and stave off disruption. Alternatively, they may see that their long-term interests are best secured by implementing a transition towards a structure capable of delivering more ethically competitive value propositions. Ethical disruption changes the game so that impact innovators can make their impact by winning, or they can make their impact by forcing their competition to copy their ethical tactics. Either scenario is a win for society and a win for ethical disruption.