Tesla is a Prime Example of Non-Disruptive Innovation: BMWs Response As An Incumbent

Peter Yared posted a article describing BMWs response to Tesla. The article titled “BMW Vs. Tesla: A Real Live Innovator’s Dilemma” itself is very misleading because it implies that either BMW or Tesla is facing the Innovator’s Dilemma as described by Clayton Christensen. In fact, it is a prime example of innovations that do not result in disruption. In his publications, Christensen has clearly outlined innovations that provoke a direct response from the incumbent and which almost always fail to disrupt. The incumbent will usually have vastly more resources at their disposal and will counter the entrant quite effectively.

Anybody who has seriously read any of Christensen’s books on the subject will immediately recognize that Tesla is not a disruptive innovation but a sustaining innovation. Peter Yared seems to be rather misguided because he apparently thinks that Tesla is disruptive. Instead, what Yared’s article is describing is not the process of disruption, but rather a typical example of how an incumbent will respond to an entrant with a new technology. In this context, Yared’s article is actually quite worthwhile.

The takeaway is;

  1. BMW has the following resources to counter attack an entrant if they are willing. The resources that are at their disposal include brand, technology, production scale, and sales & distribution.
  2. Tesla is entering the market in a way that provokes incumbents to directly respond.
  3. In this situation, it is very unlikely that Tesla will win.

As interesting as it is to see a disruption taking place, it is also very instructive to witness an incumbent fending off an entrant.