CONCEPT
Disruptive Innovation
Clayton Christensen's framework for how incumbents are displaced by inferior products that serve overlooked segments — the analytical lens through which Andreessen's software-eating thesis becomes a precise economic claim.
Clayton Christensen's 1997 theory of disruptive innovation describes the structural pattern by which successful incumbent firms are displaced not by superior competitors but by inferior products that enter markets from below. The theory identifies two routes — low-end disruption, which serves the least profitable customers incumbents are willing to cede, and new-market disruption, which serves customers excluded from the existing market entirely. In both cases, the incumbent's rational response to protect profitable customers creates the space in which the disrupter grows. The theory provides the analytical substrate for Andreessen's software-eating-the-world thesis and for his analysis of the recursive displacement AI now performs on the software industry itself.
In The You On AI Field Guide
Christensen developed the theory through empirical studies of the disk drive industry, steel minimills, and discount retailing. In each case, entrants with technically inferior products captured markets from apparently dominant incumbents by exploiting the segments incumbents rationally deprioritized. The pattern was consistent enough across industries that Christensen argued it