Transforming Industries - The Factors Predicting Upheaval in Hospitality and Travel

Abstract

Disruptive innovation in business is a topic of growing fascination, showing little sign of slowing. Yet, the applicability of the disruptive innovation theory, as articulated by Christensen in his seminal study, explains a relatively narrow subset of the broader phenomenon of industry transformation. While certain industries are apparently pushed into upheaval by new entrants, resulting in the outcome of industry transformation, not every instance of industry transformation is precipitated by disruptive innovation, as defined as a process under Christensen’s theory. Indeed, some of the most transformative business models cannot be explained by the theory of disruptive innovation.

This study outlines the systemic factors that correlate with industry transformation, apart from the processes that a new entrant would use to approach an existing industry, as well as a method for analyzing whether an industry is taking a constructive or erosive path of transformation. The application of these factors and methods of analysis to the Accommodations and Passenger Transportation sectors provides the basis for using industry transformation theory to determine their susceptibility to transformation as well as identifying the type of transformational forces at work. Ultimately, this analysis can serve as a blueprint for developing management strategies from either a new entrant or incumbent firm perspective.