How is it that a small company with meagre resources can challenge and eventually replace a much larger, entrenched company with a majority share of the customer base? Christensen gives us his theory of disruptive innovation. A smaller company starts at the bottom of the market and continues to move-up ignored until it’s too late. The steps given are as follows:

1. The incumbent (established) business innovates and develops with a focus on their most profitable customer base.
   
2. The entrant targets those ignored by the incumbent and gains traction by meeting their unsatisfied needs.
   
3. Incumbents do not respond to the entrant, choosing instead to continue their prioritisation of their profitable customers.
   
4. The entrant moves upmarket by growing to attract even the incumbent’s mainstream customers.
   
5. With the entrant now competing more directly with incumbent disruption can be said to have occurred.