ENTREPRENEURSHIP

Detailed explanation-1: -Competence destroying innovations reduce or eliminate a key competence of a firm. For example, store locations and the retail footprint were critical competencies for Block Buster. Movie rental via post was an innovation that reduced the value of store footprint for BlockBuster.

Detailed explanation-2: -An innovation is said to be competence-enhancing when it builds up on an existing technology using firm’s existing competencies. On the contrary, an innovation is said to be competence-destroying when it replaces a technology and therefore render firm’s competencies obsolete.

Detailed explanation-3: -An incumbent firm’s competence is destroyed when a technological innovation obsolesces the abilities and or resources that previously composed the competences of the firm. For instance, Blockbuster’s retail competence was undermined by Netflix’s online model.

Detailed explanation-4: -Whether an innovation is competence enhancing or competence destroying depends on whose perspective is being taken. An innovation can be competence enhancing to one firm, while competence destroying for another.