It's like in biological evolution: The population will evolve, even though individuals can't. The same thing happens in the corporate world: The population of business units within corporations evolves, even though individual business units can't. That's because the capabilities of business units reside in their processes and their values, and by their very nature, processes and values are inflexible and meant not to change.

In 15 years from now half of US universities may be in bankruptcy ... in the end I'm excited to see that happen. So pray for Harvard Business School if you wouldn't mind.

The answer is the disruptive innovator, an outsider, who creates a product or service for the non-existing consumer in a non-existing market for almost no profit.

Businesses want to think in terms of categories. Consumers want us to think in terms of their needs.

When product performance outstrips the ability of customers to use that performance in an industry, the competitive game changes. Under those circumstances you have to decouple components businesses from assembly businesses.

Another thing I've observed is how critical the role of the CEO is when a technology truly is disruptive. In looking back on companies that have successfully launched independent disruptive business units, the CEO always had a foot in both camps. Never have they succeeded when they spin something off in order to get it off the CEO's agenda. The CEOs that did this had extraordinary personal self-confidence, and almost always they were the founders of the companies.

Generally, the technology that enables disruption is developed in the companies that are the practitioners of the original technology. That's where the understanding of the technology first comes together. They usually can't commercialize the technology because they have to couple it with the business model innovation, and because they tend to try to take all of their technologies to market through their original business model, somebody else just picks up the technology and changes the world through the business model innovation.