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What Dooms Innovation to the Graveyard?

Gilles Mingasson | Getty Images

In 2003, Nokia had a plan.

Recognizing the enormous market the Nintendo Game Boy Advance was attracting—and being cognizant enough to realize that mobile games at the time were, frankly, terrible— the company unleashed the N-Gage, a cellphone capable of playing video games that had a graphical quality previously unseen on mobile devices.

The idea was sound—but the reception wasn't exactly what they expected. The N-Gage was jeered by gamers (its intended audience). Web pages mocking its taco-shaped design quickly became an Internet sensation. And reviews were harsh. A redesigned model came out a year later, but it was too late. The N-Gage eventually became yet another disruptive technology that failed to connect with its audience.

History, of course, has shown that Nokia was thinking along the right path. The mobile gaming market in 2012 hit $9 billion, according to market research firm Newzoo. But Apple, Google and Samsung are the ones enjoying the lion's share of that.

It's one thing to promise to be disruptive and "another to deliver on the promise," said tech futurist and author Scott Steinberg.

(Read more: Recipe for Disruption)

The disruptor graveyard is filled with familiar names and devices—goods and services that never lived up to their vow to change our world.

Consider Qualcomm's Flo TV and Apple's Newton, which may have been the first personal digital assistant but was gone well before the PDA era took off. More recent disruptors, like Groupon and Living Social in the daily deals space, seem to be faltering.

The reasons these technologies and services fall short of disruptive aims vary but typically fall into one of a few categories.

Many companies succeed in their initial goal of disruption but fail to keep up with fast-changing consumer demands. That nets short-term success but long-term failure, as it gives the inevitable competition an opportunity to expand on the original idea.

"I always say if you want to study disruptive thinking … it's best to study the work of professional comedians," said Luke Williams, professor of innovation at New York University's Leonard N. Stern School of Business. "They're master disruptors. Their whole job is to determine what an audience is thinking and break those expectations. And that break in expectation is where humor comes from. As soon as you hear the punch line, it's obvious in hindsight. … But a comedian doesn't stop with one joke. They have to do them again and again. [Businesses] can't just disrupt the market once and sit back and go, 'Everyone's going to use our business model for the next decade.'"

(Read more: What Netflix, IBM Can Teach Us About Disruption)

Others simply don't do their advance homework.

Businesses that create their product in a vacuum—rather than getting feedback from their potential market throughout the design process—tend to have a harder time breaking through.

Others try launching to a mass audience. But successful disruption almost never starts out big.

"Nobody reacts well to things they're not familiar with," Williams said. "Anything disruptive has to start small. It has to start with the early adopters—the people who love change and are eager to use this thing and help improve it. You have to seed that early market very carefully."

Sometimes the idea is a good one, but needs have changed by the time it gets to market. That's especially true of disruptive products that come from big companies.

(Read more: The Wearable Revolution)

For many years, entrepreneurs have embraced the Lean Startup business style, which promotes quick changes to strategy rather than getting bogged down by one line of thinking, while major corporations tend to use the Waterfall approach, in which every stage has to be validated before proceeding to the next.

"A lot of companies start out with the right intention, but because of this Waterfall process, they lose momentum," Williams said. "It's far too slow, and by the time they get to the end of the process, the market has moved on, the consumer's needs have changed or they've rounded off all the edges that made it interesting in the first place."

Certainly, disruption failures outnumber successes by an order of magnitude. And even successful companies sometimes hit a pitfall or two along the path.

(Read more: Disruptors Can Delay the Apple iPod Way)

For example, many investors felt Netflix was losing its leadership role two years ago after announcing a price hike and scuttling a much-criticized plan to spin off its mail-order DVD business, and amid battles with content providers. The company was forced to slash its subscriber forecast. But the company recently reached two milestones: streaming more than 4 billion hours of content—a figure that analyst Richard Greenfield of BTIG Research said is bigger than most cable networks -- and with 29 million subscribers for its streaming service, surpassing HBO's year-end 2012 subscriber level. Slipups are often a part of success. The mark of a true disruptive business is one that can come back from mistakes.

"There's a saying: Pioneers catch all the arrows," Steinberg said. "They're bound to make mistakes as they launch these innovative products. … The problem when you take risks is they don't all pan out—and disruptive innovations can be among the riskiest. But they can also be the biggest successes."

Technology