Compare methods

	Real Options Strategy Valuation	Disruptive Innovation Analysis
Field	Strategic Management	Strategic Management
Family	MCDM	Process / pipeline
Year of origin	1994	1997
Originator	Avinash Dixit & Robert Pindyck; Lenos Trigeorgis; Rita McGrath	Clayton Christensen; Clayton Christensen, Michael Raynor & Rory McDonald
Type	Option-valuation framework for strategic investment under uncertainty	Theory-based framework for classifying and assessing innovation trajectories
Seminal source	Dixit, A. K., & Pindyck, R. S. (1994). Investment under Uncertainty. Princeton University Press. ISBN: 9780691034102	Christensen, C. M. (1997). The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press. ISBN: 9780875845852
Aliases	Real Options Reasoning, Strategic Flexibility Valuation, Options-Based Strategy Analysis, Growth and Deferral Option Valuation	Disruptive Innovation Theory, Sustaining vs Disruptive Analysis, Christensen Disruption Analysis, Innovator's Dilemma Analysis
Related	4	4
Summary	Real options strategy valuation treats discretionary strategic investments - the chance to defer, expand, contract, stage, switch, or abandon a project - as financial-style options whose value comes from managerial flexibility under uncertainty. Dixit and Pindyck's 1994 Investment under Uncertainty established the theory that, when investment is irreversible and the future is uncertain, the right to wait has positive value and raises the threshold above which committing capital is optimal. Trigeorgis's 1996 synthesis showed how to decompose a strategic project's worth into a passive net present value plus the premium attached to its embedded options, and how to value those options with contingent-claims logic. Rita McGrath's 1999 work brought the same reasoning to strategy and entrepreneurship, arguing that managers should pursue high-variance opportunities with small, staged commitments so that downside is capped while upside stays open.	Disruptive innovation analysis is a framework for classifying innovations and anticipating when a new entrant will overturn established market leaders. Clayton Christensen introduced the theory in his 1997 book The Innovator's Dilemma, which explained the paradox that well-managed incumbent firms can fail precisely because they listen to their best customers and invest in sustaining improvements, leaving them exposed to simpler, cheaper offerings that begin at the low end or in new markets and then improve until they capture the mainstream. The 2015 Harvard Business Review article by Christensen, Michael Raynor, and Rory McDonald clarified the concept after two decades of misuse, insisting that 'disruption' is a precise process - not a synonym for any breakthrough or any successful startup - in which an entrant gains a foothold in segments incumbents overlook and moves upmarket from there. The analysis compares performance trajectories against customer needs to tell sustaining from disruptive change.