User Experience, or User Centered Design, allows you to look at how people work and what they do. The key is to focus on the user needs, to uncover and document opportunities to support people’s workflows and therefore define solutions that align with what they actually want to accomplish.
True innovation can only happen if it is informed by this. If you innovate from the outside in (when the technology is the focus) very often companies are defining solutions for imaginary “problems”. Take for example the Apple Watch. What problem is it actually solving? You look at the soft sales of the device and you can see that while it has many technology innovations, it’s a solution looking for a problem.
On the other hand (literally, in some cases) look at the success of the Fitbit. While it doesn’t have half the features and capabilities, it is a product line that is focused on supporting key use cases – mostly around health and activity tracking. By producing a range of products at different price points the company is able to support different user bases who want to be more active. (The company was so successful that Apple in response “rebranded” the Apple Watch as a fitness device a year after it was released)
Disruptive Innovation happens when companies identify what I consider “key” use cases/user needs and provide a dramatically better experience than the existing status quo. The best example I can think of is Netflix, which supported a key use case (watching movies at home) by first shipping DVDs to customers (which ended up killing the traditional video store such as Blockbuster) and then building a streaming service (which has significantly impacted Cable TV companies’s subscriber rates).