Friday, April 10, 2015

Disruptive Technologies and Blue Oceans: Synonyms?

This week I felt that the two assigned articles really connected with respect to disruptive technologies and entering blue oceans. My takeaway from the readings this week is that there are many similarities between the two. Both are able to make existing competition irrelevant because they create a new industry that fulfills customer needs.

The introduction of “The Innovator’s Dilemma” argued that companies that were market front-runners often made their failure decision at a time when they were at the top of their game. The reading also went on to explain how disruptive technologies were often their downfall, how to identify them, and how to avoid them. This connected with the Blue Ocean reading that encouraged businesses to target uncontested markets where competition is irrelevant. I found this very familiar to disruptive technologies that often create new markets and make existing technology irrelevant.

Entering blue oceans does not always mean creating a new technology. Some build off of existing technology. The Blue Ocean article also emphasized that entering a blue ocean is about finding a way to fulfill customer needs. I can think of many examples of companies that are both disruptive technologies and blue ocean companies. The classic example is Apple, who disrupted the music, phone and personal computer industries by building off of existing technologies and fulfilling customer needs.  Apple leveraged existing technology like compact memory and fulfilled customers desire for music portability. It disrupted the compact disk industry and created a market that hardly existed when it created the iPod.

Another example that relates to the Blue Ocean article are services like Airbnb and Zipcar. Both did not create new technologies, but fulfilled the needs of transportation and accommodation. They are also good examples of Blue Oceans created within red oceans. The rental car industry and hotel industries are very competitive and compete for limited market share. These companies are able to create a new industry because they provide more value to customers at a lower cost. They also do not use competition as their benchmark.  They make the competition irrelevant because they offer a differentiated product.

Another point that the Blue Ocean article made was that sometimes Red Ocean companies enter Blue Oceans. They create new products or services in areas that are uncontested and create markets that did not previously exist. Apple does this every time it releases a new product. Apple is already a market leader in its current products and faces competition with other companies who create similar products with lower prices. However when Apple releases a new technology, like the Apple Watch that was recently announced, it enters a Blue Ocean because the competition is irrelevant.

It was interesting to read about how companies fight to stay relevant and avoid being overtaken by disruptive technologies or Blue Ocean industries. Companies probably find it frustrating that they can be doing everything right and following good management practices, only to be overtaken wondering what could have been done to prevent it.

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