Wednesday, April 19, 2017

Understanding Disruptive Technology

With a rapidly changing world dominated by technology enabled disruptions, there is a strong need to understand disruptive technology from technical and managerial perspectives and study the implications for business models and market structures. 

It is necessary that we distinguish between concepts such as sustaining innovation and disruptive innovations. Innovations may be sustaining when they embody steady and linear improvement of existing technologies. Often they pertain to technological changes that lead to better performance at lower costs in the short-term. Sustaining innovations have some common features such as increasing the performance of established products within the mainstream expectations of consumers and they rarely displace or even bankrupt leading companies. Examples would include shaving razors and television sets. 

On the other hand, innovations can be disruptive when they introduce completely new approaches that may potentially create a new industry or significantly transform an existing one, for example by overtaking existing leading firms. Ways to develop disruptive technologies include offering products that are less expensive, more robust, smaller, lighter, requiring less energy, easier to maintain, easier to use, etc. The products/services do not appeal to the mainstream consumer, to begin with, but have the potential to outstrip the steady improvement of performance that they now absorb and ultimately envelop and change the entire market. Eg: ride-share market leaders-Uber. Next, the “Innovators Dilemma” comes into play when the established firms are “locked-into” their current business models and market strategies and often do not see the purpose of investing in a product or service with lower performance. 

Further, I would also like to critique the theory of disruption as propounded by Clay Christensen. One of the biggest issues is that of predicting if a technology is a potential disrupter in the future. Not all technologies that enter at the low-performance end of the market can be a disrupter. It’s not clear what makes it a disrupter. Further, there is no mention of a timeline for when the “disrupter” would potentially disrupt the market or even displace the incumbent leader in that segment. Moreover, the theory seems to point out that the criteria of displacing the market leader (for a disrupter) would be fulfilled only in the future. Thus, this criterion is not very helpful to understand a disruptive technology today. Another issue with this theory is that it fails to give a clear idea of what innovation is. According to Lepore and Gans, a disruptive innovation theory requires a historical analysis to understand which innovations became a success/failure and why this result occurred. They further suggest that a successful innovation is not only about disruption but a combination that involves social acceptance, human creativity, profit opportunity and uncertainty. 

In my opinion, to understand technology better and analyze where technology is leading the human race, studying disruptive technology is necessary. But, we have to move away from a narrow definition of disruption. A disruption need not comprise of only successful innovations. To truly understand the future of technology we have to revisit all the “failed” technologies from the past. For example, driverless cars were already in play in the early 90’s at CMU. But, because the society was not very accepting, this innovation failed to make an impact in our daily life. Fast forward to today, because of rapid changes in the society, driverless cars have risen again. Thus, we should look to provide a holistic view of disruption and expand the domain of technology studies.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.