Blog #4 –Disruptive Technologies are NOT Always New Technologies

A stereotypical view of disruptive technologies is that they are generally cutting-edge technologies. Therefore, with great inventions comes great opportunities. Undoubtedly, this is true to some extent, but the people who eventually made money from the “new” technology are not the ones who invented them. Ironically, in a lot of the cases, the technologies we deemed as disruptive are no longer new when they become disruptive.

 

There are a lot of examples that disruptive technologies are not necessarily new technologies: electric cars seems to be the latest fashion in the automotive industry, but electrified vehicles can be dated as way back as the 19th century; the iPod was a huge success that saved Apple back in its glorious days, but the product itself is more of a combination of existing mature technologies; digital cameras swept over the camera market and dominated film cameras, but it took nearly 30 years for digital cameras to achieve such dominance.

 

The list of such examples goes on and on. Nevertheless, there are things shared among disruptive technologies: perfect timing and complementary technologies. Electric cars only become popular when battery technologies improves and environmental concerns boast the call for replacement of fossil fuel; iPod was a great success due to Jobs’ brilliant market strategy that provided unprecedented convenience; digital cameras took 30 years to mature and eventually take over the market when digital image processing capabilities and memory devices finally became adequate for the whole package.

 

When we look at successful technological advancements that are deemed as disruptive, we tend to only look at a single aspect of the technology but neglect the whole package that comes with it, which makes it successful. Timing and whole packaging of technology are what makes these inventions great and usually it takes quite a long time for all conditions to be mature.

 

Nowadays when we look at successful disruptive technologies, we are somewhat blinded by the survivorship bias: we only look at successful ones and conclude that incumbents which do not embrace new inventions are risking being taken over. In reality, incumbents have plenty of time to learn, analyze, and react. The reason why some incumbents failed must not only be they didn’t embrace the new trend. It must have something to do with poor decision makings.

 

New technologies will gradually replace old technologies, but not necessarily new entrants can replace incumbents. Sometimes, incumbents can take action and gain the lead in the industry. For example, when Apple launched its iPhone, Google, who’s already in the phone market making simple phone system for traditional phones, quickly reacted by shifting its phone system development into making an equivalent contender to the iPhone system, which later becomes Android.

 

Therefore, disruptive technologies are not always new and not always favor new entrants. Rather, disruptive technologies will favor those who make the right decisions in the right situation at the right time.