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In 1995 Clayton M. Christensen in his book – Disruptive Technologies: Catching the Wave, coined the word disruptive innovation. Since then there have been different arguments about the impact of Disruptive Technology on our daily lives. This article is aimed to explore some of the disruptive innovations that have forever changed our lives in the 21st century.
What’s in disruptive innovation or technologies?
A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances and change the status quo.
Disruptive technology challenges existing ways of doing things; this is because business environment, competitions, market structures and customers do not allow traditional business or market leaders to pursue innovative technology because of their highly structured.
A typical example was the fall of Nokia, which today serves as a case study in management. What did Nokia do wrong?
In his speech the CEO of Nokia announced during the acquisition of NOKIA by Microsoft, Nokia CEO ended his speech saying this “we didn’t do anything wrong, but somehow, we lost”. Upon saying that, all his management team, himself included, broke down in tears.
Nokia has been a respectable company, a clear market leader. They didn’t do anything wrong in their business, however, the world changed too fast. Their competitors were too powerful- Apple and Samsung were disruptive and revolutionized the mobile phone industry- creating a new sector, Smart phones.
Nokia missed out on learning, they missed out on changing, and thus they lost the opportunity at hand to make it big. Not only did they miss the opportunity to earn big money, they lost their chance of survival.
The buttomline of this story is, if you fail to change, you will be removed from the competition.
To continue our narrative on Disruptive Innovations: when the technology that has the potential to revolutionize an industry emerges, established companies typically see it as unattractive: it’s not something their mainstream customers want, and its projected profit margins aren’t sufficient to cover big-company cost of developing the technology. As a result, the new technology tends to get ignored in favor of what’s currently popular with the best customers. But then another company or an entreprenuer sees opportunitues, steps in to bring the innovation to a new market. Once the disruptive technology becomes established there, smaller-scale innovation rapidly raises the technology’s performance on attributes that mainstream customers’ value.
Another reason why big established companies resist disruptive innovations is because; often time, disruptive innovation challenges the status quo of existing traditional rules and technology.
- The electric car will be resisted by gas-station companies
- Automated teller machines (ATMs) were resisted by bank tellers
- Traditional taxi unions are resisting the likes of Uber
- Bricks and mortals books stores resisted advent of digital books
Established companies, often have mechanisms that have been put in place to sustain existing technology in incremental effects. So, they fail to capitalize on the potential efficiencies, cost-savings, or new marketing opportunities created by low-margin disruptive technologies. This was the case of Nokia and another good example was the case of the telephone invented by Graham Bell Vs. the Telegraph. Little did Western Union know; the telephone would become mainstream and replace the telegram.
“When Western Union declined to purchase Alexander Graham Bell's telephone patents for $100,000, their highest-profit market was long-distance telegraphy. Telephones were only useful at that time for very local calls. Short-distance telegraphy barely existed as a market segment, which explains Western Union's decision to not enter the emerging telephone market. However, telephones quickly displaced telegraphs, as telephones offered much greater communication capacity than telegraphs”
Here are a few of my pick of disruptive technologies:
- The personal computer (PC) displaced the typewriter and large mainframe computers
- Email transformed the way we communicating, largely displacing letter writing and disrupting the postal and greeting card industries.
- Cell phones disrupted the telecom industry.
- Smartphones largely replaced cell phones and PDAs
- Social networking platforms such as facebooks, twitters, wechats are changing the way we’re interacting with friends - disrupting telephone, email, instant messaging.
- Ecommerce and online platforms are disruptive to traditional shopping malls
- Online payment such as paypal, Apple pay, Alipay wechat are disrupting the traditional banking system
- The ubers of this world are displacing long established taxi companies
- The Tesla of electrical automobile cars is rewriting the rules for the automobile industry that has largely depend on gasoline for centuries.
- Digital books and printing disrupted traditional bookstores and the newspaper industry.
What is you favorite disruptive technology? Leave a comment
Moses Og is a founder and CEO @levoexpert.com, a marketplace to connect with industry experts. Over his 12-year career of selling corporate solutions to individuals and bussiness organizations, Moses developed a strong interest on on-demand work and the freelancing industry. This led to the formation of levoexpert.com, a platform to address the growing need of start-ups and SMEs business that need affordable experts advice.