What is Disruptive technology?
The term was coined by Clayton M. Christensen in his book “The Innovator’s Dilemma” in which he propounded two types of technology:
- The sustaining technology: This form of technology builds upon an already established technology with further improvements and adjustments. It is therefore an improved product or service that aims to fuel short-term growth.
- The disruptive technology: On the contrary, the disruptive technology is a completely new way of doing things. This type of technology tends to shake up the industries by opening new markets and eliminating old, traditional ones. Disruptive technologies often encounter performance issues and need refinement.
Examples of Disruptive technologies
Disruptive technologies are more familiar than you think since you come across them every single day. Let’s view some examples in order to better understand what a disruptive technology is and what impact it has on our everyday lives:
- The e-mail transformed the way we communicate
- Mobile phones replaced traditional phones and reinvented the telecommunication industry
- Laptops replaced computers and made computing accessible from anywhere at anytime
- Social Media have entirely reinvented the way we communicate online and replaced traditional methods of communication such as email, telephone and messaging.
- Renewable energy has provided an alternative way to sourcing energy that is eco-friendly.
- 3D printing put forward additive manufacturing techniques to craft objects based on digital designs.
- Cloud technology is changing the future of data storage and computing.
- Advanced robotics are replacing human workforce and increasing productivity.
- Virtual/Augmented reality is providing an entirely new way of viewing things.
- Advanced oil and gas exploration and recovery is changing the future of the oil and gas industry
Are disruptive technologies shaping the future?
There are so much more examples out there. Disruptive technologies have been a key part of our lives and without them we would not see the innovations and revolutions we see today. So the question whether disruptive technologies are shaping out future, the answer is yes. Traditional business models are being overturned, and new, revolutionary ways of doing business have entered the business landscape. Nowadays, companies are exploiting opportunities to deliver new or existing products or services in a very different and radical way from what the consumer is used to. Facebook, Amazon, Youtube, Google, Uber, Paypal and Netflix are only some examples.
The Disruptive Innovation Model
The model is plotted along two dimensions; the product performance and time. It visualizes the product performance trajectories, which is how products improve over time, against the customer demand trajectories, which is the customer’s willingness to pay for that performance. Incumbent firms with high quality products aim to reach the high end of the market which carries a high profitability. Yet, while doing that they neglect to consider the low end of the market and the mainstream customers. As a result, new entrants can enter these uncrowded segments that have been overlooked by bigger companies. By doing this, new entrants enter the disruptive trajectory and start to move up higher along time to meet and challenge the incumbents firms.
(Christensen, Raynor and McDonald, 2015)