Disruptive keyword and its variations, like disruptive innovations, Disruptive technologies, disruptors, and Disruptive Innovation strategy, have become catchphrases. Due to the ease of use of digital technologies to recreate many products, these terms have become highly popular. Hence, tiny Startups with limited resources to mega-corporations all are after it. Of course, a disruptive technology supersedes an older process, product, or habit, but how? Do they show up with superior attributes that are immediately obvious, at least to early adopters? Perhaps, no. Another belief is that disruptive technologies are challenging to respond to because they can appear suddenly. This contradicts the belief that customers take years to adopt products considered disruptive or do not adopt at all. In addition to disruptive effects, lack of clarity of related terms and contradictory beliefs have worsened the challenge of pursuing, preparing, avoiding, or investing in disruptive technologies.
Disruptive technology is an emerging technology core that fuels the Reinvention waves of matured products, unleashing disruptive consequences on products, jobs, and businesses. It is neither an innovation nor a disruptive innovation. Instead, innovators use disruptive technology core to replace the maturing technology core of existing products to create a disruptive effect. As a result, incumbent products get recreated, forming a new growth path by destroying the demand for mature products. Prof. Schumpeter termed it Creative Destruction. Among others, the light-emitting diode is a disruptive technology example, as it powered the reinvention of the light bulb, unleashing disruptive effects on the demand for CFL and incandescent light bulbs. Consequentially, older technology-based light bulb businesses, skills, jobs, and firms suffered from disruption. Hence, disruptive technology powers innovations that significantly disrupt or alter the way that consumers, industries, or businesses operate.
Clayton’s interpretation of disruptive technology
As the reinvention out of emerging technology core causes disruption to existing products, often to firms, Clayton Christensen picked the term disruptive technology to refer to it. Notably, he referred to those technology cores powering creative destruction waves to which incumbent firms fail to switch and suffer from disruptive effects. However, often, it’s mixed up with the notion of innovation, creating confusion, misinterpretation, and erroneous communication. Hence, we need a clear understanding of disruptive technologies and their roles in reinvention, creative destruction, and disruptive innovation.
Defining disruptive innovation and technology:
Invention and innovation do not refer to the same phenomenon. The invention of the technology core leads to its leveraging through product, process, and business model innovations. For example, GUI, Multitouch, electronic image sensors, and transistors are disruptive technologies. They have been used to reinvent the technology cores of many existing products. For example, Sony reinvented Radio and TV by changing the vacuum tube technology core with the Transistor.
Similarly, Sony reinvented the camera by replacing film with an electronic image sensor. Likewise, Apple reinvented PCs and smartphones by changing the text command and keyboard technologies of user interfaces by GUI and multitouch technologies. The list goes on.
Yes, subsequent innovations around those reinventions took the shape of creative destructions as they became better alternatives to mature products. Furthermore, in the cases of Radio, TV, Camera, PC, iPhone, and many others, incumbent firms failed to switch to the new waves and suffered from destruction. Prof. Clayton coined the term disruptive innovation to refer to this effect. Hence, disruptive technologies are those that are suitable to recreate existing products by changing their technology cores, and, subsequently, power innovations around them to grow as creative destruction and disruptive innovations.
Contrary to common belief, they do not show up with superior performance. They do not show up suddenly either. They take years, decades, or even a century to grow and power the reinvention of existing products for unleashing the might of disruptive innovations. However, due to our lack of detection and monitoring capability, we often perceive them as random disruptive forces. Perhaps, as we get caught off guard, we start using related phrases interchangeably, causing confusion and creating chaos in our responses.
Disruptive technology examples–unfolded disruptive innovations:
Apple innovations like Macintosh, iPhone, and iPod are disruptive. Similarly, digital cameras, LCD television, eBook, Netflix video on demand, and word processors are examples of disruptive innovations. Technologies powering them as disruptive innovations are examples of disruptive technologies. For example, point-and-click-based GUI, LCD, multitouch, and electronic image sensors are disruptive technology examples. On the other hand, the internet, web technologies, cloud computing, and smartphones have fused together, forming a compelling disruptive technology. Among others, it has reinvented movie rental as Netflix by causing disruption to Blockbuster, circuit city, and many others.
Although we know disruptive innovations for their sudden disruptive effects, they take time to unfold. Disruptive technologies need to power them for an extended period to unleash their potential. Besides, disruptive technologies emerge in an embryonic form, showing very faint potential. For example, GUI technology development took more than two decades before it became visible to Apple. In the late 1960s and the early 1970s, the potential of GUI to make future personal computer disruptive innovations was beyond the imagination. Hence, Xerox management to give to anybody wanted.
Multitouch technology took more than 30 years before drawing the attention of Apple as a candidate for the reinvention of the smartphone. Similarly, before Netflix’s success of video streaming over the internet, video on demand over the net struggled and failed in the 1990s. Likewise, LED, LCD, electronic image sensors, and many more also emerged in an embryonic form. Perhaps, nobody perceived them as disruptive technologies at their birth.
Furthermore, they take a long, uncertain journey to reach the state to be considered candidate disruptive technologies. For example, LCD took 100 years before becoming suitable for digital watches. On the other hand, after the invention in 1962, LED technology got stuck until a significant scientific discovery in 1994.
Key characteristics of a candidate disruptive technology:
Among many other attributes, a technology that qualifies as disruptive technology should have high latent scale, scope and positive externality characteristics. These attributes form the underlying potential for enabling innovators to keep increasing the quality and reducing the cost. Without such potential, innovation out of disruptive technology will not succeed as creative destruction–let alone disruptive innovation.
Examples of emerging disruptive technologies:
Some of the emerging candidate disruptive technologies are artificial intelligence (AI), AR/VR, autonomous driving, quantum computing, 3D printing, IoT, and a few more. Despite hypes, like their predecessors, they have been taking quite a long to prove that they are candidate disruptive technologies. For example, augmented reality technology (AR) got birth in the 1960s. Despite its potential in reinventing human-machine interfaces, it has not unfolded any major disruptive innovation yet. The same thing is true for 3D printing, AI, and quantum computing.
In the form of simulation of the neural network, AI started its journey in the 1940s. But still, to date, the weight matrix value adjustment-based memorization technique is yet to unfold disruptive innovation. Despite the hype, like many other disruptive technologies, AI is perhaps stuck due to a poor science base. Due to inherent weakness, innovations around them are failing to be a better alternative to human intelligence in major target applications. For example, investment of more than $3 billion, IBM faced an insurmountable barrier to taking over the human role with AI in cancer detection and prescription.
Similarly, Autonomous vehicles cannot roll out after consuming more than $80 billion in R&D investment. On the other hand, after investing $500 million over almost 30 years, Honda stopped further R&D in the world’s most advanced Humanoid–ASIMO. Likewise, quantum computing, IoT, and a few other likely candidates need further progress to unfold their disruptive capabilities.
Challenges in detecting, forecasting, and leveraging:
The major challenge for leveraging candidate disruptive technologies lies in detecting latent potential. As a result, managing the uncertain path of nurturing and exploitation gets difficult. Due to it, often, incumbent firms having a profitable business out of mature technology cores avoid pursuing the possibilities of likely candidate disruptive technologies. But it poses a threat, even Kodak moment. Hence, in some instances, such decision-making challenges lead to suffering from a considerable loss.
Risks of Premature Saturation
An investment made for pursuing disruptive possibilities runs the risk of failure, as mentioned in the case of ASIMO and autonomous vehicles. On the other hand, despite the promise of being disruptive innovation, Uber cannot unfold its disruptive power due to the premature saturation of autonomous driving technology. Hence, we should focus on detecting latent potential and forecasting like progression path for reducing sub-optimality in our responses to disruptive technology possibilities. Similarly, Tesla is yet to turn EV into disruptive innovation.
Disruptive technology suffers from pervasive uncertainty
As explained, disruptive technologies power disruptive innovations. Like the predecessors, five emerging disruptive technologies such as artificial intelligence, blockchain, 3D printing, VR/AR, and IoT are at the early stage of their lifecycles. Managing technology uncertainty is the major challenge in harnessing their potential and avoiding catastrophic disruptive effects like Kodak moment. In many cases, the Externality Effect matters for unleashing the innovation power of disruptive technologies. For example, Netflix heavily relied on the growth of internet infrastructure to succeed as a disruptive innovation.
On the other hand, a disruptive technology core may need help from predecessors to reach the height of powering disruptive innovations. Furthermore, contrary to common belief, disruptive technologies do not unfold their disruptive effect suddenly. Besides, they are not born as disruptive technologies either. Such reality often causes confusion and decision-making dilemmas, leading to loss of opportunity or suffering from Kodak moment.
Investment challenges in disruptive technology
Invariably, all disruptive technologies emerge in primitive form. Reinvention waves of matured products through adopting them start in primitive form, generating a loss. Besides, often, upon showing early success, disruptive technologies slow down before crossing the threshold. Sometimes, such a slowdown may lead to facing crossing the chasm challenge. Consequentially, disruptive technologies create hype cycles, causing a sudden rise and fall in share price. Hence, investment challenges in disruptive technologies include detecting latent potential, dealing with decision-making dilemmas, and avoiding getting caught in the hype cycle.
...welcome to join us. We are on a mission to develop an enlightened community by sharing the insights of Wealth creation out of technology possibilities as reoccuring patters. If you like the article, you may encourage us by sharing it through social media to enlighten others.
