Sometimes, it isn’t enough to meet the needs of the market. To remain competitive, you have to create a new need, or maybe even create a new market.
This is the idea behind disruptive technology, a term introduced by Harvard professor Clayton M. Cristensen in his book, “The Innovator’s Dilemma: When Technologies Cause Great Firms to Fail” published in 1997. In this book, Cristensen categorized two kinds of technology — sustaining and disruptive. The former refers to small improvements on existing technology, while the latter refers to something completely new with initially little appeal and stability, but grows to become a major game-changer as it makes it way into mainstream.
Typically, disruptive technology offers something that the market hasn’t needed before. Thus, it doesn’t perform well when it’s first introduced. That isn’t a surprise — initial demand is low, therefore, initial sales are low. But what it lacks in significant sales, it makes up for innovation. People would eventually notice that it offers something different, something that they didn’t realize they should have. It takes a bit of time before disruptive technology picks up its pace, but when it finally does, it replaces the sustaining technology that precedes it.
Nevertheless, many companies still prefer sustaining technology over disruptive technology because it is safe and predictable. Why fix what isn’t broken, after all. And there’s nothing wrong with that; sustaining technology builds upon a technology that’s already proven to work, and also proven to have a receptive market. In contrast, disruptive technology seems to be too risky and uncertain. In its early stages, disruptive technology is just new technology that stands to either fail to succeed. It only gets labeled as disruptive after it has proven its effects.
But playing it too safe can cause a company a lot not just in profit, but also in development and growth, as some companies learned the hard way. For example, Nokia was among the top mobile phone manufacturers in the late 90s to around early 2000s, and back then, it looked like nothing could bring the company down. However, Nokia didn’t anticipate the birth of the multifunctional smartphone (e.g. the iPhone), a kind of disruptive technology that has gone mainstream nowadays. And then there’s Kodak, which didn’t foresee that people would want to own digital cameras with big storage capacity. When Nokia and Kodak finally got around to produce multifunctional smartphones and digital cameras, respectively, either company found out that they couldn’t keep up. It was a classic case of ‘too little, too late.’ When both disruptive technologies became mainstream, the market for the sustaining technology diminished significantly.
Let’s not forget the tablet! Personal computers and laptops were the disruptive technology for mainframe computers, but with the way things are going, tablets seem to be the disruptive technology that would replace laptops and PCs. By 2015, tablets are projected to outsell not just laptops, but desktops as well. That’s something to think about.
And of course, there’s the cloud computing, which has all the signs of disruptive technology. Cloud computing makes data and applications such as like a board management software that is a software for the boardroom, works on multiple platforms available anytime and anywhere, which is exactly what people on their iPads, iPhones, and Android devices need. With more people using mobile devices, more systems are likely to move to the cloud.
It’s a good idea to keep an eye out for competition that may come up with disruptive technology so your company can react accordingly. Or better yet, get your company to produce disruptive technology to become a pioneer. Whatever path your company takes, there are always risks involved, but maybe these risks are worth taking.