In recent years, the business world has been dominated by a powerful concept – disruptive innovation. Any company or organization with genuine ambitions for growth or success will have encountered the idea of disruptive technology, and it has become a regularly used phrase when attempting to predict the direction of technology and which industry entrants will succeed.
Of course, disruptive innovation has been around for a very long time, and has always been part of business and technological advancements. Henry Ford is reputed to have said that ‘what people really wanted was faster horses’, until his pioneering motor car disrupted the horse riding business. However all too often these days the phrase is misused, or widely misunderstood. The concept of disruptive technologies or disruptive innovation has been applied too carelessly, anytime a newcomer to an industry makes a splash.
To really use the theories of disruptive technologies, and for managers to properly take advantage and make the correct strategic decisions, it is important to understand the nuances of disruptive innovation.
Classic disruption is, surprisingly, usually a fairly gradual process. It usually entails a small enterprise targeting an overlooked audience or market share, and developing a new offer that genuinely changes the way an industry can work, and slowly moves upwards to challenge the market leaders. A disruptive technology displaces something established in its entirety, shakes up an entire industry, or develops a ground-breaking new product which gives rise to an entirely new industry.
Classic examples of disruptive technology include the PC, smartphones and cloud computing. Uber, often hailed as a remarkably successful example of disruptive innovation, doesn’t actually fit the mold very well, and really is just building and changing an existing industry (albeit at an unusually fast speed).
Disruptive tech is usually set against the concept of sustaining technology or innovation, which relies on improving pre-existing technology or concepts to gain an edge in business. Large corporations tend to work with sustaining technology, as they have the resources to understand their clients’ needs and desires, and develop and improve their existing products. They also don’t need to take the risks that smaller organizations do to succeed in their industry.
Due to this differentiation, disruptive technology can (at least at the beginning) be rough around the edges and lack refinement. Because initially it appeals to a limited audience, and ostensibly is entirely new and requires a new way of thinking, it can afford to leave room for improvement.
Sometimes disruptive technologies might not even have an immediate obvious use in the business world, and can take time to truly change the game. Something as fundamentally ground-breaking as Alexander Graham Bell’s telephone, for example, took many years to properly disrupt the communication industry.
Big companies and organiations often dismiss disruptive technologies, relying on their size and brand loyalty to customers to maintain their dominance, and assuming current company goals will remain solid. However this can lead to big mistakes, and companies, even whole industries being taken by surprise by an unseen newcomer.
Pursuing disruptive innovation can be a risk, of course. But disruptive technologies, while usually low-margin, tend to come with new efficiencies, cost-savings, and new opportunities for messaging and marketing, and of course have the potential to threaten the status quo.
Disruptive technologies may, initially, offer lower or slower performance than that which the market has traditionally demanded. However over time and once fully developed, they penetrate faster and have a far higher impact than existing tech.
For software engineers, developers and new technology companies, paying attention to disruptive trends is vital. You can’t just listen to what your customers want now (see Henry Ford and his faster horses), you need to be able to second guess what they might want in the future. Looking at advances in new technology like AI and VR can help give at least an idea of what might be on the horizon.
The process of embracing disruptive innovation itself can be a positive step for organizations as well. Moving from a ‘No’ to a ‘How?’ response changes the way businesses think and work, and give them more creativity and more flexibility, which can have a significant impact and influence throughout the organization.
Essentially, disruptive technologies allow smaller organizations with extremely limited resources to successfully challenge, and even overtake, the market leaders in their industry. That’s a pretty big deal for anyone, let alone a small fish in a big pond.