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Disruptive Technology

Disruptive Technology



Review of Danneels E. (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,” Journal of Product innovation Management, 21, 4 (July), 246-258.

Review of Danneels E. (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,” Journal of Product innovation Management, 21, 4 (July), 246-258.



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    Disruptive Technology Disruptive Technology Document Transcript

    • Prepared by Michael Ling LITERATURE REVIEW SAMPLE SERIES NO. 5 “Danneels E. (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,” Journal of Product innovation Management, 21, 4 (July), 246-258” Prepared by Michael Ling Email: msc_ling@yahoo.com.au Note: Michael Ling is the sole author of this document. You’re welcomed to use its contents but, as a courtesy, please quote the source of this paper http//www.michaelling.net/ Page 1
    • Prepared by Michael Ling Disruptive technology Danneels suggests that disruptive technology “is a technology that changes the bases of competition by changing the performance metrics along which firms compete.” He goes on to explain that “a particular technology has performance constraints, which limit the current product attribute set”, and “disruptive technologies... introduce a dimension of performance along which products did not compete previously.” It is apparent that Danneels attributes enormous significance to technologies so much so that they are capable of changing the ground rules of competition. I agree that technology has taken a significant role in competition to the extent that they can offer revolutionary and new ways to satisfy customer needs. However, there are a vast number of value-creating resources and business processes in an organization, such as product innovation, manufacturing, logistics, distribution channels, that are involved in the conversion of technology into marketable products. It is a simplistic view that technology alone is able to change the bases of competition. Ex ante predictions Regarding ex ante predictions of disruptive technology framework, Christensen suggests that we need to “graph the trajectories of performance improvement demanded in the market versus the performance improvement supplied by the technology.” Danneels raises the issue that it is difficult to predict “what performance the market will demand along various dimensions and what performance levels technologies will be able to supply.” I agree that it is difficult to predict the performance of disruptive technology, which “introduces a dimension of performance along which product did not compete previously”, and we have no experience nor knowledge of the new performance dimension. Page 2
    • Prepared by Michael Ling Incumbents Danneels cites King and Tucci’s and Chesbrough’s findings as a contrast to Christensen’s finding that “incumbents exposed to disruptive technology mostly fail or exit”, but he comments that the two findings “did not examine the shifts in industry leadership... and therefore did not test Christensen’s claim that incumbents lose their market leadership when faced with disruptive technological change.” He cites several more research findings to provide support to successful incumbents. It is apparent that the research findings are highly inconsistent and subject to interpretations. So, I agree with Danneels that further research is needed to examine the outcomes of incumbents when facing disruptive technology. On the other hand, Danneels calls for further research into the areas of resource allocation processes, and organizational resources, processes, and values. These two areas have been identified by Christensen as the causes for incumbent failure. Danneels cites two contrasting views on incumbent inertia from Henderson & King and Tucci, where the question is on whether knowledge, experience and capabilities accumulated by incumbents will give the incumbents inertia to harness disruptive technology. He cites Tripsas’s research finding that Mergenthaler Linotype remains a leading typesetter manufacturer despite it undergoes three waves of technological disruptions. Again, I agree that further research is needed in this area. In comparing the possibility of entering into a new field between incumbents and new entrants, Danneels draws from Helfat & Lieberman’s research finding that we need to compare the “resource profile of firms to the resources required by the new field” to identify the “resource gaps” of a firm, which can be filled by such means as “alliances, joint ventures, acquisitions, and licensing”. Drawing from the resource-based theory, Danneels offers a distinction between “customer competence” and “marketing competence” to explain the different resource Page 3
    • Prepared by Michael Ling requirements in an organization at different stages of the technology to marketable product. I agree that this is a significant issue in many organizations, whether they are incumbents or new entrants. The common problems in new entrants are the lack of a diversified resource. The problems in incumbents are often due to functional silos and organizational issues. Integration vs. Separate decision Christensen recommends that “incumbents should set up a separate organization for venturing into disruptive technology.” Danneels cites Cohan’s research that this is not necessarily the case. He cites Gulati & Garino’s research finding that “the integration versus separation decision facing traditional retailers venturing into online retailing involves a trade- off”, but he then draws from more research findings that provide opposite views. The research findings are inconclusive. Therefore, I agree that further research should be conducted in this area and, in particular, to explore “what conditions a spin-off is the best way to pursue disruptive technology.” Page 4