Disruptive Innovation Simon Sturmer 19 Apr 2012
InnovationQuick thought experiment ○ Think of the fastest-growing, exciting, most innovative business of our time.. ○ Now fast-forward 15-20 years
Definition & OriginDisruptive Innovation - Clayton Christensen, 1997 "An Innovation (product, service or experience) from a newcomer that enters a market displacing or crippling existing businesses"
ExamplesNew Entrant vs Incumbent ○ iTunes vs Sony Music ○ Amazon/Ebay vs Brick & Mortar ○ Skype vs Traditional Telco ○ PC vs Mainframe
DisruptionWithout market disruption, would we evenhave startups? ○ Big businesses get bigger ○ Rich get Richer ○ New Entrants dont have the capital, brand or distribution channels
Sources of Disruption ○ New Distribution Channel (the Internet) ○ De-regulation, Geo-political ○ New Markets (China, Mobile phones) ○ Disaster, Financial Crisis ○ **Accelerating Growth in Technology** ...
Black Swan EventsNicholas Taleb - "Fooled by Randomness" - 2004"A surprise event with major impact which, in hindsight, seems obvious" ○ The rise of the Internet ○ Google - ○ The iPhone ○ Financial/Economic
UnpredictabilityIdeas that are disruptive ○ Popularity vs Potential to be Revolutionary ● 5-10% - Brilliant, Majority think its insane ○ Not necessarily, a new company, but a new entrant to an industry (iTunes) ○ Inherently unpredictable (Black Swan), but in hindsight its obvious (Google)
Moores Law Gordon Moore, 1965 "Number of transistors doubles every 1-2yr" ○ Started with 5 data-points ○ Non-linear curve is extremely hard to identify at first ○ Applies to various fields ● Storage, CCD density ● Gene Sequencing ● Internet Growth
Pace of Human Innovation ○ Every innovation the result of one or more prior innovations ○ Think of Ideas as "procreating" and look at innovation similar to population growth ○ Emergent Layers of Abstraction ● Life sciences (genetics, biology) ● Energy and clean-tech ● Internet
Coming back to the Web ○ Greatest new distribution medium since the printing press (Dell, Amazon, Skype) ○ Prior to this, how many great innovators would ever have their ideas see the light of day? ○ Globalization & lower barriers to entry ○ Internet itself is growing in a nonlinear fashion
Disruptive Market Entry ○ Entering a market as a cheaper, lower-quality or lower-performance alternative (VOIP, CCD, E2W) ○ As technology improves, pushes the incumbent into an ever-shrinking high-end niche ○ As growth crosses the "knee" in the curve, the new entrant has effectively disrupted the market ○ Large companies often see this coming, but rarely have the power or foresight to stop it
Present Day Examples ○ Mobile is doing to the PC what the PC did to the Mainframe ○ Electric Vehicles (E2W - China) ○ 3D Printers ○ ARM - Intel
Projecting Technological Growth ○ Cant predict "Black Swan" -style disruptions, but we can count on the bigger-picture growth ○ Looking at mobile computing growth purely mathematically, by 2036: ● size of a red blood cell ● MIPS times 10^9 ○ Applications in Medical, Clean Tech, Bio/Nano engineering, Machine Learning, etc
Wrapping up ○ Were witnessing unprecedented growth in industries such as the Internet ○ Due to predictable and unpredictable forces, new entrants have incredible advantages ○ Regardless of Financial, Economic and Political effects, the pace of human innovation increases ever faster
Disruptive Innovation Simon Sturmer email@example.com http://gplus.to/sstur github.com/sstur (will link to slides and references using github or meetup) Thanks for your time.