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Disruptive technology - Meghan Fluharty
- 2. Technology Displacement • Dismissal of new technology • Fall behind competitors • Reinvention
- 3. Business Failure FAILURE OF LEADING COMPANIES TO REMAIN AT THE TOP OF THE MARKET. AGGRESSIVE INVESTMENT IN TECHNOLOGIES GEARED TO RETAINING CURRENT CUSTOMER BASE. SUCCUMB TO DOGMA OF STAYING CLOSE TO THEIR CUSTOMER BASE. BEWARE OF IGNORING NEW TECHNOLOGIES THAT DON’T INITIALLY MEET A FIRM’S MAINSTREAM CUSTOMER NEEDS.
- 4. Sustaining Vs. Disruptive • Sustaining Technologies tend to maintain a rate of improvement • Improved Quality • Disruptive Technologies introduce new attributes that differ from what mainstream customers historically value. • Unwilling to use disruptive products in applications they are already familiar with. • Allow for emergence of new markets.
- 6. Organization al strategy is Critical Locate the initial market for the disruptive technology Locate Place responsibility for building a disruptive- technology business in an independent organization. Place Keep the disruptive organization independent. Keep
- 7. References: • Bower, J. L., & Christensen, C. M. (2020, March 2). Disruptive Technologies: Catching the Wave. Retrieved from https://hbr.org/1995/01/disruptive-technologies- catching-the-wave • Cox, L. (2017, June 20). How Disruptive Is 3D Printing Really? Retrieved from https://disruptionhub.com/disruptive-3d-printing- really/
Editor's Notes
- Disruptive technology displaces existing technology and initiates a shake up within industries and organizations or introduces a ground-breaking product that forces industries and organizations to adopt the product or face falling behind those who are embracing the new competitive advantage. New technologies are often dismissed at their onset because they don’t follow the comfort pattern that industries and organizations fall into and as the technology matures market share is lost to their competitors that adopted the new technology at its early onset. Organizations that pair strategy with new technology can share in the reinvention of processes that have not been the industry norm prior will enable future growth. This strategy of adopting technology at its onset proves to garner a competitive advantage over market competition.
- Focusing on a firms current customer base and their needs in the foreseeable future seems like a sound business decision. Maintaining market share and making small adjustments to their product or service keeps a firm relevant, at least for the time being. Management aggressively invests in current technologies and upgrading their systems in hope to remain relevant but are they missing the target completely? Most technological breakthroughs that disrupted the market such as autonomous vehicles, the internet, 3D printing, and virtual reality were all things that we as consumers didn’t see coming or have a demand for it. Now, these disruptive technologies have completely changed entire markets.
- Different types of technological innovations affect performance trajectories in different ways. On the one hand, sustaining technologies tend to maintain a rate of improvement; that is, they give customers something more or better in the attributes they already value. On the other hand, disruptive technologies introduce a very different package of attributes from the one mainstream customers historically value, and they often perform far worse along one or two dimensions that are particularly important to those customers. Customers may refuse charge at first because the disruptive product may not seem useful in their current preferred products application. Once the disruptive technology is understood it can then be used and valued only in new markets or new applications; in fact, they generally make possible the emergence of new markets.
- With any new technology there is a learning curve cost associated to train the operators in addition to the purchase cost of the product. As well as purchasing costs and implementation costs. Before a firm adopts a new disruptive technology, their cost structures are reviewed. Generally disruptive technologies are financially unattractive, and its difficult to project how large the market for the disruptive technology will be. There is a high risk when adopting disruptive technologies, but as we have seen historically, many companies have fallen, Kodak for example was too late to adapt to the digital camera world and was quickly surpassed by a disruptive technology. 3-D printing is a disruptive technology that has transformed the way products are designed, manufactured and distributed through various industries, most notably aerospace, automotive, construction, manufacturing and medical. In the case of 3-D printing, labor cots have been cut improving time efficiency and in the long term providing a cost savings to these industries (Cox, 2017). The startup cost to implement new technology is an initial hit to the budget but the overall savings should be considered when implementing new technology. The cost may be high when a new disruptive technology is unveiled, but failure to find value and move quickly may lead to eventual demise.
- Organizational strategy is critical. Successful adoption of a disruptive technology does not simply mean a firm should take the risk because of a potential reward. Rather the firm needs to strategically manage disruptive technologies and decide which fits best into their organizational goals and will permit profit in emerging markets. To do this one must first Locate the initial market for the disruptive technology. Once managers have determined that a new technology is disruptive and strategically critical, the next step is to locate the initial markets for that technology. Market research is not helpful in the context of disruptive technology because there is no data to compare to. Managers have to create the market and record what they think to be the demographic that will make up the new market segment. Place responsibility for building a disruptive-technology business in an independent organization simply means the organization should establish a separate organization, tied in to the main company that is resourced by the established company. This will establish excitement for the new technology. Keep the disruptive organization independent. Once the new disruptive technology has developed into a new market it should be kept independent and not integrated in to the mainstream organization. Integration works for sustaining technologies but for new technology it could prove disastrous. Arguments over resources will arise and established products may be cannibalized. For organizations to strategically implement disruptive technologies they need to make the right decisions, look into the future and take action against products that are about to become history.