Disruptive Technology<br />“In questions of science, the authority of a thousand is not worth the humble reasoning of a si...
The World is Changing<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
Technology doesn’t care<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />Adjacent Possible<br />When in one room someone will open the next door<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union Telegraph Business<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />Bell offered the telephone patent for $100.000<br />Western Union turned Be...
Copyright © 2011, Ólafur Andri Ragnarsson<br />In 1900<br />AT&T had over million users<br />AT&T revenues were $13 millio...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Why would Western Unionmake such short-sighted<br />decision?<br />
We tend to view technology based on past usagesbut not the future potential<br />Copyright © 2011, Ólafur Andri Ragnarsson...
How will this innovationchange an industry, and what impact does this have on the firms I care about?<br />Copyright © 201...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Nordic Marketing Conference of Lottery Companies, Mývatn, September 1995<br />
Sustaining Innovations<br />Gradual Improvements<br />Foster improved product performance<br />Each year new and improved ...
Market Leading Companies<br />	Have a high probability of beating entrant attackers when the contest is about sustaining i...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Red Ocean Industry<br />Bloody Competition<br />Well know industry boundari...
Disruptive Technolgoy <br />	The product performance is good enough to fulfill a unfilled need in the market<br />	Current...
The Disruptive Innovation Theory<br />Existing companies have a high probability of beating entrant attackers when the con...
The Disruptive Innovation Theory<br />	New organization can use relatively simple, convenient, low-cost innovations to cre...
The Disruptive Innovation Theory<br />Low-end<br />	Can occur when existing products and services are “too good” and hence...
The Disruptive Innovation Theory<br />New-market<br />	Occur when characteristics of existing products limit the number of...
The Disruptive Innovation Theory<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: Christensen et. al. Seeing wh...
The Innovators Dilemma<br />	Firms that succeed in one generation of innovation almost inevitable become hamstrung by thei...
Disruption and Innovation<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Force Majeure <br />Legal/Regulatory <br />P...
The Innovators Dilemma<br />	Traditional Concept of Good Management<br />Focus on your best customers<br />Focus on your h...
The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“We listen to our best customers”<br />
The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“Our customer is asking for the new product, but w...
The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“Our customer are starting to ask for our new prod...
Copyright © 2011, Ólafur Andri Ragnarsson<br />It is very difficultfor incumbent companies to disrupt themselves, so usual...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Only ONEestablished firm managed the transition from one generation to the ...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Why did they fail?<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />They listened to their customers<br />
The RPV Theory<br />Resources, Processes and Values Theory<br />Resources (what a firm has), processes (how a firm does it...
The RPV Theory<br />Resources, Processes and Values Theory<br />	Organizations successfully tackle opportunities when they...
The RPV Theory<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Possible consequences<br />Source: Christensen et. al. ...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union Telegraph Business<br />
The telephone was a new-market disruptive innovation<br />Western Union’s resources, processes, and values meant that what...
Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union was in the telegraph business, not the communication business...
Example disruption waiting to happen<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />   Book Publishers<br />Flickr Image by wallyg<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />WhenDisruptive TechnologiesCross the Chasm<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />“’This time it’s different’ are the four most expensive words in the invest...
The Hype Cycle<br />	A graphic representation of the maturity, adoption and business application of specific technologies<...
Copyright © 2011, Ólafur Andri Ragnarsson<br />NASDAQ<br />January 2000<br />The Internet Bubble<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />
Copyright © 2011, Ólafur Andri Ragnarsson<br />
The Railway Bubble<br />Railway Stock in Britain<br />The value of railway stock grew 4 fold from 1826 to 1846<br />Many c...
Summary<br />The Innovators Dilemma<br />The Innovators Trap<br />The Disruptive Innovation Theory<br />Resources, Process...
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Disruptive Technology

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This lecture is part of course New Technology at Reykjavik University.

Published in: Technology

Disruptive Technology

  1. 1. Disruptive Technology<br />“In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual.”<br />- Galileo Galilie. <br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  2. 2. The World is Changing<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  3. 3. Technology doesn’t care<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  4. 4. Copyright © 2011, Ólafur Andri Ragnarsson<br />Adjacent Possible<br />When in one room someone will open the next door<br />
  5. 5. Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union Telegraph Business<br />
  6. 6. Copyright © 2011, Ólafur Andri Ragnarsson<br />Bell offered the telephone patent for $100.000<br />Western Union turned Belldown<br />Bellwent into business himself, founding AT&T<br />
  7. 7. Copyright © 2011, Ólafur Andri Ragnarsson<br />In 1900<br />AT&T had over million users<br />AT&T revenues were $13 million while Western Union’s revenues were $6 million<br />
  8. 8. Copyright © 2011, Ólafur Andri Ragnarsson<br />Why would Western Unionmake such short-sighted<br />decision?<br />
  9. 9. We tend to view technology based on past usagesbut not the future potential<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  10. 10. How will this innovationchange an industry, and what impact does this have on the firms I care about?<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  11. 11. Copyright © 2011, Ólafur Andri Ragnarsson<br />Nordic Marketing Conference of Lottery Companies, Mývatn, September 1995<br />
  12. 12. Sustaining Innovations<br />Gradual Improvements<br />Foster improved product performance<br />Each year new and improved products are offered<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  13. 13. Market Leading Companies<br /> Have a high probability of beating entrant attackers when the contest is about sustaining innovations<br />Incremental or radical improvements to already existing products <br />Airplanes that fly further, computers that process faster, and televisions with clearer images<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  14. 14. Copyright © 2011, Ólafur Andri Ragnarsson<br />Red Ocean Industry<br />Bloody Competition<br />Well know industry boundaries<br />Rules are established, sustained Innovation<br />Commodites<br />Disruption<br />Blue Ocean<br />Value Innovation<br />Align innovation with utility, price, and cost position<br />NewTechnology, new markets<br />
  15. 15. Disruptive Technolgoy <br /> The product performance is good enough to fulfill a unfilled need in the market<br /> Current products can’t compete<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  16. 16. The Disruptive Innovation Theory<br />Existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  17. 17. The Disruptive Innovation Theory<br /> New organization can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  18. 18. The Disruptive Innovation Theory<br />Low-end<br /> Can occur when existing products and services are “too good” and hence overpriced relative to the value existing customer can use – Value Innovation<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  19. 19. The Disruptive Innovation Theory<br />New-market<br /> Occur when characteristics of existing products limit the number of potential consumers or force consumption to take place in inconvenient, centralized settings<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  20. 20. The Disruptive Innovation Theory<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: Christensen et. al. Seeing what’s next<br />
  21. 21. The Innovators Dilemma<br /> Firms that succeed in one generation of innovation almost inevitable become hamstrung by their own success and thus doomed to lose outin the next wave of innovation<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  22. 22. Disruption and Innovation<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Force Majeure <br />Legal/Regulatory <br />Political <br />Disruptive changes in<br />Business Environment<br />Opportunity/Pitfall to<br />Make/Lose Money<br />Financial <br />Competitor Strategy <br />Technology<br />Popular opinion or fashion <br />Source: Yang, Harvard<br />
  23. 23. The Innovators Dilemma<br /> Traditional Concept of Good Management<br />Focus on your best customers<br />Focus on your highest margin products<br />Cannibalism is bad<br /> Possible consequences<br />Leads successful companies to ignore disruptive innovation threats with deadly consequences<br /> The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: Yang, Harvard<br />
  24. 24. The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“We listen to our best customers”<br />
  25. 25. The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“Our customer is asking for the new product, but we don’t have it and its to late the enter the market”<br />
  26. 26. The Innovation Trap<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />“Our customer are starting to ask for our new product.”<br />
  27. 27. Copyright © 2011, Ólafur Andri Ragnarsson<br />It is very difficultfor incumbent companies to disrupt themselves, so usually others will do it<br />
  28. 28. Copyright © 2011, Ólafur Andri Ragnarsson<br />Only ONEestablished firm managed the transition from one generation to the next<br />Image Source Page: http://www.teach-ict.com/wp/archives/264<br />
  29. 29. Copyright © 2011, Ólafur Andri Ragnarsson<br />Why did they fail?<br />
  30. 30. Copyright © 2011, Ólafur Andri Ragnarsson<br />They listened to their customers<br />
  31. 31. The RPV Theory<br />Resources, Processes and Values Theory<br />Resources (what a firm has), processes (how a firm does it´s work), and values (what a firm wants to do) collectively defines an organization’s strengths as well as weaknesses and blind spots<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  32. 32. The RPV Theory<br />Resources, Processes and Values Theory<br /> Organizations successfully tackle opportunities when they have the resources to succeed, when their processes facilitate what needs to get done, and when their values allow them to give adequate priority to that particular opportunity in face of all other demands that compete for the company’s resources<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Source: (Christensen, 2000)<br />
  33. 33. The RPV Theory<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />Possible consequences<br />Source: Christensen et. al. Seeing what’s next<br />
  34. 34. Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union Telegraph Business<br />
  35. 35. The telephone was a new-market disruptive innovation<br />Western Union’s resources, processes, and values meant that what ultimately became the right course appeared to be unattractive at the outset<br />Western Union saw entrants improving. However, investment in the core business kept trumping investment in the new business<br />By the time the right course was clear, it was too late <br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  36. 36. Copyright © 2011, Ólafur Andri Ragnarsson<br />Western Union was in the telegraph business, not the communication business<br />
  37. 37. Example disruption waiting to happen<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  38. 38. Copyright © 2011, Ólafur Andri Ragnarsson<br /> Book Publishers<br />Flickr Image by wallyg<br />
  39. 39. Copyright © 2011, Ólafur Andri Ragnarsson<br />WhenDisruptive TechnologiesCross the Chasm<br />
  40. 40. Copyright © 2011, Ólafur Andri Ragnarsson<br />“’This time it’s different’ are the four most expensive words in the investing language ”<br />- Sir John Templeton<br />Photo by flickr.com/photos/r4n/<br />
  41. 41. The Hype Cycle<br /> A graphic representation of the maturity, adoption and business application of specific technologies<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  42. 42. Copyright © 2011, Ólafur Andri Ragnarsson<br />NASDAQ<br />January 2000<br />The Internet Bubble<br />
  43. 43. Copyright © 2011, Ólafur Andri Ragnarsson<br />
  44. 44. Copyright © 2011, Ólafur Andri Ragnarsson<br />
  45. 45. The Railway Bubble<br />Railway Stock in Britain<br />The value of railway stock grew 4 fold from 1826 to 1846<br />Many companies, heavy overinvestment<br />The Bubble burst 1846<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />
  46. 46. Summary<br />The Innovators Dilemma<br />The Innovators Trap<br />The Disruptive Innovation Theory<br />Resources, Processes and Values Theory<br />Copyright © 2011, Ólafur Andri Ragnarsson<br />

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