Sustaining innovation improves existing products or services, while disruptive innovation introduces simpler, more affordable options that eventually displace existing products and transform or destroy existing markets. The document discusses examples of disruptive innovations like VoIP phones, mobile computing devices, and streaming music services that have disrupted industries like telecommunications, computers, and music. While disruptive innovation poses risks for incumbent companies, it also creates new opportunities for growth if companies adapt to the changes.

1. What is the Difference Between…
Sustaining Innovation
and
Disruptive Innovation

2. Sustaining Innovation
• “Doing it Better”
• Way For Products to Change
• Does Not Create New Growth

3. Disruptive Innovation
PS3 vs. Wii• “Playing the Game
Differently”
• Creates a New Market
• Transforms or
Destroys Current
Market
• Products Become
▫ Simpler
▫ More Affordable
▫ More Accessible
▫ Customizable
• Drives Growth

4. Technology is Going to Advance and
There is No Stopping it, Even if it
Ruins an Industry…

5. …The Good News is That it Often
Creates a New Industry

6. Companies Either Get on Board…

7. …Or Get Left Behind

8. The Technology Industry

9. VOIP
• 35% of Businesses Use VoIP
• Allows For One Phone Line
• Avoids Long Distance Charges

10. Communication
• Post Office to Today
• Communication Forms are
Merging
• Mobile Computing Could Replace
Desktops and Notebooks

11. Music Industry’s Current State
• Lower Profit Margins
• Whatever song you want, whenever you want

12. New Music Industry Business Models
• Subscription Services
▫ Pandora, Spotify, Grooveshark
• Digital Download Services
▫ Apple iTunes, Amazon MP3
• Partnering With Tech Companies
▫ EMI and Warner
• Online Album Promotions
▫ The Killers

13. Ethical Questions
• Difference Between Downloading Free Music
Versus Listening to Music for Free Over the
Radio or Internet?
• Is Downloading Free Music Unethical?

14. Name That
Disruptive
Technology!

16. Disruptive Innovation
• Helps Create New Markets
• Disrupts an Existing Market and Value Network
▫ Can Take a Few Years or Even Decades
• Displaces an Earlier Technology
• Unpredictable
• Designed for a Different Set of Consumers in a
New Market
• Lowers Prices in Existing Market

17. AKA Creative Destruction
• Leads to Paradigm Shifts
▫ A Change in the Basic Assumptions or System
Conditions
▫ Permanently Disrupting the Framework
• The Idea of Punctuated Equilibrium With the
Emergence of New Eras

18. Where There is Risk, There is Reward

19. The S-Curve

20. The Future of Hollywood
• Digital Content
• Netflix and Hulu Plus are
Looking at Original Content
• Consumers are Willing to Pay
for Access to Content
• Ticket Sales have fallen 200
million since 2002

21. Early Adoption Risks
• Picking the Wrong Technology
▫ HD-DVD vs. Blu-ray
• Not Following Real Consumer Trends
▫ GM’s Hummer
• Further Technological Innovation

22. Late Adopters
Kodak Hasbro

23. Major Success Stories
Google Apple
• Apps
• beta releases
• Adwords
• Reinvention
• iPod
• iPhone
• iPad

24. “You don’t know when the transition
period will start. The idea is to
understand that it will…
and become prepared for it.”
-Dr. Timothy Bishop
Future Studies, University of Houston

25. Sources
• http://clients.ibisworld.com/industryus/Majorcompanie
s.aspx?indid=894
• http://www.ksla.com/Global/story.asp?S=12533107
• http://nymag.com/nymetro/news/media/columns/med
ialife/6099/
• http://www.theregister.co.uk/2010/03/08/npd_home_
streaming/
• http://www.fool.com/investing/general/2012/06/18/str
eaming-music-will-make-your-ears-and-pockets-r.aspx
• http://www.hollywoodreporter.com/news/music-film-
industries-average-lowest-
167422?utm_source=feedburner&utm_medium=feed&u
tm_campaign=Feed%3A+thr%2Fnews+%28The+Holly
wood+Reporter+-+Top+Stories%29
• http://articles.businessinsider.com/2011-02-
18/tech/30052663_1_riaa-music-industry-cd-era

26. Sources cont.
• http://www.zdnet.com/blog/storage/when-will-the-ipad-
replace-desktops/1631
• http://voipstrategy.com/University/VoIP_Benefits.aspx.html
• http://voipstrategy.com/University/VoIP_Benefits.aspx.html
• http://www.lightreading.com/document.asp?doc_id=190826
• http://www.macworld.com/article/1157817/tv_movie_future
.html
• http://www.washingtonpost.com/wp-
dyn/content/article/2005/11/11/AR2005111101644_2.html
• http://myventurepad.com/jeffweinberger/91147/apple%E2%
80%99s-plight-will-disruptive-innovation-make-it-winner
• http://www.the-numbers.com/market/