Disruptive Technologies: How They Are Created?
New technologies arise all the time, but only every so often does a disruptive technology appear that can turn an industry on its head and cause established players to lose market share. Disruptive technologies are typically created by small companies that have the agility to explore new ideas. Disruptive technologies have been around for many years and will continue to be part of our lives.
The term “disruptive technology” was coined by Clayton Christensen, who wrote an excellent book on the subject in 1995 called “The Innovator’s Dilemma.” In it, he described three ways new technologies are introduced into the marketplace:
1) A disruptive technology is created by a small company that wants to compete against large incumbents by offering something new. The product may not be as good as what already exists, but it is good enough for certain customers. This is known as “disruption from below.”
2) An incumbent creates a disruptive technology and uses it against its own customers, which is called “disruption from within.”
3) A disruptive technology is invented independently and then sold to an incumbent that figures out how to use it against its own customers. This is called “disruption from outside.”
Disruptive technologies are a major source of competitive advantage and economic growth. However, only a small number of companies are actually able to successfully ride the wave of change. This blog is about how to create disruptive technologies.
The aim is to provide entrepreneurs, researchers and managers with practical knowledge about technologies that disrupt the market. I will cover topics such as:
What are the key factors for creating a disruptive technology?
What are the most common mistakes made by entrepreneurs in developing disruptive technologies?
How to identify important technological trends early on?
How to build an organization that is capable of creating a disruptive technology?
I will develop these topics using case studies from different industries such as information technology, consumer electronics or medical devices.
In the book, “The Innovator’s Dilemma” (1997), Clayton M. Christensen discusses disruptive technologies and how they are created. He defines a disruptive technology as “a process, product or service that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.”
In a previous article, we discussed the characteristics of disruptive innovations, including the fact that they tend to be cheaper and simpler than the incumbent technologies. Today we will discuss how disruptive technologies are created.
How Are Disruptive Technologies Created?
Disruptive technologies are typically created by entrepreneurs who are inspired by an emerging trend in the marketplace or technology. They identify a business opportunity and develop a solution that addresses it. How do they do it? Here is one example:
An entrepreneur is frustrated by his current payroll company that charges him high fees and has poor customer service. Therefore, he begins searching for options that offer similar services but at lower costs with better customer service. He finds no options so he creates his own company to address this pain point in the marketplace; this is how Paychex was formed.
Once he develops his product, he needs to find customers who
In late 2002, the Harvard Business School published a paper on disruptive innovation. At the time, it was one of the most influential papers ever published by the school. In late 2003, we published our study on disruptive innovation, which took a different approach to Clayton Christensen’s work on disruption.
In short, it focused on the lifecycle of new technology and how it is adopted by larger companies as they expand their operations.
What we found was that disruptive technologies (also known as disruptive innovations) are not only created from scratch, but are also created through competition between large companies and smaller ones.
How to create a disruptive technology? If you are not a genius like Steve Jobs or Bill Gates, how could you predict which technology will be the next big thing, and how could you start a company to pursue it?
There is a simple, elegant and powerful framework developed by Clayton Christensen (Harvard Business School Professor) that seems to explain why and how new technologies emerge. The framework is called the “Innovator’s Dilemma”. It is based on the premise that existing companies always improve their products based on what their customers want.
If your business sells expensive product with high-quality, then your customers will demand higher-quality and better performance every year. And if you don’t give it to them, someone else will. You have no choice but to continually release new versions of your product with better performance and higher quality. Your product gets more sophisticated over time.
This strategy works well when the market is evolving gradually. However, if an entirely new technology emerges that makes your product obsolete overnight, then your business is toast!
The list of the disruptive technologies impacting the global economy is nearly endless, but it’s interesting to see how many of them fit the definition.
Three characteristics define a disruptive technology: it has to be lower cost, more accessible, and more convenient than existing solutions. And in today’s world, we can see many technologies that satisfy these criteria. Whether it’s online shopping, online banking or mobile payments, they all provide customers with a simpler and cheaper experience.
However, this trend goes beyond simple products. In fact, many industries are going through a period of disruption right now. Take education, for example: while educational institutions have been around for hundreds of years in their current form, they might not survive in the future. Technological advancements are making the knowledge they provide increasingly available online—and often for free.
The world is changing dramatically. We are experiencing an age of discovery, invention and innovation that is moving at an unprecedented pace. As a result of this, the way we live and work is constantly changing. The world has become more connected than ever before, creating new opportunities for people to interact and share information and knowledge on a global scale.
The rapid development of technology has changed the relationship between individuals, organizations and society in general. It has also changed our economy by making the world smaller and flatter than it was before.