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Disruptive technology

Disruptive technology is technology that can significantly improve a product or a service in a way that the market does not expect. Disruptive technology is radical breakthrough advances. Often times, disruptive technology brings to the market advanced products at a significantly low cost.

Disruptive technology can be roughly classified into two types: low-end disruptive technology and new-market disruptive technology.

  • The new-market disruptive technology focuses on meeting demand for a breakthrough product.
  • Low-end disruptive technology targets customers for whom cost is a primary concern.  

Examples of disruptive technology include:
  • mobile phone: people no longer need fixed-line operators; mobile phone industry took over the market
  • digital photography: there is no more need for film; Kodak had to adjust to survive this breakthrough
  • online retailers: you can shop in the convenience of your home, compare prices and products, and have your order delivered to you at a nominal charge

Some technological innovations have not been around for enough time to say whether they belong to disruptive innovations or not. The examples include ebooks vs paper books and VoIP vs mobile phone (wikipedia.org).

The term “disruptive technology” was first introduced by Clayton M. Christensen in 1995 in his article Disruptive Technologies: Catching the Wave in Harvard Business Review. In 1997, he published a book The Innovator’s Dilemma in which he explains his theory of disruptive technology in great detail. Later, Christensen replaced the term “disruptive technology” with the term “disruptive innovation”. The main reason for this substitution is that very few technologies can be disruptive in nature. What makes the impact of a technological breakthrough disruptive is the way the technology is applied in business and what capabilities it creates (wikipedia.org).

Disruptive technology vs Sustaining technology
Christensen contrasts disruptive technology and sustaining technology. While disruptive technology can produce an effect of a bomb (sudden, tremendous, and radical change), sustaining technology does not significantly affect the market. Sustaining technology can be subdivided into two categories:
  • Evolutionary sustaining technology: this is continuous development and improvement in technology as it is expected.     
  • Revolutionary sustaining technology: this is radical change, but in contrast to disruptive technology, it does not disrupt the market. For example, automobile was a revolutionary breakthrough, but its introduction did not disrupt the market because very few people could afford to buy an automobile. A disruptive innovation took place when Ford made automobiles affordable (wikipedia.org).

Features of disruptive technologies
The first feature of disruptive technologies is that often times they do not enter the market with great success. Actually, often times companies-innovators can see the performance of the company decline before reaping the fruits of the innovation.
Another problem with disruptive technologies is that they are rarely seen as worthwhile opportunities by big established companies. Big corporations are much more comfortable with sustaining technologies, keeping the share of the market and doing business as usual. That’s why it is small companies who usually come up with an innovation to disrupt the market (economist.com).

  Disruptive innovations of 2009

  T    The world is currently facing a serious economic crisis, but there is always place for innovation and technological advancement. According to the CEO of Forward Innovations, there are several major trends that will drive innovation in 2009.

  • Cloud computing – it is becoming an increasingly important part of a business. Companies who do not follow the trend are risking loosing market share and eventually going out of business.
  • Social Streams and Mashups – social networks are continuing to advance. Feeds like Twitter are slowly shifting to become a big source of breaking news. In fact, Iranian protesters are using Twitter to get the world informed (Twitter even postponed downtime for maintenance).
  • Mobile applications – iPhone is just a beginning of the big trend of combining web and phone applications. Mini-laptops also known as netbooks are becoming increasingly popular as well (hightechexec.newsvine.com).