Disruptive TechnologiesTeam: Masters of Innovation

Team Members: Ruud Geven, Koen Lavrijssen, Jimmy de Jong, Adriaan Heijstek, Rahul Piplani

Contents● Paper ‘Disruptive Technologies’● Innovator● Innovation● Discussion

Research Background

• ‘One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change.’

• Christensen explaining the concept Clarendon Lecture

Disruptive Technologies- What are they?

Example: Computing Industry

• IBM, Mainframes -> DEC, Minicomputer -> Apple, Personal Computer -> Leaders in Portable computer market ? -> Samsung, Smartphone

• Prominent failure reason: Staying close to their customers. A paradox!

• Guideline : Managers must beware of ignoring new technologies that don’t initially meet the needs of their mainstream customers.

What helps us decide if technology is sustaining/disruptive ?

• Performance trajectory - The rate at which performance of a product has improved, and is expected to improve.

• Example: Copies per minute in a photocopier. Hard disk- storage for given size.

• Sustaining technology maintain the rate of improvement. Give the customer the same that they already have and value, but with better attributes.

• Example: Making better PCs, better Mainframes.

Disruptive Technology

• Offers very different set of attributes .

• But often worse in some aspect than current technology that customers value today.

• Consequence: Unwilling mainstream customers (at least initially) .

• Disk drive example (from past): 14 inch, 200 MB -> 8 inch, 20 MB …. -> 3.5 inch. Light weight, low power consumption but low capacity. 5.25 inch (Seagate for personal computer) to 3.5 inch (Conner peripherals in partnership with Compaq for portable computers).

Disruptive technology, a threat or an opportunity?● Established firm● On the one hand, unwilling mainstream market, thus need to go to emerging

markets (downmarket). Takes capital but profits are less & uncertain.● On the other hand, firm has large existing investment in sustaining

technology and thus prefers that for high profit margins (upmarket).

● New firm Finds easier to capture a new market, improve its product & then even

dethrone leading companies in mainstream market.

But can existing firms leverage disruptive technologies?1. Have systematic processes in place to identify and

track potentially disruptive technologies.

Above often indicates disruptive and need of intervention by top-level managers.

2. Next step is to ask the right people the right questions about the strategic importance of the disruptive technology.

3. Locate the initial market for the disruptive technology. Market research is seldom helpful as no market exists.

4. Separate mainstream and disruptive businesses in an independent organization.

5. Let that organization remain independent.

A strategic perspective on disruptive innovation

In the paper the authors state that:

“In order that it may live, a corporation must be willing to see business units die.”

Do you know of any company which makes use of this “philosophy”?

Vivendi:

Started as a water company in 1853, from 1980 onwards it extended its activities into waste management and energy.

However in 1983 it helped found Canal+ and later continued its expansion into the media sector by merging with Pathé.

In 2000 Vivendi cut off what once were its core business.

A strategic perspective on disruptive innovation

Innovator - Joseph WoodlandHistory

● Born in Atlantic City , New Jersey 6 September 1921, Jewish

● Studied mechanical engineering at Drexel University in Philadelphia

● WWII, army, atomic bomb● Bachelor in 1947● System for delivering music efficient● 1948 supermarket executive visit

with problem that needed solution● Bernard Silver and Joseph Woodland

start working on ideas to solve problem , fluorescent ink and ultraviolet light

● Woodland quits job and moves to parents house winter 1949

The solution Story at the beach

● Sitting in chair at the beach● 4 fingers in sand ● Morse code boys scouts ● Wide and narrow lines instead of

dots and dashes ● Woodland favored circular pattern ● 7 October 1952 U.S. patent● Method was unwieldy and too

expensive at that time● Sold patent for $15.000 to Radio

Corporation America (RCA)

The Universal Product Code (UPC)● 1969 patent expired ● Woodland at IBM ● Advances in technology ● Woodland re -started working on

his invention with IBM colleagues● Printed stripes read by a laser● George R Laurer worked on

encoding system (UPC)● Worldwide standard● June 1974 first product scanned

with new bar code

Awards ● Nation medal of Technology ,

George Bush sr. 1992● Inducted into National Inventors

Hall of Fame● Died on 9th Sept 2012 in

Edgewater, New Jersey

InnovationWhy?

● Bar codes revolutionized modern inventory and logistics.

● Widely adopted innovation● Used worldwide and all kind of

industries

Bar code

Strengths● Eliminates human error● More accuracy● More reliable● Faster● Affordable● Less waste● Better decision making

● Usually human interaction needed● No batch scanning● Not possible to scan in dark

environments● If a part of the bar code is missing,

all information is lost● Limitation of data that can be stored● Bar codes can easily be faked

Weaknesses

Bar code 2.0 - RFIDAdvantages over Bar Code:

● Tag not necessarily visible for RFID reader

● Batch scanning● Lots of information can be stored● Scan in dark environments● No human interaction needed

Disadvantages over Bar Code:● Too much data● Slightly more expensive● Security concerns

o Skimmingo Privacy

● Not globally standardized● Temperature sensitive

Barcoding: a disruptive technology?

- Did the technology present a different package of performance attributes which were, at least at the outset, not valued by existing customers?

- Did the performance attributes that existing customers do value improve at such a rapid rate that the new technology could later invade the established markets?

Barcoding: a disruptive technology?

Pro: Checkout speed turned out to be a performance attribute of the grocery shopping service which much people do value and this improved at a rapid rate. (But, do they value this directly or indirectly?)

Con: It doesn’t seem to provide a different package of performance attributes which are not yet valued by existing end-consumers.

Show of hands: pro vs con.

Barcoding: a disruptive technology?

Conclusion:

It depends on which perspective you take.

Basically comes down to semantics.

Reflections from other papers

Can you link your group paper to barcoding?

Reflections from other papers

A Dynamic Model of Process and Product InnovationUnit of analysis: product/process which is “in the process of being innovated”Three stages: uncoordinated, segmental and systemic

Organizational Innovation: Review, Critique and Suggested Research Directions

Three streams of innovation research:- Diffusion of innovation: diffusion and adoption of innovations- Organizational innovativeness: determinants of tendency to innovate- Process theory: the nature of the innovation process