Interesting Perspectives on Disruptive Technologies
by
Ronald
on Fri 06 Aug 2004 03:05 AM EDT
Earlier today, I was scrolling through some blogs that I typically read to find out some more info on Longhorn, the much anticipated next-gen Microsoft OS. I discovered Robert Scoble's blog (Scobleizer: Microsoft Geek Blogger) and found an entry related to disruptive technologies and a simple, yet insightful definition:
A technology that no one in business wants but that goes on to be a trillion-dollar industry.
Scoble goes on to mention Steve Wozniak and how he got turned down by HP and Atari after giving demos on his home made Apple computer. There is another example that comes to my mind: Ken Olson. The ex-CEO of DEC (Digital Equipment Corp.) once said: "There is no reason anyone would want a computer in their home...". And we all know what eventually happened to DEC. The business world is probably full of similar examples, and in certain cases some venture capital firms will attest to that, for it is not an easy task to seek out the perfect "disruptive technology" to invest in.
But the Scobleizer blog entry makes reference to two outlooks on what "disruptive technology" actually is supposed to mean. The first one is a PC Magazine article by John Dvorak. Dvorak, an accomplished and veteran writer, took issue with Harvard Business School Professor Clayton Christensen. In the article, Dvorak is critical of Christensen's definition of "disruptive technoogy", which is based on the latter's book, The Innovator's Dilemma. The term was actually coined by Christensen and it is used to describe "a new, lower performance, but less expensive product...". According to his concept, "the disruptive technology starts by gaining a foothold in the low-end (and less demanding part) of the market, successively moving up-market through performance improvements, and finally displacing the incumbent's product."
Dvorak questions whether this definition is always applicable to the examples used by the professor. For instance, does the personal computer represent a less expensive and inferior mainframe or minicomputer? Or does it represent instead an innovative and much improved version of a calculator or slide rule? The article does point out an interesting alternative way of looking at disruption, namely, a formulation made by James Burke (of the famous PBS TV series Connections):
When there is true disruption, it comes from inventions, regulatory and social change, complementary technologies, coincidence, and demand.
The second view on the subject came from an entry in Alex Barnett's blog. Alex initially defines all the concepts (including the distinction between disruptive and sustaining technologies) and then highlights another viewpoint from the Nanotechnology Now website. According to that source, a disruptive technology is defined as "...any new technology that is significantly cheaper than current, and/or is much higher performing, and/or has greater functionality, and/or is more convenient to use...". Barnett's view is that the emphasis should be on higher instead of lower performance (the tradeoff of the second being a cheaper pricepoint).
He further claims that Christensen's definition in a ComputerWorld article is a bit too limiting: "simple, convenient-to-use innovations that initially are used by only unsophisticated customers at the low end of markets." According to that view, technologies such as WWW, RSS, Blogging, Wikis, Broadband, Nanotech, WLAN, P2P and VoIP would not be considered to be disruptive. But Alex does provide another link to an interesting alternative viewpoint on the subject: an entry in Paul Wormeli's blog:
“Disruptive technologies...cover those technologies that bring change. In most instances, what makes a technology disruptive is that it brings radical change by introducing a new way of doing things generally at a much lower cost than before, and when the technologies go mainstream, the way we do business changes.”
So what's my own take on all these various viewpoints?
- first and foremost, what's important here is not the semantics and details of Professor Christensen's layman's terms definition of what a "disruptive technology" is. He coined the term and is one of the best authorities on the subject (and most sought after speakers at VC or high-tech firm events). Christensen's term has certainly been widely used and the words do convey a change in the modus operandi of a particular industry.
- over time, the definition changed from its original viewpoint to be more widely encompassing and signal a new, more efficient way of achieving a goal.
- the discussion of whether the new disruptive method represents an improvement over the old method or is simply a new giant leap forward in terms of innovation can be extended ad infinitum and it is a "frame of reference" issue.
- but what's important is to think strategically on how to position the new method. To use the DEC example above, positioning the PC as a cheap minicomputer might not have resonated well with enterprises back in the late 1970's. But applying that pitch to the home user would yield a much more different result (i.e, saying that the PC can deliver the computing power of a pretty decent minicomputer to a person's home for a fraction of the price, or alternatively, that the PC is a major leap forward in terms of innovation vis-à-vis the calculator).
In a later article, I will revisit this topic as it applies to VoIP in the enterprise, namely to IP PBXs.
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Microsoft (Nasdaq:MSFT) has already successfully introduced the new version of MSN Mobile in South Korea. MSN Mobile has been available in that country since early 2003, via a relationship with Korea Telecom Freetel, geared towards offering "always-on" IM service for 3G CDMA phones. Other variants, such as one in Hong Kong with T-Net have also been deployed in the Asia/Pacific region. The GUI (Graphical User Interface) has the same look-and-feel of the MSN PC applications. The Verizon account represents the first major wireless operator win in North America (for the full suit of MSN Mobile services, including IM).