We all know why companies with bad management fail. So why do leading companies who seem to do everything right also fall?
Clayton Christensen, a Harvard professor, put forward a theory about disruptive technology. He mentions that in every market, there is a trajectory of performance improvement that customers are able to make use of, but where this trajectory lies depends on the need of quality from the customers.
Some are satisfied with basic levels of performance while some prefer high quality.
So when a new technology enters the market, it provides few facilities that the old technology does not provide but, it will also have a few flaws. Thus it attracts only a small set of people who are content with the basic performance of the technology.
Large companies have used old technologies that led them to the pedestal of success they are at today. So when new technologies enter the market, these companies are hesitant to adopt them which usually leads to their downfall.
New companies or startups, on the other hand, are willing to experiment on these new disruptive technologies and slowly lead the competition in the market.
Examples of Disruption
Christensen frequently uses the advent of the word processor as an example. In the 90s, people were frustrated with the advent of the computer. Secretaries were horrified by this new technology. They complained that typing on the keyboard was much slower and difficult than typing on a typewriter. But, despite their speed, the benefits the processor provided were tremendous as compared to the typewriters. This eventually made processors more popular.
Another recent example is 3D Printing. As of now, 3D printing cannot be used for home-use products since it provides very low-quality artifacts. But the potential it holds is strong enough to disrupt the manufacturing sectors.
Is it just about technology?
Disruptive innovations tend to have nothing to do with how advanced the new technology is. Instead what makes it disruptive, is that it isn’t based on the same market methods and value networks that are available.
It is as much as a management phenomena as it is about technology.
They get a lot of coverage in the business press because of the big shifts in an industry it can deliver. It definitely leads to new opportunities for an entrepreneur’s success story.
This excerpt was taken from the YouTube video shown below: