Business PME is a gate of free information bound for the companies in the United States of America. This website offers thousands of contents as well as a companies directory.
The group’s other BtoB websites
-- Professional Networking
Wenesday March 17th 2010
Searcharticles Search
companies
- Strategy
- Marketing
- Advertising
- Trade
- Human Ress.
- Law & Rights
- Economics
- Finance
- Production
- Technologies
Disruptive technology | ||
A disruptive technology or disruptive innovation is a technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market. Disruptive innovations can be broadly classified into lower-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at mainstream customers who were ignored by established companies.
Sometimes, a disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill (as more expensive, lower capacity but smaller-sized hard disks did for newly developed notebook computers in the 1980s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has begun to replace film photography).
By contrast, "sustaining technology or innovation" improves product performance of established products. Sustaining technologies are often incremental however they can also be radical or discontinuous. The theoryThe term disruptive technology was coined by Clayton M. Christensen and described in his 1997 book The Innovator's Dilemma. In his sequel, The Innovator's Solution, Christensen replaced the term with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is strategy that creates the disruptive impact. The theoryChristensen distinguishes between "low-end disruption" which targets customers who do not need the full performance valued by customers at the high end of the market and "new-market disruption" which targets customers who could previously not be served profitably by the incumbent.
"Low-end disruption" occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market. In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate.
The incumbent will not do much to retain its share in not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.
"New market disruption" occurs when a product that is inferior by most measures of performance fits a new or emerging market segment. The Linux operating system (OS) when introduced was inferior in performance to other server operating systems like Unix and Windows NT. But the Linux OS distributed through Red Hat is supposed to be inexpensive compared to other server operating systems. After years of improvements in this easily available operating system, the functionality has improved so much that it threatens to displace all the other leading server operating systems. Not all disruptive technologies are of lower performance. There are several examples where the disruptive technology outperforms the existing technology but is not adopted by existing majors in the market. This situation occurs in industries with a high investment into the older technology. To move to the new technology, an existing player not only must invest in it but also must replace (and perhaps dispose of at high cost) the older infrastructure. It may simply be the most cost effective for the existing player to "milk" the current investment during its decline - mostly by insufficient maintenance and lack of progressive improvement to maintain the long term utility of the existing facilities. A new player is not faced with such a balancing act. Some examples of high-performance disruption* The rise of containerization and the success of the Port of Oakland, California, while the
* VoIP phone technology is a disruptive innovation. The quality of voice that is available over this phone system is at least as good as that has been offered by traditional players. Copyright 2008 - France BtoB from Wikipédia
|
• Disruptive technology
• Certification and Auditing • Innovation management and funnel • Kenneth C. Griffin • American system of manufacturing • Industry • Active vibration control | |
