Disruptive technologies

What they are and why they are able to revolutionize the market

The definition of disruptive technologies In 1997 Clayton M. Christensen, a professor of Business Administration at the Harvard Business School, published a research focused on the evolution of the disk and computer memories market, now re-published by Franco Angeli [The innovator’s dilemma, How new technologies can take out large companies from the market]. In his study, Christensen described what disruptive technologies were and what their power was in the market, using an image that is still very fitting today: the professor imagined that the market was like a stately building where in the upper floors reflected on how to improve life for those who had the good fortune to live there, among parties, banquets and high-sounding and solemn programs, while in the kitchens and in the basement of the palace mysterious craftsmeninvented small and poor things to make life less difficult for those who had the misfortune of living on the lower floors. But after a short time, it was just the things that came from the lower floors that crumbled the advantages of the upper floors, changing society and transforming the old castle into apartment complexbuilt around a shopping centre. Christensen concluded by saying that we could be happy if we lived in those apartments or regret if we lived in the upper quarters of the castle, but the point remained that we had to take note of what had fatally happened. Big companies become such because they develop dominant technologies, but disruptive technologies are always lurking. Take the case of IBM: while the company dominated the mainframe market, in the cellars and research laboratories were developing those innovations that would lead to the personal computer and then the laptop. If for mainframes that occupied a whole room it was not important to have large and heavy hard drives, for a laptop it was essential to have a small and light hard disk. In other words, it was beginning to develop a different market that, from there to a few years, would transform all the hard disk technology. Technological innovation can therefore improve the existing one by leaving things as they are, or it can transform the situation to such an extent that the previous technology becomes obsolete. This is the case of disruptive technology. Why do the leaders in established technologies miss out disruptive technologies? The dynamic is rather recurring. The successful company that holds the dominance of a well-established technology continues to invest in that technology, neglecting other market sectors that it considers marginal and unprofitable. But what is not very interesting for a large company can be very interesting for a medium or small size startup, which can be satisfied with smaller margins and turnovers and is therefore much more inclined to invest in small and different market niches. And it is precisely to satisfy the different needs of these niches that different solutions are created that sometimes expand without affecting the market of established products, while at other times they revolutionise the entire market, orienting it towards sectors that until now have been excluded, as it was for the whole personal computer industry and the mobile computing. So the dilemma of the innovator is: do I improve the existing one so as not to take risks soon, or do I venture into new market niches? Should I stay in the business as usual comfort zone or should I try to predict what may happen in peripheral and marginal markets? This is the graphical representation of the Christensen model. The blue line represents the improvement over time of technology that supports an established product or system, to meet the increasing and profitable needs of high-end customers, represented by the nuanced blue line. The red line represents a new product or a new technology that goes without the knowledge of the big players in the market, meets the needs of low-end customers neglected by big producers (the red shaded line), and develops to meet the needs of the blue customers. Then it becomes disruptive and destroys the supremacy or even the technology that until then had dominated. Let’s finish with a little exercise: look around and take note of everythingthat has been disruptive and had replaced or transformed some things (where are the typewriters?), Or simply improving (what are bicycles like nowadays?).Let’s try to push ourselves forward with the imagination and think about what could change in the coming months or years (will there still be satellite navigation, or will it be just an app for the smartphone?). Well, in the last case we would be well on our way to inventing a disruptive technology that could turn an apartment complex into a flying house. Umberto Santucci

written by: Umberto Santucci , 19 December 2017

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