Monday, 16 November 2015

Disruptive technology: substance or slogan?

The terms "disruptive technology" and "disruptive innovation" are increasingly heard, read and hashtagged in the world of innovation, investment and analytics. They sound impressive and bestow an aura of superior knowledge on those who use them. What exactly do they mean, though? A selection of websites throws up, among others, the following:

Disruptive innovation, as by Clayton Christensen in 1995, is "a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors". 

WhatIs.com explains the concept in terms that exclude progression up the market: "a disruptive technology is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry".

* According to BusinessDictionary.com, "new ways of doing things that disrupt or overturn the traditional business methods and practices. For example, steam engine in the age of sail, and internet in the age of post office mail". Here the definition is kinder to the disrupted technology.  Sailing is still a hugely popular pastime and technology is being developed by Boeing for the commercial exploitation of windpower even in the era of supertankers, while post office mail delivery has refocused from domestic mail to servicing the ever-growing use of Amazon, eBay, Alibaba and other online shopping facilities.

Intelligent HQ offers "a new emerging technology that unexpectedly displaces an established one". 

So what does this mean to the analyst?  At its simplest, "disruptive technology" or "disruptive innovation" is not a predictor of the future but a descriptor of the past, a conclusion drawn from the fact that an innovative technology, having planted itself in one corner of the garden, has grown to the point that it has forced out all the other plants -- the eradication of competitors being the most complete form of disruption.

The notion that an emerging technology can unexpectedly displace an established one is troublesome,  This may have been possible in the nineteenth century and for most of the twentieth, but surely any emerging technology that takes the world by surprise must be a rare exception now, rather than the rule.  Information supplied by the patent system is so rich and textured that one scarcely needs to read between the lines in order to see which businesses are innovating, and in which fields. Supplement that information with further data concerning industrial investment, consumer spending, market size and the like, plus the self-reported activities of major and even minor players in the market, and the jigsaw puzzle -- if not actually complete -- leaves little to the imagination for anyone looking at the gaps.

This leads us to consider another question: what is the psychological force of the deployment of the words "disruptive technology"?  To the prospective investor, the prospect of funds being invested in such a technology must be attractive, carrying with it the inherent promise that the new technology will scoop the pool and grant mastery of an entire market or at least a major part of it.  To investors in an established technology, the term may convey a warning that it is now a time to sell up and move away, or it be an excuse: "sorry: your investment isn't delivering any more, but we've just been hit by a disruptive technology. What could we do? Who could have seen it coming?"

It is also worth considering how much disruption is caused by nothing more technological than a fresh approach to branding. (for example the face of High Streets the world over, and retail human behaviour, was greatly changed by the introduction of business format franchises) or advertising (promoting lifestyle aspirations rather than product quality). 

In short, both disruption and innovation are a permanent part of our commercial and industrial environment and we live constantly with their effects. And while technology is never stagnant, in an era of analytics and the massive availability of data to analyse, its applications and effects should never surprise us or take us unawares.  Most importantly, we should use the words "disruptive technology" and "disruptive innovation" neither as a promise nor as an excuse but with thought and caution, if they are to be words of substance and not mere slogans.

4 comments:

  1. There's a classic attack on Christensen's concept by John C. Dvorak at http://www.pcmag.com/article2/0,2817,1628049,00.asp - "The Myth of Disruptive Technology" - written in 2004.

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  2. This may be a bit harsh. Going back to the 1990s and before then, there was no convenient and general way of expressing the replacement of one technology by another. Other terms have had to be devised for phenomena that arrived late on the scene, such as "open source licensing", "open innovation", "crowdsourcing" and "long tail" (actually pre-WW2 but little in use till this century). Again, none is a precisely defined term of art, but does that really matter so long as we understand each other.

    The danger, as you rightly identify, is using the term "disruptive technology" (or any other term for that matter) as a rhetorical device for changing or influencing behaviour, rather than as an analytical tool in its own right.

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  3. An interesting discussion. Whilst investors often express an interest in disruptive technology/innovations, their investment portfolios often reveal a lower appetite for technical and commercial risk. I subscribe to the view that a true disruptive innovation affects the whole market and all players - at its most extreme by substitution. A new market entrant, who wins some, even a substantial slice of market share, is sustaining rather than disrupting that market even if it is irritating to the incumbents. They still have scope to win back market share through innovation.

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  4. Is it my imagination, or have references to disruptive technology diminished since you posted this piece? Or is it just that Christmas is approaching?

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