DISRUPTIVE TECHNOLOGIES

GROUP 6

¢ One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change.

¢ Technolological companies invest aggressively in the technologies necessary to retain their current customers but then fail to make certain other technological investments that customers of the future will demand. They stay close to their customers. Staying close to customers reaps competitive advantage. But when comes to Next Big thing, the best customers may be giving worst advice.

THE DILEMMA

KEY DEFINITIONS

¢ Performance trajectory – The rate at which the performance of a product has improved, and is expected to improve, over time.

¢ Sustaining technologies – Tend to maintain a rate of improvement; that is, they give customers something more or better in the attributes they already value.

¢ Disruptive technologies – Introduce a very different package of attributes from the one mainstream customers historically value, and they often perform worse in one or two areas, that are particularly important to those customers.

SO WHAT IS DISRUPTIVE TECHNOLOGY ?

¢ Any new technology that is –

�  Significantly cheaper than current and/or �  Is much higher performance and/or �  Has greater functionality and/or �  Convenient to use

MANAGING DISRUPTIVE TECHNOLOGY

¢ Determine whether technology is disruptive or sustaining.

¢ Define the strategic significance of the disruptive technology.

¢ Locate the initial market of disruptive technology.

¢ House the disruptive technology in an independent entity.

SKUNK-WORK APPROACH

¢ Place responsibility for building a disruptive technology business in an independent organization.

¢ Creating a separate organization is necessary only when the disruptive technology has a lower profit margin than the mainstream business and must serve the unique needs of a new set of customers.

THANK YOU !