Have you ever wondered why few well established companies like Nokia, Kodak and other have failed to sustain in market in spite of having a well defined marketing strategy, technological upper hand and a well established reputation. Its not that they missed out something while figuring out their business plan or they missed a key input from the survey they do; it was actually inevitable. The answer to this unforeseen threat heading their way was given by Mr Clayton M Christensen from Harvard Business school in the year 1990. He termed it as "Disruptive Technological change" in one of his book "The Innovator's Dilemma". This book consists of his study of many multinational companies downfall; like IBM, Sears, Digital Equipment Corporation and many more. For example IBM, during its time was a leader in the market of mainframe computing, but some how missed the opportunity to understand the need to enter the minicomputer market, hence loosing a big chunk of global market.
What is a Disruptive Technology?
As he mentions in his book, there are mainly two types of innovations; sustaining innovation and disruptive/radical innovation. The technology that enters the market with medium scope; i.e. meeting the needs of average range customers and gives a medium level margin initially, is worked upon and made more advanced with time, is called as sustaining innovation.A disruptive technology is introduced in the market with very few features in it, manufactured cheap and gives a low performance; mainly targeting low end customers, who don't need many features and are happy with the minimal performance of it.
The above graph shows the entry of disruptive technology in the low level market and with due course of time, developments are made in it technologically making it in demand in the upper most level market.
How does it affect the Companies in competition?
Initially, the companies's R&D comes with some out of the box idea/ technology/product plan, then the sales department asks their most closely related customer of the need of this product to them with the intention to see the future scope of the product. The customer due to some reason; either financial constraint or lack of foresight says NO. Hence the company decides to cancel this project.
Meanwhile, some one comes up with a very low standard product, consisting of very less features and at a very low cost manufactured parts. With continuous advancement, they finally end up with a product that mostly every one has and is at a low cost. And at this time, the customer asks what the hell they were doing till now and the company is in no shape to come up with something that can help them to sustain this phase.
No comments:
Post a Comment