‘Disruptive technologies’ is what everyone is talking about. Every
start-up is labeled as a potential disrupter. Taxi aggregators like Uber, guest
room aggregators like AirBnb, Apple and now car pooling – you think of
something new, it is labeled disruptive. What, indeed, is disruption? Is it
only some fancy technology which disrupts an existing or thriving business? Or is
any new idea that disrupts the
prevalent thinking? In 1829 the Governor of New York, Martin Van Buren was
concerned that the railways would disrupt the existing system of
transportation. “The canal system of this country is being threatened by the
spread of a new form of transportation known as ‘railroads,” he complained to
the President of the United States.
Clay Christensen, the management
guru who coined the phrase ‘disruptive technology’ meant that disruption
happens by big changes. It is not polishing existing products to make it sell
better or some marketing thrust or improvisation. So, what is disruptive
technology? A new product always threatens an existing product, particularly
one which dominates the market. Any new technology is a challenge to a
prevalent technology. From that sense any change that takes place in the
product or technology may disrupt. Even a new marketing idea may threaten an
existing product or service or business. These are not disruptive in the sense
that they change some fundamental ideas on which a business, technology,
product or service is based. If by disruptive technology we mean something very
important and fundamental, it is a technology which changes the very idea on
which current business, technology or practice is based. The premise on which a
business or its technology is based is rendered redundant by the disruption. It
is not refining a product with a few more applications or reconfiguration of
technologies to get better results. Such tinkering are modifications or
improvements, not disruptive in this sense. Disruptive technology affects the way
a particular business is organized, the way the customers or users of the
technology perceive it, and the entire supply-chain gets transformed
fundamentally.
Today every business and every
product is threatened by disruption. The disrupting idea may not have targeted
any particular business, organization or product while evolving itself as a
killer idea. Many times a new idea pops up as an improvement of an existing
idea. Soon, it evolves into a path-braking idea, making an existing powerful
idea obsolete. That is how a disruptive technology becomes a threat to existing
business, product or service.
Disruption will involve a social
cost and a social benefit. The cost arises from the fact that an existing
technology may become obsolete too soon, rendering all the investment made on
that redundant. At the end, it is society that bears the cost by way of
abandoned manufacturing unit, immediate unemployment etc. On the other hand the
disruptive technology obviously provides better ways of doing more useful
things. This eventually saves cost to the consumers, and society benefits. It
is, indeed, difficult to figure out the net effect in the near future. In the
long term every innovation benefits society. But at organizational levels the
perspective is different. A disruptive technology is a threat to any
organization. Worse still is the fact that disruption is an undercover
operation. The one who ushers a new technology neither knows clearly that the
new technology will be a disrupter, nor which existing technology it would disrupt.
Similarly, an organization is caught unawares when a disruptive technology
becomes a threat to itself. By the time the threat becomes clear, the
technology takes firm roots and none of the tinkering of existing technology
can prevent the onslaught by the disruptive technology.
What should an organization do to
protect itself from disruption? It is obvious that fighting disruption is a
no-win game. Disrupting the disrupters will involve a huge organizational and
social cost. The best thing organizations
can do to prevent disruption is to disrupt themselves. That is to say,
organizations should invest in innovations which will be “self-disruptive”. If
an organization continuously innovates and invents path-braking new
technologies, it disrupts its own current business and takes its business not
only to a higher level but also into different directions. Thus, when the
threat of disruption appears on the horizon the organization is already
disrupting itself; and this disruption is stimulated from inside, and happens
in a non-threatening manner..
But, how can organizations do
this? They need to stay ahead of the disrupters. Here are five rules to stay
ahead of disrupters:
1. 1. Do
not waste resources trying to scan and find disruptive technologies which may
threaten your organization. Instead continuously innovate to find technologies
that can disrupt your business; not technologies that will merely change your
business.
2. 2. Never
feel comfortable with your technology or business. Always worry about
disrupting your technology. Remember disruption is not small changes,
disruption is innovating which will change the very idea on which your business
is based and the way your business is organized.
3. 3. Always
keep in mind that if others can disrupt your organization, you can do it much
better and to your advantage.
4. 4. Make
your organization a great learner.
5. 5. Remember
there is no core competence better than the competence to innovate technologies
to disrupt your business to your advantage.
Take a look at
some of the organizations who were leaders in their business; but new technologies
swept them away. NOKIA is an example. If NOKIA disrupted its own technology by
its own version of smart phones, would it still be a leader today? Will today’s
healthcare business model be swept away by healthcare, particularly diagnosis
and treatment supported by technology? If a device around one’s wrist reads all
the parameters of one’s health, and a health monitoring software suggests
treatment, how long it will take for today’s hospitals to face NOKIA’s destiny?
Cannot hospitals work on these self-disruptive technologies Yes they can, and
that is the only way they may survive in the long term. The mantra of the five rules of self
disruption is the key to survival in age of disruption.
By V.K.Talithaya
Managementmasala Contributor
vktalithaya@managementmasala.com
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