Wednesday, 30 December 2015

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‘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
On 12/30/2015

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