Disruptive technology is an innovation that significantly alters the way that consumers, industries, or businesses operate. A disruptive technology sweeps away the systems or habits it replaces because it has attributes that are recognizably superior.
Recent disruptive technology examples include e-commerce, online news sites, ride-sharing apps, and GPS systems.
In their own times, the automobile, electricity service, and television were disruptive technologies.
Clayton Christensen introduced the idea of disruptive technologies in a 1995 Harvard Business Review article. Christensen later expanded on the topic in The Innovator's Dilemma, published in 1997. It has since become a buzzword in startup businesses that seek to create a product with mass appeal.
Even a startup with limited resources can aim at technology disruption by inventing an entirely new way of getting something done. Established companies tend to focus on what they do best and pursue incremental improvements rather than revolutionary changes. They cater to their largest and most demanding customers.
Key Takeaways
A disruptive technology supersedes an older process, product, or habit.
It usually has superior attributes that are immediately obvious, at least to early adopters.
Upstarts rather than established companies are the usual source of disruptive technologies.
This provides an opening for disruptive businesses to target overlooked customer segments and gain an industry presence. Established companies often lack the flexibility to adapt quickly to new threats. That allows disruptors to move upstream over time and cannibalize more customersegments.
Disruptive technologies are difficult to prepare for because they can appear suddenly.
The Potential of Disruptive Technology
Risk-taking companies may recognize the potential of disruptive technology in their own operations and target new markets that can incorporate it into their business processes. These are the "innovators" of the technology adoption lifecycle. Other companies may take a more risk-averse position and adopt an innovation only after seeing how it performs for others.
Companies that fail to account for the effects of disruptive technology may find themselves losing market share to competitors that have discovered ways to integrate the technology.
Blockchain as an Example of Disruptive Technology
Blockchain, the technology behind Bitcoin, is a decentralized distributed ledger that records transactions between two parties. It moves transactions from a centralized server-based system to a transparent cryptographic network. The technology uses peer-to-peer consensus to record and verify transactions, removing the need for manual verification.
The automobile, electricity service, and television all were disruptive technologies in their own times.
Blockchain technology has enormous implications for financial institutions such as banks and stock brokerages. For example, a brokerage firm could execute peer-to-peer trade confirmations on the blockchain, removing the need forcustodiansandclearinghouses, which will reduce financial intermediary costs and dramatically expedite transaction times.
Investing in companies that create or adopt disruptive technologies carries significant risk. Many products considered disruptive take years to be adopted by consumers or businesses, or are not adopted at all. The Segway electric vehicle was once touted as a disruptive technology until it wasn't.
Investors can gain exposure to disruptive technology by investing in exchange-traded funds (ETFs) such as the ALPS Disruptive Technologies ETF (DTEC). This fund invests in a variety of innovative areas such as the internet of things, cloud computing, fintech, robotics, and artificial intelligence.
A disruptive technology sweeps away the systems or habits it replaces because it has attributes that are recognizably superior. Recent disruptive technology examples include e-commerce, online news sites, ride-sharing apps, and GPS systems.
Investing in disruptive technologies enables companies to innovate and gain a competitive edge in the market. Companies that embrace disruptive technologies can differentiate themselves from competitors, attract new customers, and capture market share.
Netflix's journey is the epitome of disruptive innovation. It began as a mail-in DVD service, appealing to a niche market ignored by then-giant Blockbuster. This segment included those indifferent to new releases, early DVD adopters, and online shoppers.
Spotify disrupted the music industry by fundamentally changing how people access and consume music. Streaming. Spotify eliminated the need for physical albums and downloads by offering instant streaming access to millions of songs and podcasts. Subscription-based.
The 12 disruptive technologies include: mobile Internet, automation of knowledge and work, Internet of things, cloud technology, advanced robotics, autonomous and near-autonomous vehicles, next-generation genomics, energy storage, 3D printing, advanced materials, advanced oil and gas exploration and recovery, renewable ...
Amazon, launched as an online bookstore in the mid-1990s, is an example of disruptive innovation. Disruptive innovation requires enabling technology, an innovative business model, and a coherent value network. Sustaining innovation is the process of innovating to improve products and services for existing customers.
As Bartman worked through the questions, it became clear that Tesla is not a disrupter. It's a classic “sustaining innovation”—a product that, according to Christensen's definition, offers incrementally better performance at a higher price.
If your innovation incrementally improves the existing product, then the innovation is sustainable. But if it completely changes the way the product has been used so far, or if it serves a completely different set of customers, then the innovation is disruptive.
Blockchain, cryptocurrency, artificial intelligence and other recent and evolving technologies are the next step in automation and efficiency, and therefore are disrupting business norms.
As Walmart uses technology to be a leader in retail disruption, Kumar pointed to several areas the company is exploring that it sees as the most disruptive technology in the coming years. Kumar said voice technology is a “very natural extension” of reducing customer friction.
Disruptive technology, often referred to as disruptive innovation, is when a new Business model attracts an underserviced market or revenue stream and grows until it supplants incumbent competitors. Technologies are not in themselves disruptive, but their application in a new business model can be.
Together with the Internet of Things (IoT), blockchain, and several others, AI is considered to be the most disruptive technology, and has impacted numerous sectors, such as healthcare (medicine), business, agriculture, education, and urban development.
Yes, "Uber" and "Netflix" can be considered disruptive innovations. According to Christensen et al. (2015), disruptive innovations are characterized by their ability to create new markets or significantly alter existing markets by introducing simpler, more convenient, and often more affordable alternatives.
It is considered disruptive because when it emerged, it was a new idea and not an improvement on an existing idea. Furthermore, it has given rise to other disruptive innovations, like cloud computing, e-commerce, and artificial intelligence. Smartphones are another example of disruptive innovation.
The key to disruptive innovation is the ability to break the existing operating model and create the right conditions for the emergence of a new one. Disruption is about doing things differently and making a deliberate choice to try to change the general notions in the industry.
Instead, Apple's first real example of disruptive innovation was the combination of the iPod and the simultaneous release of iTunes. iTunes is both a media library and music marketplace. It locked iPod users into purchasing music from the iTunes store. More importantly, it offered convenience and a lower price point.
One of the most notable examples of disruptive innovation is Apple's iPhone, which was introduced in 2007. The iPhone was initially met with scepticism, as it had fewer features than many other smartphones at the time and required a pricey data plan.
This efficient payment processing also introduces a new level of disruptive innovation in business. Popularity in real-time payments has boomed in recent years. The Clearing House reports that transactions on their real-time payments network accounted for $29 billion in Q2 of 2023, up from $18 billion in Q2 of 2022.
The use of algorithms, big data, blockchain, peer-to-peer lending and crowdsourcing, means that the role of the intermediary is changing: banks now face competition from other intermediaries in their core business.
Interruptions such as frequent use of the restroom, smoke breaks, etc. Poor personal hygiene that leads to a classroom disruption or lack of focus. Use of alcohol or other substances in class. Attending class while under the influence of alcohol or other drugs.
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