When an existing technology reaches its limit of performance,
it is often the case that another technology emerges to provide a higher limit
for that performance parameter. This is called a technological
discontinuity and results in the new technology substituting the former.
For example, during the period of rapid growth, the x 486 PC processor performance
was increased from 33Mhz to 100Mhz, but it took the introduction of the Pentium
processor to push beyond the 100Mhz limit. Thus, when a technology reaches its natural limits,
it becomes a mature technology vulnerable to substitution or obsolescence.
You should be aware of potential technical substitutes and consider being prepared to invest rapidly in new technologies if they emerge as serious contenders.
Competence-destroying technological discontinuities are industry-wide phenomenon that [30]:
- are associated with a significant advance along a technological frontier
- occur fairly infrequently
- break the existing order and disrupt industry structure
- cause a shift in the skills and knowledge base or competencies required to operate the new technology - rendering existing competencies obsolete
- result in the demise of industry leading firms.
- are more likely to be initiated by new firms
- lead adopters/early movers enter previously impenetrable markets
A classic example is the shift from the thermionic valve to the monolithic transistor.
You should be tuned-in to any such major changes and realize that they afford a rare opportunity
for competitive advantage if you are willing to risk early adoption of the new technology.
Disruptive Technologies
This is the name given to new technologies in new markets that take over or displace the
established technology in established markets. It is a term coined by Professor Clayton Christensen in his book,
"The Innovator's Dilemma" [31].
These new technologies initially serve new (and sometimes niche) markets and initially have performances
which are below those of current sustaining technologies that serve established larger markets. Because the
needs of the new market are also evolving, the market is prepared to accept the performance of new
technologies that do not quite meet the market needs.
However, these technologies are rapidly improved to the point where their performance meets the
requirements of established larger markets. When this happens the new technology takes over or displaces the
established technology in the established markets. This disruptive technological innovation can result in the
demise of industry leading firms.
You should note that disruptive technologies:
- under-perform established products in mainstream markets
- result in worse product performance in the near term
- initially serve small markets remote from the mainstream
- bring to the market a very different value proposition
- have other features that a few fringe/new customers value
- typically result in products that are cheaper, simpler, smaller, and frequently more convenient to use
- precipitate the failure of leading firms.
Is your organization in potential danger of threats from disruptive technologies?
How will your respond to these threats?
Invest to protect. Use our expert assistance to analyze the potential disruptive threats to your organization.
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Learn about other important topics such as the Innovation Paths available to your organization.
