Disruption is the name of the game in technology

PDF Report

Rochelle Kopp

I recently read a fascinating article.  The author happened to buy a bunch of old newspaers, dating from 1991.  In them was an advertisement from Radio Shack, a leading American retailer of electronic gadgets.   Looking at the items in the ad, the author realized that nearly all of them had been rendered obsolete by the smartphone.  Answering machine? Replaced by the voicemail on the smartphone.  Cassette recorder?  Replaced by an app. Calculator?  Also replaced by an app.  CD player?  The smartphone is now home for all music.  Camcorder?  The smartphone makes videos.   All in all, one would have spent $3052.82 in 1991 (equivalent to about $5100 today) to buy all the stuff shown in that ad, that can now be done with one’s phone.  There were only two items in the ad that couldn’t be replaced by the phone: a radar detector, and a speaker.

That ad is a great example of how technological changes can disrupt industries.  For the companies that made the answering machines, calculators and recorders in the ad, the entire landscape of their industry changed overnight.  Surely, they aren’t able to sell nearly as many of their products as they did previously.

Another excellent example of the kind of disruption that today’s rapid technological changes are leading to is also related to the smartphone.  For many years, the stand-alone GPS was a very popular product in the United States, sold by specialist companies such as TomTom, Garvin, and Magellan.  However, with the advent of smartphones, that product category was almost instantly devastated.  Why buy a separate machine for $100 or more, when there is a free navigation app pre-loaded on your smartphone?

This GPS example is significant, because it illustrates how disruptive innovation today may not come from the same industry, and can appear out of nowhere to immediately wipe out mature products.  The result is that new markets can be created or destroyed  overnight.

For many years in Silicon Valley and other technological centers in the U.S., companies fretted over The Innovator’s Dilemma, the title of a book that explained how disruptors start by offering cheap alternatives to the products sold by existing players. Today, a popular book is called Big Bang Disruption, and it argues that innovations today are likely to cause markets to be upended, as in the case of the GPS. This ever more disruptive change is certainly going to lead to more headaches for companies.  Sitting on ones’ laurels is definitely no longer an option.

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