Introduction
Something that is disruptive overturns or changes the traditional way of doing things and in its place introduces an absolutely new way of doing the same old thing. Disruptive technology, therefore, can be described as a technology that displaces an established technology and in the process introduces a new groundbreaking product or service to the market (Rouse, 2014). Disruptive technology disrupts the status quo of the market, changes the way people live and work, and rearranges the pool of values. This inevitably forces other companies to either change the way that they approach their businesses or risk losing market share by being rendered completely irrelevant.
Disruptive technologies often appear almost suddenly and therefore established companies are never able to really plan for them. It involves significant risk-taking since most disruptive products and services do not usually have an immediate impact on the market. It could take many years before a product is adopted by the users. Companies that are averse to taking risks are at a lower potential of coming up with disruptive innovations. Their only other alternative could be integrating new disruptive technologies to keep up with market trends or risk losing their market share.
Disruptive technologies do not have to be better than the ones already offered in the market. Simple tweaks like significantly lowering prices of products and services could have the desired disruptive effect.
Causes of Disruptive Technology
The major cause of disruptive innovations is the rapid technological advancements and globalization which allow the introduction of new business models at increasing rates and lesser costs. Disruption can also be caused by a change in designs of a product or the methodology of delivering services in order to address the most pressing needs of customers.
Generally, it can be said that disruptive technology is caused by using technological advancements to address critical customer wants in a way that has never been done before (Kostoff, Boylan & Simons 2004).
Examples of Disruptive Technologies
The last twenty years has witnessed an evolution in the technological world. New things are being invented almost every day. Some of these technologies have considerable disruptive effects on existing technology. A few examples of disruptive technology are discussed below.
Before the age of personal computers, typing was mainly done using typewriters. The introduction of personal computers, featuring improved editing, storage and formatting capabilities phased out typewriters completely.
Windows operating systems brought to the market a combination of affordability and user friendliness that led to the personal computing industry experiencing a rapid forward surge in growth and development. This greatly diminished the television industry and telecommunication industries.
Emails arrived as a more convenient, instant, efficient and faster way of sending messages or mail. This had a detrimental effect on letter writing and exchange of postal cards. As a result, the postal and greeting cards industries were disrupted.
The introduction of mobile phones made it possible to make calls and send messages from anywhere consequently phasing out pay phones and land line telephones. This disrupted the telecommunications industry and to some extent the postal industry.
The portable laptop and mobile computing made access to personal computing easier. One could carry a laptop and use it from anywhere. Although a significant number of desktops still remain in use today, laptops have replaced a large number of them.
Smartphones have recently emerged with inbuilt features and applications that allow the user to take pictures, play music, use calculators, view calendar, use maps and perform many more functions. In this way, the smartphone has successfully combined various functions that were initially performed by separate devices. This has spelled doom for industries that manufacture cameras, mp3 players, calculators, calendars, radios, GPS devices and many other devices whose functions have been replaced by smartphones.
Cloud computing has replaced the use of external storage devices such as flash disks, external hard disks, memory cards, and memory sticks. It has also displaced conventional data storage methods such as in-house storage and traditionally hosted storage services.
Social sites are developing, and new ones are emerging every day. Social sites such as Facebook and twitter have reshaped the mode of communications in the world. Networking has become extremely easy hence the phrase “the world has become a global village”. This has in the process had a huge negative impact on the telephone industry, emailing, event planning and instant messaging (Schmidt & Cohen, 2010).
The most recent inclusion in the list of disruptive technologies is Uber taxi services and Airbnb. Uber and Airbnb have shown that transport and accommodation services can be provided more efficiently by exploiting the idle capacity held by existing providers and at considerably lower prices. Uber has completely revolutionized the taxi business by providing a service that connects taxi drivers and potential customers using an application with inbuilt GPS characteristics to note the locations of both parties thereby making it easier to tell the time of pick up. Customers are also able to choose which drivers they want. Uber also provides minimal requirements for drivers and therefore attracting a large array of people. In addition to this, Uber rates are considerably lower than other taxi services (McQuivey, 2013).
Airbnb, on the other hand, is an accommodation service provider that connects people looking to rent their homes to potential tenants using an online platform. Hosts put up their houses or living spaces for rent while travellers search for and book their preferred accommodation using the online platform. It has grown a sense of appeal to tourists and business travellers due to the low rental costs and the possibility of memorable experiences that allows for differing levels of collaboration between colleagues (McQuivey, 2013).
The examples above are just a few of the many more innovations that have actually been implemented. There are many more innovations with the potential to be disruptive that are currently under research. These include advanced robots with the ability to perform tasks believed to be too delicate or uneconomical to automate, next generation genomics, and energy storage devices such as lithium-ion batteries and fuel cells. Advanced energy storage technology could be used in future to manufacture cost competitive electric vehicles, improve the utility grid’s efficiency and bring electricity to remote areas in underdeveloped countries.
Effects of Disruptive Technology
This article will use Uber and Airbnb as case studies when discussing the effects of disruptive technology since they have attracted a horde of conflicting opinions from both the business stakeholders and consumers.
Most of the short-term effects of disruptive technologies are often negative. This includes slowing down of economic growth (Koukoulas, 2015). Uber and Airbnb entered into business without the need to buy cars or build apartments or hotels by tapping into idle capacity without adding to investment. They have also taken businesses away from hoteliers and taxi companies thereby holding back economic growth. Nowadays the commercial battle that matters is for the control of digital customer interfaces. Infant companies that have majored on software companies are disrupting old established industries and taking away their businesses.
Uber and Airbnb have forced stakeholders in the hotel and taxi businesses to cut down prices in reaction to decreasing market shares. As a result, formal employment weakens. This leads to a drop in wages (Preston, 2014).
Uber and Airbnb have given people the ability to choose their own working hours. This has increased individuals’ freedom and flexibility. However, the downside is there is no certainty of work. With a steady job and steady employer, one does not have to worry about sick leaves, superannuation, holidays and insurance needs (Manyika & Dobbs, 2013).
In the long term, however, disruptive technology has considerable benefits. The expansion of technology and its ability to undermine older ways of conducting business has led to increased efficiency and productivity.
The biggest gainers from disruptive technology are often the consumers. The companies which have not been completely run out of business are able to wake up and improve their service delivery thereby increasing customer satisfaction. In addition to generating a better customer experience, disruption also creates new sources of revenue and consequently expands the industry (Danneels, 2004). This is done at lower costs by exploiting existing infrastructures, as in the case of Uber and Airbnb.
Conclusion
The standards of living for many people has improved, products and services are more affordable, computer devices are more user-friendly, delivery of services is more efficient, health services have improved, and the environment is much cleaner (Keane, 2016). These are just a few of the extensive benefits of disruptive technology. As much as there are some drawbacks to digital disruption, the pros definitely outweigh the cons.
References
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