DISRUPTIVE TECHNOLOGY IN E-

BUSNIESS

Ankur Shukla (02)

Arun Johnson (18)
Deep Banerjee (25)
Milind Kosambia
 Innovation/Technology Types
Sustaining:
An innovation that does not affect existing markets.
Evolutionary:
An innovation that improves a product in an existing
market in ways that customers are expecting.
Revolutionary:
An innovation that is unexpected, but nevertheless does
not affect existing markets.
Disruptive:
An innovation that creates a new market by applying a
different set of values, which ultimately and
unexpectedly overtakes an existing market.
What is a disruptive technology?
Originally defined by Professor Clayton M. Christensen:
A new technology that unexpectedly displaces an
established technology
A disruptive technology is a new product, service or
technology brought into market which is so superior to
the current technologies in that market that it deems
them obsolete.

A disruptive innovation is an innovation that helps

create a new market and value network, and eventually
disrupts an existing market and value network (over a
few years or decades), displacing an earlier technology
Factors:

Price & Size

Practicality & Technology
Cost of Production & Usability
 Examples of Disruptive Technologies
Personal Computer Letters Emails Instant Chat
Windows Operating System
Records Tapes CDs
Email
Downloadable Music
Cellphone
Mobile Computers Globe Google Map
Social Networking
Digital Cameras Research books search engines
Light Emitting Diodes
Dial up internet Wireless Internet
Hydraulic Excavators
Plastic
E-commerce & E-Business
E-commerce
The buying and selling of goods and services
over the Internet
E-Business
The conducting of business on the Internet
including not only buying and selling, but also
serving customers and collaborating with
business partners
E-business Basics
 Opening New Markets
Mass customization The ability of an
organization to tailor its products or services to the
customers specifications
Personalization Occurs when a company
knows enough about a customers likes and
dislikes that it can fashion offers more likely to
appeal to that person
Intermediary Agents, software, or businesses that
provide a trading infrastructure to bring buyers and
sellers together
Disintermediation: eliminate intermediaries
Reintermediation: add values to the chain
Cybermediation: new kinds of intermediary
Business Value of Disintermediation
EXAMPLES
FACEBOOK, GOOGLE, SPACEX, VIRGIN/QUALCOMM disrupts
COMMUNICATION:

Today these companies are looking to provide 1 megabit per second

connectivity to every person on the planet, potentially disrupting the global
communications infrastructure. SpaceX alone is looking tolaunch 4,000+
satellites to accomplish this. Google is launching thousands of balloons, and
Virgin and Qualcomm are launching 648 satellites through OneWeb.

APPLE disrupts MUSIC PLAYERS: Apple is notorious

for disrupting adjacencies. In 2001, after Apple
experimented with music application iTunes, they
realized there was no good MP3 player on the market.
So Apple created their own, the iPod selling over 300
million of them, until they dematerialized their own
 LINKEDIN disrupts RECRUITING: LinkedIn disrupted the
corporate recruiting market ($26B) by launching "Talent
Pipeline" in 2011 (now known as Recruiter). LinkedIn had
EXAMPLES
been making money from advertisements and job postings,
and then launched a subscription to tools for recruiters to
generate leads. Recruiter now accounts for 62% of their
revenue in 2015, up 36% from last year.
NETFLIX disrupts CONTENT STREAMING and
CREATION: Netflix transitioned from mailing DVDs to
video streaming over the web. Its now a $41 billion
company. Now they are shifting again, aiming to disrupt
original content production with Netflix Originals.

AMAZON disrupts EBOOKS: Amazon started as a

company selling physical books, but saw the shift
towards e-books. By 2010, the Kindle accounted for
62.8% of all e-readers worldwide. Amazon is now the
leader in promotion and sales of digital content in an
 GOOGLE disrupts MOBILE PHONES: Google is an
Internet search company, but in 2008, Google got into
the phone/hardware business, shipping Android and
beginning the disruption of mobile operating systems.
Android currently commands an astounding 82.8%
EXAMPLES
market share.

TESLA disrupts ENERGY STORAGE: Tesla, an electric

car company, is disrupting energy storage with the Tesla
Powerwall. They used the technology developed for their
cars to branch into this new ($19 billion) market.

FACEBOOK disrupts SMS

MESSAGING: Facebook decided to
disrupt SMS messaging with the launch
of Messenger. Because Facebook is a
platform, they have been able to
garner 700M monthly active users
globally driving a projected 38%
decline in Telco SMS revenue in North
Possible responses to disruptive innovations

Focuson and invest in the traditional

business the disruptive innovation will not
grow indefinitely (10-20%) and wont capture
100% of the market

Ignore
the innovation it is not your
business different customers, value
propositions and require different skills and
competences

Attack
back disrupt the disruptive
innovation create an even newer game

Playing
both games simultaneously via a
separate unit
 Positive Implications
Save Physical space (USB Stick).
Beneficial effect on environment (Letters,
books, carbon footprint).
Improving choice.
Improving technology (Easier life).
Easier Communication.
Access to more information.
Independence.
 Negative Implications
Dependence on technology (Less skilled).
Pollution (Transport, production).
Disadvantage to older generations.
Negative effects on traditional companies.
Negative effects on supplementary goods.
Social implications:
Less face to face contact.
More lazy (Obesity).
Security risks.
Crime (Piracy/theft)
 Summing up
Disruptive innovation is a key force in
todays society
Innovation strategies must be in
place both for incumbent firms and
start-ups
The customer is always right is not
correct anymore