Disruptive Technologies

Disruptive Technologies - DISRUPTIVE TECHNOLOGIES:...

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DISRUPTIVE TECHNOLOGIES: INNOVATORS’ PROBLEM AND ENTREPRENEURS’ OPPORTUNITY Steve Walsh’ and Bruce Kirchhoffi?, ‘University of New Mexico, Albuquerque, NM 2New Jersey Institute of Technology, Newark, NJ 07 102- 1982 I. h3STRACT This paper examines the statement made by Christensen (1997) that disruptive technologies are introduced into markets with innovations that cost more and perform more poorly than existing products. This is likely to be industry specific observation ob- served in part because of an imprecise definition of disruptive innovation. Empirical evidence suggests that small independent firms are more successful at the innovation process because they are unaffiliated with an existing product line, do not have an existing customer base, and so search for applications where their technology can provide immediate profitability. This “fresh start” advantage means that the innova- tor’s dilemma provides major opportunities for small entrepreneurial fm. 11. INTRODUCTION Since Christensen’s publication of The Innova- tor’s Dilemma in 1997, there has been a renewal of interest in R&D procedures and a plethora of new ideas on how to create disruptive technologies in or- der to avoid the innovator’s dilemma of relying on sustaining technologies. The definition of disruptive technologies builds upon the strategic categorization scheme originally suggested by Bower and Chnsten- sen (1995). They view technologies as either those that sustain the current manufacturing practices and technological capabilities required in an industrial setting or altematively disrupt the current capability set required by a given market. Furthermore disrup- tive technologies are those which do not support cur- rent firm based manufacturing practice. In addition, Bower and Christensen (1 995) state that a technology is considered disruptive when its utility generates service products andor physical products with differ- ent performance attributes that may not be valued by existing customers. Moore (1991) adds clarity to this aspect of disruptive technologies by noting that they generate discontinuous innovations that require us- erdadopters to significantly change their behavior in order to use the innovation. . Christensen in the Innovators Dilemma (1 997) notes that many firms slip into a operating mode that avoids disruptive technologies in favor of sustaining technologies that have a greater time adjusted rate of retum. Firms find that the dsruptive technology based innovations “disrupt” existing profitable prod- ucts thereby reducing revenues in the short run. While disruptive technologies promise considerable oppor- tunities for early and strong entry into existing and new markets, they also involve high risk of failure because of customer resistance. There are a growing number of corporate executives, especially in large, established firms who believe that the commerciali- zation of disruptive technologies is an increasingly more costly endeavor with greater uncertainty of suc-
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Disruptive Technologies - DISRUPTIVE TECHNOLOGIES:...

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