Pushing the envelope: disruptive technologies and business models

There has always been innovation, advancement and change – from home televisions and commercial flights in our past to smartphones and blockchain in our present. One of the key differences between change then versus change now is its pace: our digital, technologically aware world – in which so much more is now possible – is spurring on both the development of new technologies and the rate at which they can be designed and delivered to market.

It’s not just for the likes of Silicon Valley start-up entrepreneurs and niche markets: at the heart of much of this our new technology is its devolvement, putting it in the hands of consumers and seeking widespread adoption.

What is disruptive technology – and why is it important?

The basis of disruptive technology is innovation. In essence, the term refers to any technology that ‘disrupts’ existing, established companies and markets, altering the way in which businesses operate and creating new markets and new value propositions along the way. New entrants in established markets can quickly gain both momentum and popularity; these technologies eventually displace competitors, in all senses, from products to processes to business models.

Disruptive innovation is important as it can have significant, widespread impacts upon markets and industries alike – and establishes meaningful value creation for businesses. It pushes the boundaries of possibility and understanding, breathing new life and bringing fresh ways of thinking to traditional set-ups and status quos. Ultimately, it takes expensive and inaccessible products and services and makes them cheaper and more accessible for the masses.

Further benefits of disruptive tech include:

• transforming and stimulating key areas of society, including healthcare, education and the economy
• providing new products and services that fill gaps in the market or solve existing problems
• making products and services cheaper and better adapted
• helping emerging markets to develop creative solutions to make hard-to-secure products more accessible
• identifying upcoming market shifts that might impact production
• increasing competitive advantage and garnering market share.

The disruptive technology model

Clayton M. Christensen, former Harvard Business School professor and author of both The Innovator’s Dilemma and The Innovator’s Solution, coined the term ‘disruptive innovation’ in the early-1990s. Christensen highlighted three requirements for disruptive innovation to be successful: enabling technology, an innovative business model, and a coherent value network.

An obvious requirement of disruptive innovation and disruptive tech is, naturally, the enabling technology required to take an idea for conception to realisation. Enabling technology is needed to both deliver a product at an affordable price point and make it accessible to large consumer demographics. Where enabling technology has not yet caught up – or is not yet in widespread use – disruptive innovation can falter. Following initial development, new tech also needs to undergo rounds of testing and troubleshooting until optimal quality, affordability and ease-of-use are achieved. Of course, many technologies – despite taking longer to enter the market – do achieve their end-goal of creating high-performing, effective new products and launching them to mainstream audiences.

Adopting an innovative business model requires targeting new customers – or customers who don’t generally spend large amounts of money with companies, typical ‘non-consumers’ – through original, cutting-edge products. Innovative models tend to release products at more-affordable price points than similar items in order to win custom, however this may mean it takes longer to turn a profit. In such scenarios, customer recommendations and awareness can help to boost profit margins and growth.

Lastly, a coherent value network is an ecosystem in which all company business partners benefit from the disruptive innovation – i.e. the business model innovation itself and the subsequent results it brings – including all ‘upstream’ and ‘downstream’ parties.

Examples of disruptive technology

You don’t have to look hard to find a case study of a tech disruptor in action. There are numerous examples, many of them ubiquitous in our everyday lives:

• Netflix, heralded as the ultimate downfall of home video incumbent, Blockbuster, transformed the way in which we watch films and television shows. Their on-demand video streaming model offers convenience, choice and accessibility, all at a low-cost price and from the comfort of our homes.
• The sharing economy and crowd-based marketplaces, which rocketed during the recession, led to a number of innovations as individuals with assets to share developed new sources of income. One of the key success stories was Airbnb, which has revolutionised the travel and accommodation sector.
• Simplicity, cost-effectivity and accessibility were the drivers behind the development of WhatsApp, the free-to-use, Internet-based messaging platform that focused on the end-user experience. A first-mover in the market, it quickly found market penetration and expansion through satisfied users.
• The most well-known of the cryptocurrencies is, undoubtedly, Bitcoin. Its decentralised, digital format means it can support millions of people around the world who do not have access to functional currencies or banking facilities. Currently, its growth and adoption rates are comparable to the Internet.
• Amazon, the retail and e-commerce giant, developed a business model that has pushed the boundaries of what’s possible in the online consumer goods space. As well as positioning itself as a one-stop-shop for goods of all types, its embedded technology and analytics enable the e-tailer to both meet and exceed customer expectations.
• Uber – another child of the sharing economy – dislodged the traditional taxi model of public transport by offering an affordable car service to people who couldn’t afford it. The technology enabler it relies upon – Uber’s mobile tech platform operates alongside the GPS of mobile phones – has become more reliable, readily available and of better quality over time.

Further examples can be found across all sectors, from the Internet of Things to Apple products to Tesla electric cars to social media.

Develop the skills to become the next big market disruptor

Is a disruptive business model suitable for your start-up venture? Want to learn the lessons of successful companies who have used technology innovation to transform existing markets?

Gain in-depth understanding of innovative business models with Keele University’s online MBA Entrepreneurship programme. Whether you’re an aspiring entrepreneur or intrapreneur, combine your innate creativity with fundamental business expertise on a flexible course that suits your individual requirements. Your studies will span investable business plans, finance and funding, organisational and business strategy and more, as you develop the skills to succeed in the fast-paced, competitive environment of global business.