Tag Archives: economics

Disruption. Part 1


We often associate the term disruption with a snag in our phone, internet or other infrastructure service, but there is a larger sense of the expression. Technological disruption refers the to phenomenon that occurs when innovation, “…significantly alters the way that businesses operate. A disruptive technology may force companies to alter the way that they approach their business, risk losing market share or risk becoming irrelevant.”1

Some track the idea as far back as Karl Marx who influenced economist Joseph Schumpeter to coin the term “creative destruction” in 1942.2 Schumpeter described that as the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” But it was, “Clayton M. Christensen, a Harvard Business School professor, that described it’s current framework. “…a disruptive technology is a new emerging technology that unexpectedly displaces an established one.”3

OK, so much for the history lesson. How does this affect us? Historical examples of technological disruption go back to the railroads, and the mass produced automobile, technologies that changed the world. Today we can point to the Internet as possibly this century’s most transformative technology to date. However, we can’t ignore the smartphone, barely ten years old which has brought together a host of converging technologies substantially eliminating the need for the calculator, the dictaphone, land lines, the GPS box that you used to put on your dashboard, still and video cameras, and possibly your privacy. With the proliferation of apps within the smartphone platform, there are hundreds if not thousands of other “services” that now do work that we had previously done by other means. But hold on to your hat. Technological disruption is just getting started. For the next round, we will see an increasingly pervasive Internet of Things (IoT), advanced robotics, exponential growth in Artificial Intelligence (AI) and machine learning, ubiquitous Augmented Reality (AR), Virtual Reality (VR), Blockchain systems, precise genetic engineering, and advanced renewable energy systems. Some of these such as Blockchain Systems will have potentially cataclysmic effects on business. Widespread adoption of blockchain systems that enable digital money would eliminate the need for banks, credit card companies, and currency of all forms. How’s that for disruptive? Other innovations will just continue to transform us and our behaviors. Over the next few weeks, I will discuss some of these potential disruptions and their unique characteristics.

Do you have any you would like to add?

1 http://www.investopedia.com/terms/d/disruptive-technology.asp#ixzz4ZKwSDIbm

2 http://www.investopedia.com/terms/c/creativedestruction.asp

3 http://www.intelligenthq.com/technology/12-disruptive-technologies/

See also: Disruptive technologies: Catching the wave, Journal of Product Innovation Management, Volume 13, Issue 1, 1996, Pages 75-76, ISSN 0737-6782, http://dx.doi.org/10.1016/0737-6782(96)81091-5.

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