...McKinsey Global Institute May 2013 Disruptive technologies: Advances that will transform life, business, and the global economy The McKinsey Global Institute The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. Current research focuses on four themes: productivity and growth, the evolution of global financial markets, the economic impact of technology and innovation, and urbanization. Recent reports have assessed job creation, resource productivity, cities of the future, and the impact of the Internet. MGI is led by McKinsey & Company directors Richard Dobbs and James Manyika. Yougang Chen, Michael Chui, Susan Lund, and Jaana Remes serve as MGI principals. Project teams are led by a group of senior fellows and include consultants from McKinsey’s offices around the world. These teams draw...
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...Description: Examples of disruptive and sustainable technology that come in my mind are: First is cable television technology as sustainable and IPTV or VOIP as a disruptive technology. Second could be Wi-Fi and Wi-Max as a disruptor. I will pick on the first example here to go in detail i.e. cable television technology as sustainable and IPTV as disruptive. Cable TV was a disruptive technology at one time and has sustained through time. Cable television technology: Cable technology replaced the traditional over-the-air method of broadcasting. It has been in business for a long time and the reason I call it sustaining because, it is customer focused and it is main-stream. Sustaining technologies tend to maintain a rate of improvement and give customers something more or better in the attribute they value. This is what cable television technology was doing till last few year, though now it has some challenges. There is a big competition for this technology from direct broadcast satellite and few other forms of competitions as well, that I will discuss. Nevertheless – • It still dominates the market • It was once emerging technology that proved sustaining and very successful in the broadcasting field. • It is customer focused IPTV: IPTV is a disruptive technology in the field of video delivery. Disruptive technologies introduce a very different package of attributes from the one mainstream customers historically value, and they often perform far worse along one or two...
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...McKinsey Global Institute May 2013 Disruptive technologies: Advances that will transform life, business, and the global economy The McKinsey Global Institute The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. Current research focuses on four themes: productivity and growth, the evolution of global financial markets, the economic impact of technology and innovation, and urbanization. Recent reports have assessed job creation, resource productivity, cities of the future, and the impact of the Internet. MGI is led by McKinsey & Company directors Richard Dobbs and James Manyika. Yougang Chen, Michael Chui, Susan Lund, and Jaana Remes serve as MGI principals. Project teams are led by a group of senior fellows and include consultants from McKinsey’s offices around the world...
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...1) What was the disruptive technology? The disruptive technology is wireless internet access on cell phones 2) Why do you think it can be classified as disruptive? A disruptive technology can also be described as “an innovation that improves a product or service in ways that the market does not expect” (www.wikipedia.com). With this being said I don’t think that there is any other technology invention that has done the above more than the iPhone, the Gphone (Droid) and in some cases the Blackberry. 3) What was the impact on the companies operating in this particular industry? The impact on the companies operating in these industries has been phenomenally profitable. Let us take for example the iPhone…there have been lines around corners and internet servers crashing because of the desire of having first dibs on these phones. Companies not only have to contend that other carriers and manufacturers are catching up with them, but also they have to keep on tract with their upgrades and ensure that their next operating system or their next generation has more features, capabilities and app functions than the ones that came before. 4) Who were the winners and losers? Explain why some prospered while others failed? Winners: - The consumers – They are able to walk around with the internet at their finger tip, there is no longer guessing about where can I find an Indian Restaurant in this area? Or How are my stocks doing today? The answers to these questions are a “type a website...
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...17. Disruptive Innovation by Clayton M. Christensen. How to cite in your report. A disruptive technology or disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect. Although the term disruptive technology is widely used, disruptive innovation seems a more appropriate term in many contexts since few technologies are intrinsically disruptive; rather, it is the business model that the technology enables that creates the disruptive impact. Chapter Table of Contents 17Disruptive Innovation 17.1 Introduction 17.2 The Disruptive Innovation Model 17.2.1 Disruption at Work: How Minimills Upended Integrated Steel Companies 17.2.2 The Role of Sustaining Innovation in Generating Growth 17.2.3 Disruption Is a Relative Term 17.2.4 A Disruptive Business Model Is a Valuable Corporate Asset 17.3 Two Types of Disruption 17.3.1 New-Market Disruptions 17.3.2 Low-End Disruptions 17.4 Shaping Ideas to Become Disruptive: Three Litmus Tests 17.4.1 Could Xerox Disrupt Hewlett-Packard? 17.4.2 Conditions for Growth in Air Conditioners 17.5 Afterword 17.6 Acknowledgements 17.7 Appendix: A Brief Description of the Disruptive Strategies of the Firms in Figure 4 17.8 Commentary by Donald A. Norman 17.8.1 The theory is easy to...
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...Disruptive Business Model The word Disruptive is used when referring to surprising new entrants into an industry, new competitors with new technology and sudden competition coming from unlikely sources. It means in business and technology, that sudden changes occur to improve the product or service in different ways that the market does not expect. There are many companies which used to follow the old stream method for their business strategy, but if we have a look in recent years we can see that the companies those who comes along with new innovation and technology with a new ‘disruptive’ business plan, was able to make a disruption in the industry and was able to capture the market share from its competitors. There is also a correlation between disruptive business and disruptive innovation .It is often said that ‘innovation has something to do about being positively different from competitors’. It is about being different in a way customers love. Especially it works better in either ways when the economy is static or mild, or the market share is already captured –companies should find a different business model to disrupt the market in order to sustain or gain market share. For example –Southwest Airlines introduced LCC (low cost carrier) model which includes: * Flying one model of plane rather than several * A point to point route structure rather than having several stop over * One class of service rather than many * No meals, no assigned seating. Their...
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...dictionary definition of breakthrough is: "a significant and dramatic overcoming of a perceived obstacle, allowing the completion of a process." But what really makes an innovation a breakthrough (radical, disruptive) one, rather than incremental, from a marketing point of view? According to Boston Consulting Group report, breakthrough innovations are defined as “innovative products that offer consumers significant new benefits through advances in technology, formulations, or applications or through more convenient packaging (Boston Consulting Group (BCG): A Disciplined Approach to Breakthrough Innovations). Christensen (1997) argues that a necessary condition for an innovation to be disruptive is that it “captures new markets in an original and unexpected way.” Academics of marketing literature differ in their opinion about a relationship between a significant new technology and disruptive innovation. Some authors believe that radical innovation goes hand-in-hand with a significant new technology (Veryzer et al. 1998, O’Conner et al. 1998). Although the notion that significant new technology is an unavoidable condition of radical innovation can be infirmed by Sony Walkman example. Sony Walkman was revolutionary in its product concept but fundamentally new technology was not used in its creation (Mascitelli 2000). Mascitelli in line with other authors (Lynch 1998)...
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...Crossing the Chasm What’s New? What’s Not? Strategic Management of Emerging Technology Hult School of International Business May 23, 2014 Disruptive Innovation Sources of Wealth Creation in the Current Decade • Eating other people’s lunch • Software eats hardware • Op ex eats cap ex • Services eat products • Leveraging next-generation technology • • • • Social Mobile Analytics Cloud 2 Marketing Disruptive Innovation • High Risk What Makes High-Tech Marketing Different? • Unproven products and promises • Incompatible and incomplete infrastructure • Social resistance to change • Low Data • No product history • No company track record • No best practices 3 Category Maturity Life Cycle Indefinitely elastic middle The Evolution of a Disruptive Innovation Secular Growth Revenue Growth Cyclical Growth Secular Decline A Emerging Market B Growth Market C Mature Market D Declining Market Catch Next Wave Fault Line! E End of Life Technology Adoption Life Cycle Focus for today 4 Time The Technology Adoption Life Cycle The Initial Dynamics of Disruptive Innovation 5 Innovators - Technology Enthusiasts 6 Innovators - Technology Enthusiasts • Primary Motivation: • Learn about new technologies for their own sake • Key Characteristics: • Strong aptitude for technical information • Like to alpha test new products • Can ignore the missing elements • Do whatever they...
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...SMaL Camera Technology INTRODUCTION The star-up SMaL enter into the image (picture, recording, etc.) market with a disruptive innovation. The company came up with the idea of applying the well-known CMOS technology into the image (camera, video, etc.) market. This allowed a cheaper manufacturing a less bulking product compared to the CCD technology. In addition, CMOS technology consumes less power, fact that solved the battery power consumption. The start-up since the very beginning was seeking a fast growth, with a large amount of capital but at the same time stablishing a long-term perspective. Although SMaL achieved a considerable success during the initial years of launching the first product, the organization ended up in a situation that put it away from future possible opportunities. This situation occurred probably due to several poor decisions the managers decided. Even if a start-up company creates a marvelous innovation, the customers will not take care unless that is exactly what they need. What did the SMaL`s management team do right? a) Thanks to the CMOS technologies, the team could offer a capture system that: * Autobrite: technology allowed higher quality pictures in brightly lit conditions * Reduction of power consumption, so smaller batteries These two features clearly were a great differentiation in front of the current capture system in the market in 2002. That is to say, what it seemed to be a disruptive technology. b) This...
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...driven out by new disruptive technology • Highly imitable – startups and new entrants can copy • Organic Growth tends to push sustaining technologies upward relative to performance demanded by low end of market Reactions from Competitors • Copy-cats Organic Growth likely to drive technology improvement Companies must continually look for ways to take advantage of the opportunity they’re creating, or be vulnerable to resulting disruptive technologies. Options for Square: International Expansion Rewards • Massive untapped opportunities in other markets, engine for growth • Can focus on “best fit” markets • International Growth likely to accelerate technology improvement International presence allows for better fit for large, international retailers if pursuing Adjacency strategy. Risks • Existing established international market copy-cats, and new copy-cats will emerge. • Differing regulations or business environment, could require new features, development, versioning products, feature creep. • Partnership Risks, entering some markets without strong partnerships is highly problematic • High Capex Reactions from Competitors • Increase in the number of Copy-cats • Steadily make market look more attractive for large companies Will increase the number of apparent low end opportunities as new markets are developed, increasing the likelihood of an unanticipated disruptive technology. Options for...
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...Developing a strategy that creates profitable growth is one of the most important tasks of the management of any organization. In doing so, companies attempt to move away from “red oceans” where competitive forces are at their greatest and actively seek “blue oceans”; uncontested spaces within the competitive market where companies have greatest potential for profit, growth, and market share. Organizations often find “blue oceans” by leveraging disruptive technologies that change the rules of the game within the competitive environment. In presenting a strategic disruptive innovation, I will use the example of Meru Cabs Private Limited (Meru), India’s first radio-cab service introduced in April 2007. Meru has a an interesting history in the context of competitive strategy in that when its services were first introduced by IVCF, the company that owns Meru, no service of its kind was previously available in India. Over the last four years, several companies have introduced radio-cab services that were essentially identical to that of Meru. While the radio-cab industry in India has become a “red ocean”, where several companies are competing for profits and market share, Meru, by virtue of being the first entrant, has established its brand as a provider of comfortable and trustworthy means of transport within major metro cities. Prior to Meru Cabs, the only available modes of transport in major Indian metros were public transport (local rail and bus), yellow cabs and auto-rickshaws...
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...Summary of “Disruptive Technologies: Catching the Wave” (by Joseph L. Bower and Clayton M. Christensen) by Maria Teplykh and Tatyana Mikhailova There is quite a common pattern following which many well established leading companies failed. Established companies tries to satisfy today customer needs and usually missed to develop the technology, that customer will need in future. The main reason of it is that leading companies stay close to their customers and their needs. There are two kinds of technologies – sustaining and disruptive technologies. Sustaining technology gives the customer the same that they already have and value, but with better attributes. Disruptive technology offers just another set of attributes, and may be even worse that mainstream technology, by the set of parameters, that customer values today. Established firms often choose to develop sustaining technologies, because it gives them guaranteed profits. Disruptive technologies usually are developed by entrant companies aimed firstly on emerging markets. But a moment comes when disruptive technology becomes established in new emerging markets, sustaining innovations raised its performance to level, on which it can satisfy customers on the established markets. And company decides to invade these established markets, where leading companies stays fully unprepared for this: customers needs have changed and the disruptive technology better satisfies them now, while it is too late for leading companies to develop...
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...Since founded in 1999, Netflix has grown to become the world’s largest online movie rental service. In the beginning of 2007, Netflix surpassed 6.3 million subscribers. With a catalog that includes more than 100,000 titles, Netflix is leading the movie rental market. Netflix’s subscription-based business model was a disruptive innovation in the movie rental business. By using the internet, Netflix focused on providing convenient and affordable prices for an entertainment industry that was already highly popular. Based on a product that consumers already loved, Netflix’s business model was profitable because it improved the consumer’s rental experience. The company aimed to become the best cost provider. As part of its competitive advantages, Netflix has an intuitive website (easy to use), personalized movie recommendations, and excellent customer service. Netflix has been rated No. 1 in online retail customer satisfaction by Neilsen Online for the past 3 years and for nine consecutive periods by Forsee/FGI Research (Netflix, 2009). Netflix’s strategy for success has included providing a comprehensive selection of movies; an easy way to choose movies, fast delivery, a no late fees policy and a convenient drop it in the mail return system. These strategies ensured a competitive advantage to Netflix and threatened to make the traditional video store obsolete. A combination of its business model and strategic approach carry out the mission of the company. Diagnosis of...
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...Chapter 5 Review Questions 1. Describe systems analysis and the major activities that occur during this phase of the systems development life cycle. During systems analysis, you determine how the current information system functions and assess what users would like to see in a new system. Requirements determination, requirements structuring, and alternative generation and selection are the three primary systems analysis activities. 2. What are some useful character traits for an analyst involved in requirements determination? Requirements determination is a crucial part of the systems development life cycle; therefore impertinence, impartiality, relaxing constraints, attention to details, and reframing are important characteristics. 3. Describe three traditional techniques for collecting information during analysis. When might one be better than another? Traditional techniques for collecting requirements include interviewing and listening, observing users, and analyzing procedures and other documents. Interviewing and listening involve talking with users individually or as a group to discover their views about the current and target systems; it also involves carefully preparing an interview outline and guide before conducting the interview. Interviews are best done when only a few people are involved, when you need open-ended questions or the questions vary from individual to individual, or when a more personal method is needed. 4. What are the general...
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...BUSINESS 111 FALL 2011 NON-BBA FINAL EXAM REVIEW GUIDE Final Exam Date: FRIDAY, DECEMBER 9TH, 2011 Exam Time for WLU Students: 7:00 p.m. – 9:30 p.m. Exam Time for UW Students: 7:30 p.m. – 10:00 p.m. Writing Locations posted at https://www.wlu.ca/~mibrahim/exams/FALL2011/BUSINESS.html Important Notice: If a student cannot write a business or economics final exam as scheduled, they must submit a "Petition for Exception to Academic Regulations" form to Ms Lee Leeman, Student and Petitions Coordinator, SBE1256. Supporting documentation will be required and verified. This permits equitable treatment for all students taking SBE courses. If appropriate circumstances are presented with appeals, students will be accommodated on either the SBE slip day or the next exam session. Exam Format: 20 Multiple Choice questions = 1 mark each 6 Short Answer questions, 2 to 6 marks each, choice in 1 question = 25 marks 7 Quantitative problems, 3 to 6.5 marks each, choice in 1 question = 35 marks 80 marks total TOPICS TO BE COVERED: (Items listed in red indicate quantitative problems) Economic Factors - four pillars of Canadian financial system – description, roles - Bank of Canada - description, tools for affecting money supply - bonds – characteristics (return, term, priority over stockholders), types, features, factors affecting price, calculating approximate yield to maturity, relationship between prevailing interest rates and bond prices, reading bond...
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