I’ve had the privilege over the past several weeks to learn about technology cycles and disruptive innovation from some of the pioneering researchers in the field. One of my classes this semester, Technology Strategy for SDM (15.905), is taught by Professor Jim Utterback, who did some of the earliest research into the ideas of dominant design and the various phases that industries go through as technology evolves. Also during the semester, I’ve had the opportunity to attend eight hours of lectures by Professor Clayton Christensen and to finish reading his first book, The Innovator’s Dilemma. Though these ideas have been around for a couple of decades, it’s the first I’ve been exposed to them, and they provide a very illuminating framework for looking at the world of technology.
In a nutshell, the idea behind disruptive innovation is that as companies grow, they naturally seek out the higher end of the market, increasing the performance of their products to serve their existing market with innovation after innovation — what Christensen calls “sustaining innovations”. But in doing so, they often miss new technologies that are simpler and cheaper because they don’t meet the demands of their current customers — after all, why build something that your customers can’t use? But as other companies begin to build the cheaper technology, the market develops and eventually the technology improves enough that customers are able to switch from the old to the new technology in droves, causing the original firm to suffer an often precipitous decline. This is what Christensen terms “disruptive innovation”.
A great example of this is the way transistor radios replaced the old vacuum tube variety. At first, customers of vacuum tube radios would never consider a transistor radio because the quality was very poor in comparison. But a brand new market developed for the transistor radios — that is, it was “competing against non-consumption” — and as technology improved, eventually the quality became satisfactory for the vast majority of customers who had previously been uninterested, and vacuum tube radios became virtually extinct.
There are endless applications of this idea to the world today. One of the most obvious is the way phones and tablets are beginning to disrupt the traditional PC (in the same way the PC disrupted the minicomputers and mainframes of the past). A few years ago, portable devices were not much more than a toy with a few handy features, and you still needed a PC to do any real work. But clearly technology (both hardware and software) is progressing at an extremely fast rate. The PC market is in decline as more and more of what could traditionally be done only on a desktop or laptop can now be done on an iPad, a Kindle, or a smartphone. Looking at the developing world, the smartphone market is exploding — but it’s doubtful that they will ever need or even want PCs. It seems increasingly likely that the PC will suffer the same fate as the mainframes of the 1970’s or the minicomputers of the 1980’s.
Understanding this theory provides an entirely new lens to look at new technologies, and it would be fascinating to apply these ideas specifically to the fundamental shifts we’ve seen in the software industry over the past decade, from desktop apps to web apps to mobile apps. Might be a good thesis topic.