TRANSFORMING BUSINESS DEVELOPMENT
EDITOR’S NOTE Dear Readers,
TEAM SUMMIT
President ARJUN KRISHNAN Vice President PRATYUSH PANDA Creatives Head MEGHNA GUPTA Editorial Head VIBHU VATSALA Treasurer & Event Head RIDDHI KUNDU New Initiatives Head TARUN GUPTA
Thinking out of the box and coming up with innovative ideas alone, might not change the world. But coupled with persistence and effort, it may lead to the creation of disruptive innovations. The status quo of the industry changes forever. SummIT- The Technology Cell of NMIMS, presents to you the annual magazine ‘MANTHAN’ on the theme “Disruptive Innovations”. This edition includes an exclusive chat with the renowned author Mr. Ivan Bayross, focussing on the current trends of the e-commerce industry, the five best articles on the cover theme selected from the huge number of entries received from reputed b-schools across India. It is our constant endeavour at SummIT to keep the readers abreast with the latest technological innovations that have the potential to make an impact in the coming future. The Techbytes section looks at two such disruptive innovations Printrbot and Beacon Technology. To promote and honour the spirit of entrepreneurship in technology, in this edition, we take a closer look at two startups – Coursera and Kickstarter. 2014-2015 has been a very promising year for SummIT. We take you through the highlights of the year under the chronology of events section. We thank the authors and the esteemed guest for their valuable contributions. We are also grateful to our readers’ constant patronage which has encouraged MANTHAN to reach new heights. We would love to hear from you, for any feedback or suggestions, please feel free to write to us at summit@nmims.org. Enjoy Reading!! -The Editor, MANTHAN
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WHAT IS IN STORE...
GUEST SPEAK-INTERVIEW WITH MR.IVAN BAYROSS, A TECH GURU DISRUPTION– THE NEW AGE COMPETITIVE STRATEGY RIDING THE DISRUPTION WAVE TECHNOLOGY DRIVEN DISRUPTIVE INNOVATION STARTUP STORIES MANTHAN 2015
TECH – CHAT Mr. Ivan Bayross, an author of over 68 books is a specialist on e-commerce and its current trends in the industry. Mr. Bayross is an entrepreneur and a trainer, having taught in SPJIMR, NMIMS, Don Bosco and other reputed colleges. He specializes in Java, HTML5, PHP, ANSI SQL, Visual Basic and is a staunch supporter of Digital Marketing. He provides free online training on digital marketing and conducts training sessions on weekends. Team SummIT is honoured to present before you excerpts of our interview with Mr. Ivan.
TECH CHAT WITH MR.IVAN BAYROSS SummIT: What are the current risks in the E-commerce segment? How can a company look to mitigate these risks? Ivan: One of the major risks prevalent today is delivery. The difference between a brick and mortar model and an ecommerce model is the fact that in a brick and mortar model you get your product as soon as you pay for it. In an e-commerce it might take anywhere between a few hours to a few days to receive the product. Another issue in delivery are the courier companies. At present most of the companies are delivering through courier services. There are more than 1 lakh pin codes in India and courier companies deliver only to around 5000 pin codes. So there is a huge market that cannot be catered to unless an e-commerce company 1
starts its own courier service. The second issue is violation of taxes by the ecommerce companies. All of the top 4 companies have been collectively fined about INR 57 crores by the Indian Government. This is because they are violating a number of taxes that are implemented differently in different states. As of today all these companies chose not to appeal against this fine. Currently the state which has filed this violation case is Kerala. If all the 28 states follow suit against these companies, then they will run out of business. So the rules have to be changed by the government in order to support these e-commerce companies. There is also an internal issue of chain of command which should be controlled.
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TECH—CHAT SummIT: The boom in the e-commerce space saw many companies come up with different offerings. But only some succeed and most fail. What can be the reason behind this? Ivan: There is a strange thought process that occurs among the Indian companies. One guy opens a chemist store in a locality and within 10 months you will find 5 guys with a chemist store. The profit that now each of them earn is less than what the first guy was earning initially. This is called the “me-too” phenomenon. This is what happens in the e-commerce space. The companies are copying each other and coming up with the same offerings. You need more than this to have a successful business model. One should study the market needs, size, and demographics and use some common sense. Just replicating other’s ideas won’t sustain the business for long. The big and the successful companies are investing in studying the market. Hence, those are the ones who will eventually survive. SummIT: Companies like Ola, Uber, Big Basket are causing some disruptions with their innovative business models. How do the traditional businesses compete with these companies? Ivan: It can’t be said clearly as to what will happen as of now. But some of the trends that are coming up are that the ecommerce companies are tying up with the local kirana stores. For example, Big
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Basket is thinking of moving their products to the local groceries and allowing them to distribute their products. Now the problem here will be those of logistics and maintaining a clear track of all the grocers and the amount of products distributed to them. In this process the local grocer will get a cut of the price. Such types of collaborations are will certainly happen in the future. But to answer this question to the point, the traditional businesses won’t be able to compete with these e-commerce players. SummIT: What do you think is the most important role in the e-commerce industry and how do MBAs fit into that role? Ivan: Truth to be told, the only important role relevant today is that of a digital marketing manager. Someone has to realise that digital marketing is not social media marketing. Social media marketing is just one vertical. The rules of marketing for Facebook is different from that of Linkedin. There is a dearth of talent in digital marketing. Hardly anyone can create a different set of advertisements for Facebook, Linkedin and Twitter. This is where the gap is and this is where skilled people are needed. HR and Finance are required roles but their job is mostly the same and that is based upon cost-optimization. The huge bubble is happening in the marketing space. And this is where the MBAs in marketing fit in. 2
EVENTS SUMMIT- CHRONOLOGY OF EVENTS(2014-2015)
2014-2015 has been an immensely successful year for SummIT. Activities for the year started in July, 2014 with an Adobe Photoshop Workshop being organized by SummIT, in partnership with Arena Multimedia. During Augustus, 2014, the cell organized a two day quizzing event (Ellipsis) which saw more than 130 participations. This was followed by Inter’n’Act, a highly interactive session where the second years’ shared their summer internship experiences with the first years’.
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During Parichay in July, 2014 SummIT organized the first online treasure hunt of the year called The Pylon of Isis. The treasure hunt was a resounding success and witnessed participation in huge numbers. Khoj (online treasure hunt), the flagship event of the cell was held during Paragana in November, 2014. Khoj was even bigger than the previous year. With 750+ participants it was one of the most successful events of the year for the college. Spread over two days, the treasure hunt witnessed international participation as well.
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EVENTS November end saw chuckles, with the cell organizing a Stand-Up Comedy show by Deepak Gopalakrishnan (a.k.a Chuck Gopal). Chuck was again invited on campus to host a digital marketing workshop (Digitize). Having worked closely with various websites like PaGaLGuY.com, Sportskeeda.com and Cricinfo.com, Chuck imparted invaluable digital marketing knowledge to the audience. In January
and March 2015, SummIT organized the Powercel workshops. The first was a session on Microsoft Powerpoint in which winners and finalists of GE Genius, NUS Cerebrations, Mahindra War Room, ITC Interrobang, Titan Elevate, Marico Over The Wall and JP Morgan Deal were the speakers at the event. They shared great insights regarding making effective presentations and winning competitions. The second session in association with Forevision, was held in March. It was an extensive workshop on Microsoft Excel; a much needed one for the first years’, who would be going in for their summer in-
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ternships in a month’s time. During Euphoria, 2015 the cell organized the muchawaited LAN Gaming Competition (Zero Respect). It comprised of FIFA, NFS and Counter Strike. The event witnessed a huge turnout.
SummIT in association with PayUMoney, also organized a National Level B-School Case Study Competition- ACE the CASE, in March 2015. The cell has also offered its members the opportunity to work on live corporate projects. Snyxius and iitiimshaadi.com are a couple of such projects which received notable appreciation from the industry experts. Under the able mentorship of Dr Nilay Yajnik the cell has continued to excel over the years and will continue to do so in the future.
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STARTUPS
Coursera is an education platform that offers free online courses to everyone by partnering with top universities. It offers massive open online courses on subjects like physics, mathematics, history, arts, music, computer science, biology etc. Its partner universities include Stanford, Georgia Tech, Princeton, John Hopkins and Indian School of Business. As of 2014 Coursera have had 22,232,448 enrolments from students representing 190 countries across 571 courses. This is a significant number given the fact that the company was launched just 3 years ago. Coursera was founded by Andrew Ng and Daphne Koller in 2011. The company is headquartered in California, USA and earns revenue mostly by verified certification fees. These certificates are given on successful course completion. It had earned $1 million in September 2013 through verified certificates. The courses are open and free for everyone and it’s only the certification that requires a fee. The course includes video tutorials, inter5
active quizzes, graded assignments and academic notes. The assignment and quizzes can be submitted online which are then graded. To improve on their assessment process, Coursera started using peer assessments. In some cases, assignments cannot be graded by a computer as it may be qualitative in nature. That’s where peer assessments came in handy, where learners themselves evaluate and give feedback on each other’s assignments. Various studies have found this technique to result in accurate feedback for the learner and a valuable learning experience for the grader. In January 2014, Coursera introduced Specializations, which consist of a group of related courses designed to help students deepen expertise in a subject. There are currently more than 25 such programs available in several subject areas, from data science to writing. If a student earns a verified certificate in all the courses listed under that specialization, he gets a specialization certificate.
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STARTUPS The specialization course ends with a Capstone Project that allows students to apply their knowledge learnt to relevant and real-world challenges. Coursera had recently partnered with Google, Instagram and 500 other start-ups to work on live
projects. Online education has seen a huge growth in recent times and Coursera is at the head setting new trends. With mobile apps and other new features, it looks set to continue forwards its growth story.
Kickstarter is a global crowdfunding platform based out of New York. Crowdfunding is a relatively new practice of raising money for a venture from a large number of people, mostly over the internet. It is changing the way funds are generated and has become a widespread practice these days. It was one of the first firms that launched this service early in 2009. Since its launch, 8.1 Million people have pledged more than $1.6 Billion, funding 79,000 creative projects.
ceive any money – they either get all the money or they get nothing. If the goal isn’t reached, the money is returned back to the respective donators. The projects are on a diverse range such as filmmaking, music, photography, fashion and design, games, publishing etc. Kickstarter is not meant to gain financial returns for promoters; the project creators have complete ownership of their work.
Anyone can launch a project and they have complete control over it; Kickstarter doesn’t develop the projects themselves. How it works is that the project creators set a goal for the funding and a deadline of receiving these funds. Then they promote it by creating a project page, uploading videos and offering returns to their backers. Once the page is ready, the project is launched and shared on the website. People who like the project can pledge money to help it come alive. The unique feature of Kickstarter is that the funding is “all-or-nothing”, i.e. projects must achieve their funding goals to re-
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Kickstarter was founded by Charles Adler, Perry Chen and Yancey Strickler; Chen serves as the Chairman while Strickler is the CEO. Its revenue model is that it charges a fee on each successful project funding. Kickstarter levies a 5% fees from the fund of a successful project. In the US, Amazon Payments processes the pledges and in other countries it is done by a third party payments processor. The fees they charge comes roughly around 3-5% of the total funds. If the funding goal of the project isn’t reached then there are no fees. Kickstarter works on an innovative concept and more importantly it is making a huge social impact by helping dreams of many to come true. 6
TECHBYTES
BEACON TECHNOLOGY Apple introduced iBeacons in 2013 and activated the technology across its 254 retail stores, and retailers began testing the technology in stores in early 2014. Beacons enable more granular location awareness that GPS alone cannot provide, meaning they offer tremendous potential to target customers with relevant, personalized and appropriately timed messages. Following suit, multiple competitiors like Estimote, Bluecats, Bluesense and Gelo have launched their own beacons that can interact with both iOS and Android devices. The underlying communication technology is Bluetooth Low Energy (BLE). With an iBeacon network, any brand, re7
tailer, app, or platform will be able to understand exactly where a customer is in the brick and mortar environment. This provides an opportunity to send customers highly contextual, hyper-local, meaningful messages and advertisements on their smartphones. The typical scenario looks like this. A consumer carrying a smartphone walks into a store. Apps installed on a consumer’s smartphone listen for iBeacons. When an app hears an iBeacon, it communicates the relevant data to its server, which then triggers an action. This could be something as simple as a push message [“Welcome to Best Buy! Check out new
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TECHBYTES launches on Aisle 3!”], and could include other things like targeted advertisements, special offers, and helpful reminders [“You’re out of Milk!”]. Other potential applications include mobile payments and shopper analytics and implementation outside of retail, at airports, concert venues, theme parks, and more. Some of the
companies which are already using Beacon technology extensively are Hillshire Brands, Macy’s, Starwood Hotels, Virgin Atlantic, Japan Airlines, American Airlines, Walgreens, Walmart, Nivea and Major League Basketball (MLB). The potential is limitless, and the technology has a bright future.
PRINTRBOT
In the year 2011, Printrbot was founded by Brook Drumm in Lincoln, California to manufacture affordable 3D printers. Ever since, it has proved to be a cost-effective and reliable solution for most Do-ItYourself (DIY) users, educational institutions and manufacturers across the world. In a short span of 4 years it has expanded to 4000+ cities and 80+ countries. It also happens to be the most funded technology project on Kickstarter till date. Printrbot is sold as fully assembled or as a kit requiring assembly. It boasts of having an assembly time as less as 45 minutes. Calibration problems and adjustments which are one of the major drawbacks of
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other 3-D Printers, are not present in the Printrbot models. At the same time it is compatible with the latest open source technologies. It uses fused deposition modelling to produce plastic models of 3D objects. Since creation, the original Printrbot has been discontinued and replaced with newer versions which vary in price, size and functionality. It has forged successful partnerships with over 100+ schools and universities to make 3D printing accessible to the student community. One of the most amazing disruptions in technology in the current decade, it is sure to give toy manufacturers like Mattel and Lego a run for their money! 8
ARTICLES DISRUPTION – The New Age Competitive Strategy Everything is fair in love and war; and competition in a business environment is like a cold war. Innovation has always been the major strategy used by businesses around the world to stay competitive. The traditional paradigm of innovation was to improve the performance of the existing technology, thereby steeping up the performance trajectory. However, value creation for customers may be much simpler than high performing technology. There is always a threshold level till which customers can absorb and appreciate which the traditional paradigm fails to address. This has lead to a gradual shift in paradigm, over the last five decades, from a continuous performance improvement to that of something called ‘Disruption’. Clayton Christensen coined this term and today it has become a big buzzword. He identified ‘Disruptive Innovation’ as a
product or service, so compelling in nature that everyone rapidly abandons their current way of doing things to this new approach. IT has been the big enabler of this disruption. The fundamental aspect of disruption is to use the right benchmark, which becomes additive with time. When that happens, we find entire product lines – even the whole market – gets created as well as destroyed overnight. There are two major players in a disruption scenario – the Incumbent and the Disruptor. The Incumbents are the existing market leaders following sustaining innovation strategy. The Disruptors are the agents of the disruptive innovation. They don’t follow conventional notions of strategy and market adoption, and some of them have shown ability to destroy companies and brands in a flash. Modern day consultants often call them the ‘bigbang’ disruptors.
PRASUN KUMAR DAS S. P. Jain Institute of Management & Research “Prasun worked as a Database analyst before pursuing MBA from SPJIMR. He is a passionate traveller, observant photographer, a technology enthusiast, and an avid singer”
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ARTICLES THE INNOVATOR’S DILEMMA: Why the Incumbents fail?
To understand means to counter, we need to know what causes it. It’s evident that a new kind of innovation is changing the way in which the game is being played. One of the most intriguing questions is why does a disruptive innovation almost always come from a different market player, letting a new leader to emerge? Why can’t the existing market leader come up with a disruptive innovation? On the contrary, how did leaders like Apple survive? Clayton Christensen accounts this to the ‘Innovator’s Dilemma’. Disruptive technologies have some common characteristics – they are cheaper, simpler, smaller and often a lower performing alternative to the existing technologies. The current market leaders, over the years, develop sophisticated innovation systems; create high market
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standards in terms of performance, and a high brand value. For them, a low margin disruptive approach doesn’t justify as a rational financial decision to make. This leads to the ‘dilemma’. They end up building up on their own sandcastles, coming up with more complex, high performing, and expensive products. The customers have their own threshold to accept and absorb performance, sophistication and pricepremium. They now look for simpler, more convenient and budget-friendly alternatives. This sets the stage for the disruptor to make an impact. Disruptive technologies start making more sense; delivering exactly what the customer will like to have. There comes the decoupling point when the customers start switching.
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ARTICLES Survivors like Apple are visionaries. They have an open mindset; instead of reacting to changes around they become the change, and have successfully able to uplift the customer’s expectations and level
of acceptance. They never fall prey of selfcomplacency and bring up their own brand of disruptive innovations in the market.
Innovation - SUSTAINING vs. DISRUPTIVE For any form of innovation there are two perspectives. The product perspective gives the performance standard of the inSustaining Innovation Product Perspective Customer Perspective
novated technology. The customer perspective gives an idea on how the innovation is being perceived by the customers. Disruptive Innovation
Radical product value proposiScales up the performance of tion; underperforms current the existing products market standards Improvisation that mainstream Few niche customers apprecicustomers appreciate – Comates it in the beginning petence enhancing
An innovation that disrupts the market today gets into the sustaining innovation mode until they reach up to the customer’s threshold expectation. When that lev-
el is reached, any further sustaining innovation makes it vulnerable to disruption. So, a disruptor today becomes vulnerable to disruption in future.
Fig. 1: The graph showing shelf life of a technology in a disruption model
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ARTICLES A – Sustaining technology (S) keeps innovating at a pace far higher than the rate in which Customer’s acceptance level grows. This is the time when S goes beyond the customer’s level of acceptance. An underperforming technology (D) then starts disrupting into the market of S. This technology D, then
continues to innovate itself in a sustaining manner. B - This is the time when technology D sustains so long that its performance level crosses the threshold customer acceptance level. Some other technology may come and disrupt the market of D now.
THE SURVIVOR MODEL
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ARTICLES When disruption starts, the incumbent must work on its survival strategy. Clayton Christensen accumulates his insights on disruption and designed a survivor model. The following model is an extension of the same. This identifies the different possible counter strategy an incumbent may resort to.
The BOX-PLOT It’s evident from the Fig. 1 graph that every technology has a shelf life, which depends on the following two factors:
The rate of performance improvement in the technology
The growth rate in the customer’s acceptable level of performance
To avoid disruption, companies have to be
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Denial History Resistance to Change Mindset Brand Sunk Cost Profitability
4 2 7
Lack of Imagination
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6 8 3 8
able to anticipate the disruption first and then formulate a counter strategy. Any strategy will have one thing in common – change. The survivor model (Fig. 2) shows different reasons why an existing innovator falls prey to disruption. Certain inherent aspect within the incumbents makes them vulnerable. They either fail to anticipate the disruption or to adapt accordingly. The Box-Plot, as suggested by Prof. Robert Smith, University of Maryland, comes handy there. It quantifies the incumbent’s vulnerability to a disruption. For each factor to the Innovator’s Dilemma, a number between 0-10 is put, signifying its likeliness to occur and thereby identify possible strategy to undertake. The following example will make it clear.
The figures show that this company is not very old but has been highly profitable and has an esteem brand image. Their business is not high in capital intensity. They are somewhat able to identify a possible disruption but their high and consistent profit intensity makes them fail to pay much attention to
This company can make use of its available capital to adapt to the disruptive technology – either by launching a competing product to it or by acquiring it. In the meantime, it can continue enjoying its current profitability.
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ARTICLES offering to accommodate the new innovation. It can be done in the following ways:
STRATEGIES TO COUNTER DISRUPTION The Survivor Model illustrates several strategies an incumbent can resort to proactively or reactively. Failure to do so essentially means failure to survive. Companies, with an ability to anticipate the future, will proactively use any of the strategies, not just to survive against disruption but also to diversify itself. Let’s try to understand each of the strategies. ADOPT Abandon the existing technology and adopt the new one, thus being an agent of disruption. Canon and Nikon were quick to realize the potential of digital transformation in the imaging industry and shifted to it, and stopped making film cameras. ELEVATE Increasing the shelf life of the sustaining technology by raising the bar, which is the customer’s acceptance level. Reposition the product or technology to inculcate in the customer’s mind that they deserve better and can do better. This is a progressive strategy in terms of performance but it makes customers inclined on over-sophisticated and overexpensive products and services. E.g. Apple’s MacBook business ADAPT Rather than fighting the disruption this strategy aims at making it a part of the company. This is to adjust the existing business model or product
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COMPETE Launch a competing product in the market similar to the new product having a slightly higher performance. The earlier this is done, the lesser the new technology grows. After the advent of Amazon Web Services, companies like Oracle and IBM didn’t wait long to launch their own cloud based infrastructure services. Since, the new product will be low in profitability this strategy may hurt the revenue (i.e. cannibalism) but, it will slow down the momentum of the disruptor. REVISE Revisit the core business principles and value proposition of a product being offered – ‘job to be done’ principle. Kodak failed to address that they are into the imaging business, not in a film camera business and hence failed to identify the disruption brought by the digital transformation of the industry. Thus, a company should time to time revisit the core operations to ensure that relevance is not lost. If lost, relevance can be regained in two ways –
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ARTICLES REDESIGN Work on the reengineering of the product design or the business process to bring back the relevance. Apple redesigned iPhone to a large screen model seeing the disruption in their mobile market created by large screen smartphones by Samsung and HTC.
REPACKAGE Product offering should be replaced with solution offering, which includes a bundle of product and services. Panasonic understood their value proposition is not just a TV but entertainment. They are offering complete entertainment package along with their TVs.
ACQUIRE Either acquire or merge with the disruptor. This will put the reins in your hand. After acquisition following can be done –
The new technology or product line can be continued. But, this will again lead to cannibalism. Kill the new technology – This will help temporarily. New innovation is like opening a Pandora’s box. The acquisition gains attention and new en-
trants will show up in the market acting as disruptors. CONCLUSION Innovation, being the basis of progress, can’t stop. However, technology has made the business scenario, a fastchanging one, where market leaders are born and destroyed overnight - a phenomenon often called a creative destruction. The key to survival lies in the ability to identify threats. A survivor keeps a constant eye on new technologies – analyst reviews on them, thinks and discusses with consultants to keep strong vigilance, regularly performs scenario analysis to derive upon a perfect strategy to rediscover business for itself. Often, risking cannibalizing oneself gets necessary to innovate and survive; like Steve Jobs said, ‘If you don’t cannibalize yourself, someone else will’. This makes Darwinism relevant, where there is an intense struggle for existence and nevertheless, the fittest one survives.
References
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https://theoldspeakjournal.wordpress.com/tag/illegal-surveillance/
http://www.edrm.net/resources/data-privacy-protection/data-protection-laws/ india
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ARTICLES DISRUPTIVE TECHNOLOGY: THE FUTURE IS HERE Debalina Ray, T.A. Pai Management Institute, Manipal “Innovation is not about market timing. It is about creating something that fulfills an unmet need” ~ Jeremy Gutsche
which we say Sustaining Innovation or innovate to capture a completely new market i.e. Disruptive Innovation.
Where all think alike, there is little danger of innovation. But with the constant evolving technology surmounting brains and traditional capabilities, there is little scope of no innovation. One of the classic examples of legendary innovation is the Internet and that of lack of innovation is Kodak. The market shift from Kodak in 1999 to Instagram in 2014 has been magnanimous. But the multi-value-addition provided by Instagram now and the unwillingness of Kodak to shift from consumer photography market with its aversion to learning new skills to innovate then, is the reason of one’s success and the other’s demolition.
Disruptive Innovation, a term coined by Harvard Business School Professor Clayton M. Christensen, is a process by which a product or service is introduced to trace small unmet markets and then slowly displace existing technologies, established competitors and their market share by threatening the status quo. Disruptive technology has dipped into practically every sector one can think of: IT, energy, manufacturing, entertainment and transportation among them.
Innovation has become the need of the hour. The firms are in constant need to find the untraced market needs, diversify business and re-engineer business structure. Firms can enter into a market with already existing competition (e.g. Telecommunications sector) and try to create a market for itself i.e. Red Ocean Strategy or create an untapped market segment by following Blue Ocean Strategy. They can either restructure an already existing technology with some value-addition
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History of Disruptive Technologies: The history of disruptive innovation dates back to the era when Personal Computer (PC) displaced minicomputers and mainframe. It also displaced typewriting and forever changed the way we work and communicate. While minicomputers involved costly processes, PC processes were cost-effective. PC’s in conjoint with the TV-tuner cards was a move to eat up the television industry. Another innovation success is the World Wide Web in connection with the Internet. Before 1991, internet was a loose collection of protocols, networks and tools 16
ARTICLES tools built by university geeks. With the introduction of World Wide Web and its mass acceptance and success gave people, firms and sectors to connect and spread information online. The traditional hand-written, time consuming era of letter-writing got forced out by the Email industry like Gmail, Yahoo mail, hence disrupting the postal and greeting cards industry. Graham bell’s iconic invention: Telephone has been slowly taken over by the portable Mobile Phones making people just a call away from anywhere. Smart-phones are largely displacing cell phones. The high MP of camera installed in the smartphones has started disrupting the digital photography industry and eating up the market share of prominent players like Canon and Sony. While cassettes and tape -recorder were displaced by Walkman and MP3 Players, the availability of plethora of apps has resulted in disruption of MP3 players, calculators, alarm clocks and GPS devices. With the size of smartness increasing at an alarming rate in the form of phablets, tablets and IPads, these have started displacing laptops, which themselves had taken over desktops immensely. Factors like portability, status, less physical space occupancy but high storage capacity are leading to this dramatic shift.
try (both SMS and call services), E-mail and Instant Messaging businesses. We remember the old VCRs to record TV shows. But this tedious technology slowly got displaced by DVRs- TiVo and Replay TV digital video recorders during 1990s, by which fast-forwarding through commercials became an easy task. And now with Youtube, any TV commercial, sports, movies or documentaries are just a click away. “At the heart of effective technology integration, technology offers opportunities to be more actively involved in the learning experience” ~ Vanessa Vega Technology won’t be able to replace teachers. But teachers using the advanced education technologies will be able to replace the ones using traditional systems. E-learning is on the rise with technologies like Webinars. Amazon’s Kindle has made its’ attempt in disrupting the books industry. Other big trends:
Social networking has made a huge impact on the way we communicate. The free chat services provided by Whatsapp, WeChat, Facebook or Skype have been majorly crowding out the telecom indus17
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ARTICLES
Future Milestones : 3D Printing: It has the potential to turn digital files into physical objects and revolutionize the way we make almost everything. The 3-D printing market is expected to double by 2019. Companies are developing ways to 3D bio-print human tissue such as blood vessels and organs.
Nike has used 3D printing into basketball, football shoes and more recently using SLS technology to prototype and manufacture the 2012 Vapor Laser Talon football shoe for American football players. Reduced production costs and less time and money spent by the company. While previously it took $50,000-$60,000 and 3
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months production time, post 3D it took $3000-$4000 and just 5 days for the same.
New Balance is reportedly using 3D printers to create custom fit shoes for professional athletes by emphasizing on lightweight but efficient spike plates. The end products can at times be printed at far cheaper rate than it would be to buy from a traditional manufacturer. E-cigarettes: According to Citi’s report, Electronic Cigarette is the second disruptive technology that is bound to transform the world. The health risks, addiction, social stigma 18
ARTICLES and negative perception of cigarettes have paved the way to success for ecigarettes, which with their pure e-liquid content act as a good option for those who wish to cease smoking. Though in its infancy, e-cigarettes, with its aggressive marketing into the new market of “vapers”, is expected to see 50% CAG in coming years disrupting the established cigarette industry.
Genomics: As per latest MIT report “First healthy person was born in the U.S. with his entire genetic makeup deciphered in advance”. Genomics is a masterpiece in the field of health. With fast, low-cost gene sequencing, synthetic biology, low cost in gathering DNA data, advanced big
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data analytics, the genomics market is already exploding. It is targeted to have profound impacts on health concerns, how we produce food and its safety, how we can monitor our environment and sustain natural resources. Mobile Internet: With the increase in purchasing power and disposable income of population, the sale of smartphones, which provide us with a plethora of apps, have increased. By 2015, it is predicted that sales of tablets would surmount that of personal computers and laptops. With this, the day is not far when mobile becomes the only means of internet connectivity. Even e-retailer giant, Myntra announced its’ plans to shut down website by year end and focus only on web-app as 60% of its’ sales happens through its mobile application. With this mobile payment is also on the disruptive rise and could one day be a trillion dollar market. Autonomous cars: Initiated by Google, fleets of driverless cars and taxis are the future. Technological advancements with multiple sensors, 3D cameras, GPS, LIDAR (Laser-imaging detection and ranging) and Artificial Intelligence are going to smoothen our drives with no more waiting in traffic and efficient parking systems, automated braking technology. As per reports, Autonomous cars could save Canadians $65 per year; Road accidents to reduce overall by 20%, saving 14000 lives by 2025.
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Conclusion: The future of business is not limited and tied to the permeation of Facebook, Twitter, IPhone, and pins on Pinterest or apps. It horizons to the limitless sky of unmatching technology pace, how it affects decision-making and business process and a firm’s ability to adapt to them. All these put together with timely response can give a firm the competitive advantage. But an important question remains, “At what point of time does an evolving technology become disruptive? And what attributes or processes constitute a disruptive mechanism?” Such unanswered questions pave way to the risk of Digital Darwinism, when society and technology evolve faster than one’s ability to adapt. In this rapidly moving competitive era, it’s always “Survival of the fittest”, like the
way Fujifilm survived. It is about challenging self-status quo and constant investments in R&D. The fall from being an industrial giant to bankruptcy is always preventable. True innovation, high reinvestment on R&D, human capital need to be constantly in pace with the changing macro-economic and micro-economic environment to fend off the market share attack. Else, it is likely for a firm to be obsolete like an old technology. It is important for corporations to realize the life cycle of their products and business units, which will help them creating new scope to replace the ones that must inevitably die. For corporations to live, it must be willing to see its own business units die, because if the corporation doesn’t kill them off itself, competitors will. In the end, it is always persistence over resistance that will create the ladder to success.
References
Nike: http://www.scdigest.com/images/Nike_3D.jpg
Genomics News:http://www.tumotech.com/2014/06/20/first-healthy-person-ever-born-in-the-u -s-with-his-entire-genetic-makeup-deciphered-in-advance/
Tablet vs. PC statistics: http://www.extremetech.com/computing/185937-in-2015-tablet-sales-
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ARTICLES RIDING THE DISRUPTION WAVE Tania Mallik and Debroop Banerjee
Way back in 1908, the Ford “Model T” made its debut in the transportation industry, hence disrupting the market for horse-drawn vehicles. Another such project was the Hippo Roller, designed by Pettie Petzer and Johan Jonker in 1997. It was a revolutionary water storage and distribution device, which brought a lot of relief to women and children in third world countries, who were faced with the daily daunting task of carrying heavy buckets of water to and fro. Disruptive innovations have shaken up the market once in a while, but made the lives of us, the consumers far more simple and convenient. The term “Disruptive Technologies” was coined by Clayton M. Christensen in the year 1995. These disruptive innovations are capable of unsettling even the most successful and well-managed companies. Sears Roebuck was one of the biggest retailers in the world and accounted for almost 2% of the retail sales in the United States in the 1960s. However, today it has lost market share to discount retailers like Walmart, Target Corporation and Best Buy. Sears simply failed to adapt to the disruptive practices of discount retailing. Digital Equipment Corporation was the
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leading manufacturer of mini-computers in the mid-1980s. But by the early 1990s it was reduced to obscurity with the advent of workstations and the low-margin personal computers which revolutionized the computer industry. The makers of personal computers like Apple and IBM hogged the limelight. Small table-top
Disruptive innovation is not a tactic. It's a mind-set.
Photocopiers ended the monopoly which Xerox once enjoyed, mini-mill technology changed the way the North American steel market functioned and hydraulic excavation technology disrupted the cableactuated power shovel industry. Amazon’s “Kindle” put leading bookstores like Barnes & Noble and Borders on the verge of bankruptcy.
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An entirely different value proposition is what disruptive technologies can offer customers. Radios were replaced by the Sony Walkman, which in turn was replaced by The Apple I-Pod. The value proposition in this case, was better sound quality, more content to choose from and easier portability. The powerful motorcycles of Harley-Davidson and BMW once dominated the streets of America. Later small off-road motorcycles like Yamaha, Honda and Kawasaki took over. The value proposition here was better mileage and efficient fuel consumption. Floppy Drives (magnetic disks) were wiped out by Compact Disks, which were replaced in turn, by Pen Drives. Customers felt that compact size and greater storage capabilities were indispensable value additions. Digital photography took over the camera industry sending established players like Eastman Kodak who used silver-halide photo-
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graphic films into oblivion. Wired telephony was replaced by mobile phones, Cathode Ray Tube(CRT) TVs were replaced by LED TVs, full-service stock brokerages were replaced by online stock brokerages, brick and mortar retailing was replaced by e-tailing, offset printing was replaced by digital printing and classroom education programmes were replaced by distance education programmes. Each had its unique value proposition which was irresistibly appealing to the customers. Disruptive technologies can also result in the creation of blue oceans (new market spaces). Instant messaging applications like WhatsApp, WeChat, Line, Viber and Hike created an entirely new market. They replaced the SMS service. Similarly, search engines like Google, Bing and Yahoo have now become one-stop shops for all kinds of information.
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ARTICLES Earlier, people had to run around to gather information and even after all the effort they put in, they would end up with piecemeal information. These search engines have brought everything under the same roof. Brook Drumm, the inventor of the 3D printer, Printrbot has carved a niche market which might prove to be a threat to the existence of toy manufacturing companies like Mattel, Lego and Hasbro. Digital network surveillance video industry is another blue ocean which has been created. New companies like Axis Communications are giving established players like Bosch and Pelco a run for their money. Due to globalization, many large organizations are also targeting emerging economies. The reasons are twofold: a) expansion of market share b) the tremendous growth potential in developing nations. For instance, the healthcare industry is characterized by products and technologies that are highly complex, sophisticated, expensive and inconvenient. Many afflictions, thus, remain untreated. Therefore, there is a large untapped demand that can be captured with the aid of disruptive innovation. General Electric had revolutionized the healthcare industry in India and China with two products included: a $1,000 handheld electrocardiogram device targeted for rural India and a portable, PC-based ultrasound machine that sells for as little as $15,000 for rural China. This not only opened new avenues of success for GE in these developing economies but also enabled GE to pre-empt the existing domestic players from disrupting GE’s market share. So disruptive innovation can actually enable a dominant market player to expand its market share and 23
consolidate the same. From the perspective of upstarts in this sector, frugal innovations can actually help challenge the dominant player. In India, frugal innovations like low-cost healthcare delivery by hospitals like Aravind Eye Care that provides cataract surgery to around 300,000 patients at a cost of 18 USD per patient to product innovations such as the Jaipur Foot, a low-cost prosthesis are paving the way for healthcare industry disrupting foreign products/technologies that are unaffordable.
Thus, from all the illustrations above, companies need to build and design their resources and align them on the lines of Clayton’s disruptive thinking. For instance, GE, in a bid to continue its efforts, invested around $3 billion in 2009 to come up with at least 100 new innovations in the healthcare sector. On the other hand, in 2004, the then CEO of Proctor & Gamble entrusted two P&G veterans – John Leikhim and David Goulait with the task of creating a milieu that can foster disruptive growth. The duo came up with initiatives to shake up the existing foundation of thinking, for instance,
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ARTICLES imparting training courses to senior management to align their thinking on lines of disruptive approach. Additionally, P&G also strengthened its organization support by creating entirely new divisions that are devoted only to the creation of entirely new business opportunities. Consequently, in 2006, P&G introduced Crest ProHealth, toothpaste that can combat cavities, plaque, tartar, stains, gingivitis, and bad breath; thus combining a number of benefits in one tube. Therefore, companies attempt to emphasize disruptive thinking either in the form of discrete investments or taking initiatives to create a
cultural change in the organization. To conclude, disruptive innovations have number of key benefits like gaining competitive advantage, creation of new market space and sustainable growth. The fast pace of change in today’s world is characterized by uncertainty and risk and disruptive innovation is, therefore, viewed as a reasonable panacea. They have already made a mark on several industries as illustrated above and more industries like banking and IT sector are looking to explore the opportunities that disruptive innovations can create.
TANIA MALLIK
DEBROOP B.
Tania is a 1st years student at SBM, NMIMS. She loves reading fictions, watching movies and listening to music
Debroop is a 1st year student at SBM,NMIMS. Travelling, exploring places and reading are few of his hobbies.
References http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/ http://www.thecis.ca/cms3/userfiles/Image/Disruptive%20Innovation.pdf
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TECHNOLOGY DRIVEN DISRUPTIVE INNOVATION Udit Sharma and Ashutosh Gupta In writing the sequel of his successful book (the Innovator’s Dilemma) “The Innovator’s Solution”, Clayton M. Christensen wrote about Disruptive Innovations as innovations that created new markets by discovering new categories of customers. Innovators do this partly by harnessing new techniques but also by developing new business models and exploiting old technologies in a new manner. Priit Kasesalu and Jaan Tallinn, forever revolutionized long distance communication when they created Skype. iTunes software created by Apple, a consumer electronics company, gave consumers a freedom to choose and purchase only the songs they wanted to listen rather than buy whole 25
albums (which more often than not contained fillers). Model T, the first automobile manufactured by Ford Motors, gave the world automobiles to travel faster. All these innovations and more were disruptive in their time as they paved the way for consumers to have a better, easier life. Disruptive innovation is not entirely a new concept. Joseph Schumpeter, an AustrianAmerican economist prophesized the concept through the term “creative destruction” where innovations were a process of industrial mutation that incessantly revolutionized the economic structure from within, incessantly destroying the old one and incessantly creating a new one.
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ARTICLES Rapid technological reform has been pivotal to revolutionary changes in the past few years. Technology has brought people closer (Facebook), made advertising easier and cheaper (Craigslist and Google’s AdWords), made finding locations easier (Google Maps), made selling and buying a lot easier (Amazon, eBay, Alibaba and others), made access to news and books cheaper, faster and more environment friendly (Amazon Kindle, iPad and other readers and online news agencies). The past few years, technology has covered long strides in the realm of education, healthcare, social reform, environment protection, collection and interpretation of information and innovations in these realms will be discussed in greater detail in this article. Disruptive Innovations in the Automobile industry In a generation from now, your journey to your office may go a bit like this. As you leave your home, an empty car would pick you up. On the way to your office you could make some final touchups to your presentation, manage your calendar or just relax and watch TV or listen to music while you’re having breakfast. Some of the other cars have drivers whereas yours and many such like yours have none. Despite the traffic, cars move smoothly and there are no accidents for the whole journey. As you are
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dropped to your office, the car wheels away to serve another client and you walk straight to your office. You order a vehicle again only when you need it. All you’ll need to do is to press a few buttons from your phone. The influence of mobile applications has been tremendous in the automobile industry. Disruptions in this industry have been caused in three major sectors. Firstly, the services and applications delivered to automobiles via mobile networks. Entertainment systems, satellite navigation and traffic information etc have made being stuck in a traffic jam less tedious over time. People can now watch their favorite shows and listen to satellite radio or watch news while they are in their cars. Secondly, services based on data supplied from the car to the user’s smartphones have also picked up. These days, sensors can collect data from various car parts and send advanced warnings to users about car parts getting deteriorating. Finally and most importantly technology is being applied to automobiles that can help them communicate with other vehicles and entities on the road. Companies have come together to create an infrastructure from roadside signals to traffic sensors. General Motors’ CEO Mary Barra is very confident of the success of v2x mobile technology to make reads safer in the coming times. V2x is a vehicle-to-vehicle and vehicle-to-infrastructure communications software.
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Cars enabled with v2x can be warned by road signs (which are also enabled with v2x) of oncoming cars or road blockades ahead. Another big innovation what will disrupt and build a new industry in terms of automobiles is the advent of driverless cars. Both Google and Apple, tech giants in CalEmbedded sensors or The Internet of Things Thanks to the smartphone revolution, innovators these days know of many ingenious ways of using microelectromechanical systems (MEMS). These sensors make it easy for scientists to attach sensors to every physical product imaginable. Take for example Kolibree. This device has lots of sensors attached to a toothbrush (of all things!!) and it collects oral data sends it to your smartphone. It records where all the brush has reached and which parts it has ignored. The device also monitors the oral health of the user and sends all the information to the user’s mobile phone for a dentist to later examine. More and more companies are coming together to build smarter appliances that can continuously gather and assimilate 27
ifornia, have been trying to come up with cars that drive themselves. Trials have been done by Google these days to drive electric cars driven by software called Google Chauffer. On May 2014, Google produced a prototype of a driverless car which did not have a steering or pedals for that matter. Soon, legislations worldwide will open up to the concept of cars driving themselves. These cars will also be known to be safer and faster. Other innovations in the sector include cars running on alternate energies like Solar energy, Fuel cells (Toyota’s FCV and Honda’s FCX concept cars run on Hydrogen) other greener energies.
data. AllSeen, an alliance of companies like Microsoft, Haier, Panasonic, Qualcomm and LG (amongst others) is plotting to build devices like fridges, televisions, washing machines etc. Which would be able to communicate with other
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ARTICLES machines (M2M communication) and also save energy (Smart Grid). According to Gartner, a research firm, by 2020 30billion devices will be connected to the Internet of Things. These devices will provide marketers with data that will help them target their customers with better accuracy. With the help of data available from these devices and a combination of conversion tracking, behavioral tracking, and programmatic marketing a new level of precision will emerge with which marketers would be able to display advertisements only to people with relevant interests. The current challenge with the Internet of Things is for companies to come up with a universal language and format for these devices to communicate with. The fact that companies like AT & T, Cisco, IBM and GE have also joined hands to form Industrial Internet Consortium for the same purpose as AllSeen, makes things all the more complicated. The Internet of Us Another trend that has been creating much noise these days is the trend of wearable technology. The trend was started in the 80s with calculator wristwatches. Later on, the trend of ubiquitous computing continued with Bluetooth headsets. This technology now has applications in monitoring and real time feedback for sports enthusiasts. A simple wristband can collect large amounts of data about the athlete’s blood pressure, heart rate and vital signs and report back to his technical team or his mobile phone too. This can help people monitor their
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health and tell them how their workout has been going on. But the most promising work in this field has been done by Google with their Google Glass, a pair of smart-glasses which can be used to take pictures and make videos (in HD) and also display information from the internet. Fly, Fly American Pie Big strides have also been taken in the field of civil aviation. At the end of 2013, Amazon, and American online retail giant, revealed that it was testing the delivery of packages with small drones (unmanned aircrafts). The company says that in a few years it will develop the capability of delivering all its packages via drones around the 10 mile radius of its warehouses. Drone technology has already proved fruitful in hunting down terrorists in the
valleys of Afghanistan. Although the flight of drones for commercial purposes is still down to legislations by regulatory authorities (like America’s Federal Aviation Authority (FAA)) drones sure have a very bright future and they seem most likely to disrupt the aviation industry. 28
ARTICLES We can look forward to a future of having our pizzas delivered by an unmanned aircraft. All hands on deck Never before has technology brought people so close together than today. Innovations like Uber which allow users to book cabs which come to them via location tracking on times they want, are just huge. Airbnb which started in 2009 has the potential to put hotels out of business. Airbnb connects local hosts in various countries with visiting tourists and takes a small cut from them. So instead of spending hundreds of dollars per night for a hotel, people just stay in other people’s houses (the hosts) for a much lesser amount. Another such venture that intends to save millions for science labs around the world is called Science Exchange, started by Dr. Elizabeth Lorns a New Zealander the application lets laboratories around the world share research equipment which otherwise would cost millions to procure. Another social venture which is disrupting the way people ask for donations to carry out ventures is called Kickstarter. The site allows people to inform donors about ventures they are interested in creating and asking them for donations in turn. Inventors and innovators from various industries ranging from movie 29
making (Zach Braff) to video gaming (Born Ready Games) have taken donations for their products and have shown brilliant results. Finally, we come to our favorite disruptive technology. Oculus Rift “Crystal Cove”. You’d be forgiven for not knowing what the last sentence just meant. Virtual Reality headsets are going to be the technology that’ll rule the technology industry for the coming days. VR headsets digital sounds and images to create a 1080p OLED display for improved clarity and gets rid of blurs experienced by
past users. With this device (and others in the pipeline) we could witness truly engaging gaming and entertainment. Further applications of this technology can be watching movies, listening to songs, virtual museum shows, and theater and so on.
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ARTICLES With all the talk of technology driven disruptive innovation in the field of entertainment, automobiles, food, business etc. there is also a pressing need for such disruptions in the fields of Healthcare and Education. The process has started with Massive Open
Online Courses (MOOCs) like Coursera.com and edx.com in the field of education and innovations like Gene Therapy, the future in these fields also looks bright.
UDIT SHARMA
ASHUTOSH G.
Udit is a die-hard Liverpool fan. He dreams of working as a consultant at McKinsey someday and is interested in international politics & eco.
Ashutosh is an avid reader and a social activist. He loves taking part in competitions and is a finance enthusiaist .
References
The Economist Vox.com Forbes.com Kickstarter.com
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TECHNOLOGY’S ROLE IN ACCELERATING DISRUPTIVE INNOVATIONS Pragyanshree Jagati The Cricket World Cup 2015 is going on in Australia and New Zealand now. Lovers of this game are grappling with feverish cricket mania to take out time to watch the game. One-day cricket, a derivative of Test cricket, was conceptualized by Kerry Packer, the media magnate from Australia. It was perceived more as an entertainment. He went further by introducing day -night cricket with the white ball and colored clothing for the players. Apprehending such cricket may distract national and international players, initially there was a huge uproar and protest by the controlling authorities of the test cricket playing 31
countries. However, one day cricket (in fact it is now a day-night encounter) very soon became exceedingly popular in all cricket playing countries, conspicuously more popular than Test cricket. The basic reason for such wide popularity is certainty for a result in a match, and convenient time for the cricket fans to watch the game, which was missing in Test cricket. This is an example of ‘Disruptive Innovation’. The concept of ‘Disruptive Innovation’ was first coined by Professor Clayton Christensen. In simple words, in disruptive
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ARTICLES innovation, new idea or invention is attempted to be commercialized with a new product or service targeting a smaller segment of customers which gradually engulfs larger segments of the industry. It must be noted that Disruptive Innovation is different from Sustaining Innovation which merely aims at improvement of existing products or services which we may say, are outcome of R&D activities. In disruptive innovation, a new and better product (expression includes service for brevity) is introduced for the existing cus-
tomers. Sometimes, the new product which may not be apparently as good as the existing product, but may be either novel, simpler, convenient, or cheaper with a potential to attract new customers. In due course of time, such products offer performance - price point that existing products cannot match. Consequently with a smaller target market, it expands its user base. The success of a company in gaining benefits from disruptive innovation lies in its ability to apply technologies in comparison to its competitors.
An effort has been made in this article to substantiate the role of technology in disruptive innovations which can bring success to corporate players and simultaneously failure to those who ignore it.
Let’s discuss briefly about the above mentioned types of disruptive innovation with illustration from the contemporary corporate world for better understanding and clarity.
Types of Disruptive Innovation:
Product / Service Innovation Process Innovation Business Model Innovation
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ARTICLES Product / Service Innovation In such type of disruptive innovations, the new product initially targets smaller customer base but gradually captures more and more market because of its unique feature(s) or price competitiveness which its competitors fail to match. At times, the innovator prefers to adopt a strategic price, which may yield very low or no margin to start with. However, with increase in market share, the price may be tuned to yield the desirable margin.
A classic example is the Tata Nano. It is a case of technological breakthrough that signifies a paradigm shift in the automobile industry. Nano brings the comfort and safety of a car within the reach of thousands of families looking for an affordable personal transportation solution. Although, this disruptive innovation got disrupted initially by some stray political incidents, today it is the most affordable and inexpensive car in the Indian market.
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Another example is the ‘Galvanized Grain Storage Silo’ manufactured by Fowler Westrup, a Bangalore based company engaged in the manufacture of agro processing machines for post-harvest applications. A few years ago, when the company decided to manufacture this innovative product, its existing customers were depending on the concrete warehouses in which the wastage and pilferage of grain was very high. There was no readymade market for the product in India. Customers were depending on the state run warehouses. However, galvanized grain storage silo of Fowler Westrup enabled its customers to have storage solutions at an affordable price in comparison to the higher costs involved in concrete warehouses and more importantly handling and preserving grain in a scientific manner. Now a few state governments have taken initiatives to establish galvanized silos instead of traditional concrete warehouses.
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ARTICLES Process Innovation The crude oil prices in the international market has come down from US$ 115 in June last year to around US$ 60 now. Consequently, the price of petrol and diesel has come down significantly in the Indian market too. The question arises how could it be possible? The answer is, that due to a substantial improvement in the production of Shale Petroleum by the US. The availability of crude petroleum oil from ‘shale’, one type of solidified clay under the ground is not a new phenomenon. However, the drilling and extraction of oil from such shale is quite expensive in comparison to traditional method of extraction from available oil wells, as most oil companies were not interested in exploration and extraction of such oil. However, in recent years, many American based oil companies due to development of innovative ‘Fracking’ technology have been able to reduce the cost of oil production as well as increase the productivity significantly. Due to massive increase in production, the global oil prices have come down, thus benefiting the world economy. One more example of process innovation can be cited from Tata Chemicals, the second largest soda ash manufacturer in the world. The manufacture of
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soda ash generates wastes that can be harmful to the environment if they are not properly treated prior to disposal. However, these wastes can be used to source valuable raw material for manufacture of cement. Tata Chemical in collaboration with Larox Corporation of Finland developed an innovative process to turn such waste to wealth with recovered material being used in the manufacture of steel. Similarly, Skype can also be termed as an outcome of
disruptive innovation by process innovation. The low cost telecommunication service enables customers to call and message on the same interface more conveniently and for a fraction of the price of traditional telecommunication services.
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ARTICLES Business Model Innovation This type of innovation means the implementation of a new process, practice and structure that is significantly different from the existing pattern of doing the business. Establishment of commodities exchanges to deal with future trading in commodities has enabled the producers and customers to assess future price in a transparent manner and thus helps in risk mitigation. It also provides for investment avenues. However, complex commodity exchange model could be made possible by innovative business model encompassing storage arrangement, software based
Why Leading Companies Ignore Disruptive Innovation? As explained by Clayton Christensen, there are basically four reasons why big companies fail to encounter disruptive innovation. These are as follows.
network for transaction monitoring, establishment of regulatory authority etc. We can come across a number of examples of disruptive innovation through novel business model route like GPS based radio taxi services (Uber, Meru, EasyCab etc.), e-retailing services (Flipkart, Amazon etc.).
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Leading companies unilaterally listen to the customers who generally are unable to predict potential impact of disruptive technologies. Leading companies devote time to assess the market size and growth of existing products thus ignoring impact of new products generated due to disruptive innovation. Leading companies usually focus on investment with good return. However, the disruptive technology aims at development of product with lower margin to start with. Leading companies normally focus at large market. On the other hand, the disruptive technology target at smaller market with gradual consolidation.
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ARTICLES Challenges Ahead: Adopt Disruptive Innovation or Get Disrupted Partly because of disruptive innovation, the average job tenure for the CEO of a Fortune 500 company has been reduced drastically from ten years in 2000 to less than five years today. There is good reason to think that the pace of change will increase, as computer power increases and more things are attached to the internet, expanding its disruptive influence into new realms. Each business house whether big or small must set up a team comprising of executives who need to think and act very differently from other line managers. Their key objective should be only
development of disruptive innovation capabilities. It is also advisable to have collaboration with other organizations having a reputation for development of innovative technologies, like Tata Chemicals and Larox Corporation Lastly, the success of doing business is the ability of identifying and understanding customer needs without being told by the customer and finally delivering the solutions that deliver satisfaction to the customer. To remain at the top, today’s business leaders must become faster, smarter and more adaptable. They should do what others only talk about. They can still be successful by borrowing and adapting somebody else’s ideas.
PRAGYANSHREE J. Reference:
Websites of referred companies / products Innovation and Innovativeness – The Tata Experience published by TMTC Strategies for Growth by Atanu Ghosh published by Random House India
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Pragyanshree was the Indian delegate at HPAIR Harvard Conference. She is a great orator and a passionate dancer.
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THE INFORMATION TECHNOLOGY CELL School of Business Management, NMIMS
EDITORIALS TEAM (L to R)Debroop Banerjee, Ankit Anurag
CREATIVES TEAM (L to R)Jinal Mehta, Prabakaran Nagarajan, Maitri Shah
Contact Us: Email: summit@nmims.org www.facebook.com/SummIT.nmims