Disruptive Technology: Technological Advancement and its Implications In The Overall Business Network

Disruptive technologies are oftentimes defined as technological advancements that may eradicate an existing business structure, concept or system. Commonly, if the disruptive technology is strong enough, it may take over entirely, making clients move towards a new business model that accounts for the sudden changes in technical evolution and maturation. This article review will holistically break down the concepts and ideas presented by Disruptive Technologies: Catching the Wave by Joseph L. Bower and Clayton M. Christensen, and provide insightful agreements and potential disagreements to help the business world better understand the implications of these bothersome paradigm shifts. The Harvard Business Review published the article in 1994, and makes insightful comments attributed to the ideas, beliefs and practices of disruptive technologies. This article review will discuss the organizational accreditation and highlights of the article, as well as its strengths and weaknesses; industry leaders will be mentioned to approve or dispute the current findings of the article; and lastly, it will discuss the overarching preeminence of the article as related to the grand scheme of the business industry and emerging market. Before further unraveling the significance for the article, a summary will be provided as an elaboration on the overarching concepts and ideas of Bower and Christensen.

It has become somewhat of common practice to listen to the demands and needs of the clients, but oftentimes a business will get sidetracked and rely solely on those needs. In time, customers may reject new technologies, concepts or ideas do to growing trends. Ones entire business model relies on the purchases a customer is willing to make. Bower and Christensen recognize that businesses dedicate too much time on the wants of the customer, rather than on their own business model. Their model is comprised of research and development, finances, accounting, they build plants and channels of distribution, all to meet the demands of their customers. They consider how large the market will be, and if their investment becomes profitable. However great those academic thoughts may be, theory is controlled and practice is spontaneous. For those that have dedicated every hair on their head to customers, their business structure will collapse if they do not consider new emerging trends and new possibilities for new technological advancements. If a customers generational needs are met, there may be great profitability opportunities, rather than a hit and miss. According to Bower and Christensen, “The research shows that most well-managed, established companies are consistently ahead of their industries in developing and commercializing new technologies.” There are incremental changes, and those that are drastic radically improve the industry as a whole; but, regardless of the outcome, businesses that are at the top of their game improve their overall profit margins.

There are two characteristics that have the power to damage established companies. These new technologies present a different package of performance capabilities, though at the outset, they are not valued by customers; and the attributes that customers do value gain popularity at such a rapid rate that the new technology will ultimately invade those emerging established markets. The industry leaders of the disk drive industry, between the late 1970’s and the early 1990’s were improving efficiently and promply, so much so that at first the original disk-drive started at a physical size of 5,400 to 8 cubic inches, and the cost per MB fell from $560 to 5$. Technology has been advancing quickly so one must adapt their technology to meet the demands of their customers, or the product or service will fail. Established companies understand this concept, and place their manufacturing R&D at the zenith of their product.  Performance trajectories aim to prepare companies for future shifts in technology; this which aims to help business managers understand the rate of which a product has improved and is expected to improve over time. Understanding the market, and gathering that knowledge, can become instrumental in maintaining a fruitful B2C relationship.

Apart from disruptive technologies, there is also another concept that business managers can use, known as sustaining technologies, which aims to show a constant improvement rate in the technology. In comparison, the concept of disruptive technologies breaks the flow of the normal attributes customers want. Although the technology may be great, it is best used when the technology makes way for new emerging markets. research demonstrates when a disruptive technology tries to change how customers do things in their recognized and valued products, they do badly in the market. It is advised to not change what customers already love. Some businesses today still fail to comprehend these two concepts and continue to make the same mistakes time and time again. The article by Bower and Christenson denotes the importance of not undervaluing the importance of disruptive technologies, for although they may initially produce a financial dilemma, and not enough revenue, there may be a great deal in the long-run.  For established companies, disruptive technologies look financially unattractive and managers make the decision to pull the plug. Managers may not know what the technology can provide in the future in terms of revenue and profit ; so, as a result, they do not want to continue developing the product.

How to Work With Disruptive Technologies

There are overarching points reached by Bower and Christensen. There are five points that can be used as a road map by business leaders to grasp the technology and its possible implication in an emerging market. (1) A business manager must determine whether the technology is disruptive or sustaining, (2) define the significance of the disruptive technology, (3) locate the initial market for the disruptive technology to avoid complications, (4) place responsibility for building a disruptive technology on an independent organization, (5) and keep the disruptive technology independent from the other products the business may have created.

In theory, if these approaches are taken, the business should not fall in the grasp of financial bankruptcy. This article was published in 1994, and continues to hold a strong standing in the business world. The ideas presented in this article are relatable and could be used by business managers to avoid the pitfalls that other established companies have failed to recognize and are no longer recognized. An example of this trend is Netscape, and the growing demands of the Internet era. Netscape could not keep up with the demands of their customers, which is why they are nonexistent today. According to Roughly Drafted Netscape crashed in 1990-2000 because it did not want to introduce new technology into the growing demands of their customers. In 1998, “Netscape dropped its original plans to deliver Netscape 5 as significant revision to Communicator 4. Instead, it chose to freeze development of the classic Mariner engine and wait for the completion of a completely rewritten new one called Gecko.” This freeze in time became detrimental to their further success with AOL buying them out in 1999. The article is well written and holds common principle and practice with today’s technology evolutions.

The article has valuable strengths such as the four main ideas and practice of understanding whether a technology is sustained or disruptive. The four major key points are relevant and industry leaders can use them to further their expertise and comprehension in the vast rapidly growing market of technology. Although the article talks about technology primarily, one can also apply the concepts to fast food chains and their development of new products and services. Investopedia says that “ while companies often plan to make incremental improvements to the way that they do business in order to improve efficiency, they are unlikely to be able to fully plan for disruptive technologies because these technologies can appear suddenly." There are risk takers in the industry that have endless amounts of cash flows, and can begin a project to justify the growing demands of the people. However, for smaller business owners, disruptive technology may completely destroy their revenue model. One of the main arguments that one could make on the Bower and Christensen’s article is that it constantly seems to contradict its own viewpoints. On one hand they state that customers pave the way for disruptive technologies, but businesses should not listen to those demands and focus more on internal revenue structures. For example, the beginning of the article states that companies “succumb to one of the most popular, and valuable management dogmas. They stay close to their customers,” which they state is a paradox. They state that those dogmas are bureaucratic arrogant, and poor planning; however, one can see that customers today pave the way to the majority of the concepts the industry has disruptively created. It would be best to split finances for the business and create a funding project that pays for itself: one that can house new innovations. 

The United States is founded on capitalism, which is a structure that lets people work hard, and earn what they desire. As opposed to communism where gains are shared and commonalities are worshiped. According to Psychology Today, “Desires constantly arise in us, only to be replaced by other desires. Without this continuous stream of desires, there would no longer be any reason to do anything: life would grind to a halt, as it does for people who lose the ability to desire. An acute crisis of desire corresponds to boredom, and a chronic crisis to depression.” This review is making the argument that although Bower and Christensen somewhat have the notion that consumers should not dictate the flow of the business, psychology proves otherwise, when the customer is always right and intends to want more. The idea of innovation and creativity go hand in hand when innovation is produced by business; and creativity and desire and the want for new products are produced by the customers. Although the article strongly correlates disruptive technologies with steps to take in case disruptive technology were to happen, it would have been a much stronger article if it understood that customers pave the way for disruptive technology. Moreover, it would have been more instrumental if it not only focused on larger companies that may have the ability to house the disruptive technologyin independent entities, or locate the initial market for disruptive technology among others, but help smaller businesses to succeed in case of a disruptive technology. The article is written very well will points made directly to the article, so overall the article is well done, but it lacked in answering some of the main questions for different industries such as the food industry and their progression into an innovated era. Some business franchises today have developed new disruptive innovative measures in their restaurants, e.g. McDonalds. A customer can walk up to a machine and place their own order rather than having an employee push the buttons. This may not be completely disruptive, but it can be an incremental change to a larger technology in the restaurant industry. It would be fascinating to see where their development leads them when they broke a key component in Bower and Christensen’s article, which is to house the disruptive technology in an independent entity, among others. Perhaps this is the end for McDonalds? If not, the article may make too many assumptions.

This section of the review will discuss the final evaluation of the article as it pertains to the overall knowledge of the business area. The article is well written and strong. Although it was written in 1994, one can see that larger business can continue to use the knowledge showcased in the article. It is relevant and up to par with the growing trends of technological advancements. Although this article added other criterion to consider, the main points of Bower and Christensen are extremely relatable if used as a model to consider the growing trends of disruptive technologies. This essay has broken down the article of Bowen and Christensen, and has shed some light on potential future attributes that can be added to the model so other smaller business can use it as well. It has placed the consumer in the frontlines of disruptive technologies, and has provided insightful knowledge into relatable topics that have occurred in the past or are currently occurring.