One of my responsiblity at work involved identifying and monitoring disruptive technologies, especially infocomm technologies that will drastically change the economic, business and social landscape in Singapore. But what is disruptive technologies and how do you identify them?
In the classic Crossing the Chasm, Geoff Moore describe a Technology Adoption Lifecycle Curve1. The curve is loosely divided into 5 segment: Innovators, Early Adoptors, Early Majority, Late Majority and lastly Laggers.
More interesting, the area under the curve can be interpreted as the User Expections from the technology. And the more mature the technology, the higher the user expections. The laggers remains is the most difficult customers that often requiring the most resources and thus, most companies adopt the 80/20 rule.
Embracing this 80/20 is not an easy. Technology-centric and even customer-centric companies often falls into this pitfalls and collapsed under over-engineering. Their products that is so sophisticated that only a few customers really need. In an ideal case2, the company will innovate carefully, by listening to their customer but not fullfill every request. Knowing what to include and what not to is a constant challenge.
Now, imaging there is a new competiting technology that comes along a few years later. By that time, the old technology is already matured and already captured the mass market.
When you compare the old with the new, there is a huge gap in ability to meet user expections (and hence market size). So it doesn’t matter how cool the new technology is or the advantages the new technology has over the old one or how cheap it is; It just isn’t in any position to compete with the old one yet. Some of these technologies could potentially stays in this phase (ie. stage 1) for a long time since there is no incentives to develop these new technologies. Most people3 would ignore it as something not worthy to pay attention given its small market size. And to be fair, they could rightly be so since the new technology may turn out to be just noise.
However, if and when the disruptive technology managed to cross the chasm (ie. stage 2), that’s when the fun begins. People begin to take notice of the new technology and investments are made to develop it. At this stage, it will began to take market share away from the old technology.
If the old technology up the ante and plays the competitive game, they will either run into the 80/20 barrier and collapse on its own weight. Alternatively, it will occupied a niche high-end market while the mass embraces the new one.
The bottomline is: It is not about which technology is more advance, but which technology can satisfy the User Expections. And eventually, the new one will reach the 80% (or “Good-Enough”) mark (even if it takes years).
Thereafter, we can repeat the whole story again with another new technology and so on and on…(isn’t it fun to be a technologist? :-)
Lets looks at some examples to see how this play out:
i) IPv6 is still in stage 1, cruising along, waiting for its moment to break out to mass market. Compare IPv4 and IPv6 is moot at this stage since IPv4 wins hand-down. I could name a dozen of other promising technologies in this stage: PKI, Semantic Web, Mesh Network, etc etc.
ii) IP Telephony (SIP-based) shows sign of entering stage 2. While it still not taking away significant market shares from the normal telephone, we can already see rapid development and deployment. RFID is another example.
iii) Server side Linux is well developed in the stage 2, already taking huge market shares from competitors like Solaris. Companies like IBM and HP are smart enough to embrace Linux quickly even though it means giving up AIX and HPUX. In certain ways, AIX and HPUX (and even Solaris) are already dead. (They just don’t know it yet)
iv) On the other hand, Linux desktop4, is still in stage 1. Like it or not, it is not ready for mass market. So why Microsoft is determine to fight Linux so strongly even though it is not competiting with it yet? Well, once it hits stage 2, then it would be a matter of time for Linux to replace Windows. My guess is that Microsoft is determine to keep Linux desktop instage 1 as long as it can5.
v) Speaking of Microsoft, have you notice that their recent focus are moving towards stuff like Xbox (Gaming), PDA, Mobiles, Media Player but very little on Windows itself? But when is the last time you have something you wish Windows can do which you are very sure everyone else wants it too?
vi) When CTO of Cray say “Linux clusters don’t play in HPC“, well, you know where they are in the graph.
And my answer is, Yes but Linux don’t need to :-)
What does this teach us about disruptive technology?
a) You cannot identify stage 1 disruptive technologies by looking at its market size. You cannot even trust market survey or asking the “existing market players”. Most would just ignore it because it is so insignificant.
So how do you identify disruptive from noise? The yardstick I am using is growth rate. If a technology has 100% growth year on year, you know you’re onto something. Technologies like SIP and Social Software, like Internet and WWW in the 90s, are growing at this rate.
b) By the time disruptive technologies reaches stage 2, the game is over. Even though both old and new technologies may co-exists for many years6 to come, the old one will eventually be replaced (50 years if it need to be).
Big players of today rides the wave of yesterday disruptive technologies to where they are. Ignore the new wave and securing a position for yourself in the new market place is sucidal. So embrace disruptive technologies as quickly as you can while keeping the old.
c) Stop competing in features, especially features most people don’t need. Sometimes good enough is really good enough.
d) Always always watch for new technologies. What you don’t know can hurt you! I am always more afraid of what I don’t know then what I know.
1 The book focus is on “the technology chasm” between the visionary to majority market, a most difficult period time for any technology. It is not specifically on disruptive technologies.
2 On a related note, check out Clay Shirky eassy on Situation Software where he argue that software should be designed for specific needs then for the mass market. If his arguments is true, then the ideal situation may not be the 80% mark but one much lower.
3 “Most people” probably dont even aware of its existence.
4 I installed my first Linux desktop in 1993. Anyone still remember you have to manually calculate the vsync and hsync numbers (which also enables you to get funky resolution like 821×516) to get XFree86 running and comes with a warning that it might blow up your CRT monitor if you calculate them wrongly?
5 I shall make a bold prediction: that Microsoft will turn 180degree around and embrace Linux desktop when they realise Linux reach mass market. Microsoft is a very smart company and they know when to turn around. But of cos, by that time, Microsoft will be entranced in other market industry so giving up Windows may not be a big concern to them.
6 Well, Email has not fully displace Snail Mail and Aeroplanes has not fully displace Trains yet.
Additional Note: The 20% and 80% lines are really arbitary. Think of it as the band where technology have positive ROI. If it is below the “20% line”, then it doesn’t have enough adoption to be profitable. if it is above the “80% line”, you have negative return on investments.
