Disruptive Technologies and Innovation
Business dynamics, ever-changing technologies, and consumer demands for better products and services have brought most businesses to their knees. In light of this, it is imperative and of great importance that firms, both big and small, embrace the technological advances. Generally, this will be facilitated by having innovations and accepting talents in companies. In addition, the forms of technologies help to give better and much needed competitive advantages in the market. Hence, disruptive technologies and innovations assist chief information officers (CIO’s) in strategic planning to enable growth.
Disruptive technology is a term that was first coined by Clayton M. Christensen, a professor at Harvard Business School. Simply put, he described it as a technology that displaces an established technology. Effectively, this results in massive changes in the given industry in terms of new markets and new products been realized (Christensen 2003).
Moreover, some of the examples given to make it clearer are the windows operating system, the laptop, cell phones and email. Collectively they brought about the dawn of a new age in telecommunication. To enumerate, individuals were able to communicate with each other at any given time instantly, while in the past they used call boxes which were not portable. Evidently, the emergence of these new devices that could do a number of activities simultaneously such as calling and sending messages led to the displacement of earlier technologies. Basically, the traditional ways such as letter writing, the postal, and telecom industry were displaced and reduced to almost non-existent (Christensen 2003).
In addition, in his book, “The Innovator’s Dilemma” professor Christensen (2003) further separated new technologies into two broad categories namely, sustaining and disruptive. Notably, sustaining technology refers to the betterment of an already existing technology. Therefore, sustaining technology is widely used by big companies. Furthermore, it is used to improve products that have an already established role in the market. Unlike sustaining technology, disruptive technology is not been well established and may not have applications that have been proven due to its newness. Moreover, it may have performance problems due to it been untested.
Innovation refers to coming up with any new idea in production, and development of products and services that may influence the economic and social spheres. Ideally, this means the application of solutions that meet the needs of an existing market (Edison et al 2013). With the same breath, industrial economics sees innovations as a result of wanting to meet the consumer demand. Furthermore, is beneficial to the society since it is a catalyst for economic growth and development (Carayannis, Samara, & Bakouros 2015). To elaborate, there is a need to revolutionize the economic structure by coming up with more efficient production methods, and better quality of goods and services. With this intention, entrepreneurs come up with innovative products that are durable and with better prices. In effect, they are able to capture bigger market segments.
Strategic planning is the process of the management strengthening its operations by making sound and informed decisions, and alignment of the available economic resources with the employees’ competencies and skill in order to achieve the set goals and objectives. Jointly, disruptive technology, innovation, and strategic planning assist in the growth of companies by enabling them to have a bigger market share for their products and services (Dewald et al 2010). In light of this, it is wise to have a workable plan for the three in order to realize a company’s set goals and objectives.
How and Why Should Disruptive Technologies, Innovation be Included in Strategic Planning
To begin with, it is important to note that disruptive technologies are chiefly adopted by small firms, and small and medium enterprises (SMEs). With regard to this, big firms are losing out on business ventures that they otherwise had a bigger chance of securing. In effect, it is important for big companies to continuously undertake rigorous research in order to maintain their competencies by developing new and innovative products.
How can Disruptive Technologies be Included in Strategic Planning
In brief, some of the ways of encouraging the inclusion of disruptive technology in strategic planning include encouraging failure. In essence, the associates should be given a gentle nudge to take risks and be encouraged to be entrepreneurs (Christensen, Johnson, & Horn 2008). Shortly, the risks and entrepreneurial spirit may pay off by coming up with a sound billion dollar innovation. Consequently, there should no be fear of failure for it is a step towards the one in a million innovations that may be revolutionary.
On the same vein, the company should be open to the public and welcome criticism from their fans. Generally, this can be done through innovative ways of capturing a lot of ideas from them. Interestingly, the critiques may offer solutions to the betterment of products and services (Dewald, & Bowen 2010). In effect, their ideas may help the company realize a market niche. Furthermore, although stopping and listening to people while asking questions may sound foolish, it may give the business a great opportunity to know about flaws of its products. In turn, implementation of corrective changes based on the received feedbacks may result in disruptive innovations.
Finally, the company can look for ideas from its neighbors. To elaborate, developed countries have in the past been a source of great innovations, but recently the developing countries have come up with better innovations. In light of this, the developed countries can look for ideas that work in developing countries and implement them at home. Interestingly, some of the revolutionary innovations have been made by people related to immigrants. For example, Steve Jobs, the founder of Apple was a child of Syrian immigrants (Isaacson 2013). With this in mind, the welcoming of knowledgeable and skillful individuals from developing countries into developed European and American economies may create an avenue for people to come up with new innovations.
Why should Disruptive Technologies be Included in Strategic Planning
Notably, the advantages of having disruptive technologies are far greater than the demerits. As a consequence, small firms have grown immensely due to the adoption of disruptive and not sustained technologies. To emphasize, disruptive technologies have brought forth new markets through innovation for new products, and enhancement of existing products or services. Through finding and exploitation of market niches present, companies have been able to secure client base before other firms’ enter into these new markets (Walsh, Kirchhoff, & Newbert 2002).
In fact, there is a further quality improvement of new products. In essence, this is due to product flaws been removed by the new technologies. Importantly, this furthers customers’ satisfaction through the offering of quality products that have a competitive advantage against the rest. Moreover, disruptive technologies bring about efficiency. Generally, the new innovative technologies are fast, reliable and efficient to use. In turn, this brings about the aspect of reduced operational costs due to efficiencies brought by the new innovative technology. To explain, the cost of production may be halved and result in additional profits for businesses.
Likewise, innovations are able to point out weaknesses in the current operations. In brief, this is through identification of processing areas that need structural improvements. In addition, the management of the firm may also be put under the microscope. Ideally, innovations enable the firm to know of potential future leaders among its employees (Edison, Ali, & Torkar 2013). Typically, innovators and thinkers use non-conventional methods to carry out skilled production. Entrepreneurs and individuals with these characters are the ones who bring about disruptive innovative technologies into being. Therefore, they usher in new products that are advantageous in the market. Last but not least, disruptive innovations bring about opportunities for the future. To clarify, there is the possibility for some totally new products to be developed in the innovation process. For example, the innovation of mobile phones led to the development of totally new technologies such as the mobile money payment systems.
Demerits of Missing out Disruptive Technologies and Innovations
Failure to embrace the disruptive innovations can be catastrophic to a company. Not only will it lead to unproductive and inefficient output brought about by use of redundant and outdated technologies, it can also cost the company big market share. Ideally, this is brought about by big firms not been interested in the small markets that are brought about by disruptive technologies. Primarily, this is as a result of them having the responsibility to their shareholders to maintain steady growth rates and not risking their funds in unproven businesses.
Consequently, the company will enter the market once the profits are big enough but at a time when it is too late to get a big share of it. As a result, the business will lose the market entirely and the company will have diminishing profits over time and lose its competitive advantage. In effect, this will cause massive losses to the shareholders.
Challenges Faced by CIO’s and CTO’s From Disruptive Technologies
Apart from the numerous advantages that come with the adoption of disruptive innovations, there are a few hiccups faced by the CIO’s and CTO’s. Due to the ever changing and increment of innovations in the IT sector, there is a convergence of many technologies such as internet of things, use of data clouds, and analytics which provide insight from massive amounts of data (Sultan 2013). Further, there is also the emergence of robotics, cognitive computing, and artificial intelligence in many business environments. In light of these innovations, CIO’s and CTO’s are most burdened in ensuring that there is top-notch security for valuable organizational data. Nonetheless, the rise and growth of these technologies namely robotics, cognitive computing, and artificial intelligence will lead to the reshaping of known markets. In effect, this will cause a shift in profits for companies that will have to assimilate them in their strategic plans.
Another key point, CIOs are faced with the challenge of global consistency and variation. To point out, there is the emergence of some technologies globally while others appear regionally. For instance, a CIO in a company based in the USA may receive pressure from technologies emerging from China that are yet to be adopted in other countries. For example, biometrics has been well developed by the Chinese and is expected to be the main driving force in business. Thus, it may cause huge transformations in the business industry in countries such as the US that have not fully adopted these technologies (Christensen, Johnson, & Horn 2008). To put it differently, innovations are coming up much faster than can be adopted and used effectively. To clarify, technology leaders say that technology complexity is the main hindrance to businesses adopting and assimilating technologies such as data and analytics.
To summarize, CIOs are having a hard time assimilating all the gainful technologies. With this in mind, CIO’s should now more than ever use their resources and skills to determine which technologies may potentially benefit their companies. Nevertheless, despite these challenges, CIOs stand to benefit from the emerging technologies. For instance, reduced costs, increased productivity, and organizational value increment are some of the opportunities that these emerging technologies may offer companies. Correspondingly, CIOs need to encourage senior management to take risks on adoption of these innovations. Similarly, they should invest in talented individuals and also get better methods to implement the emerging technologies. All these will put the CIOs in a better position to evaluate emerging technology and accelerate the process of adoption and utilization (Hall & Martin 2005).
How Innovation and Disruptive Technologies Contribute to Competitive Advantage
Markedly, through the use of innovations and disruptive technologies, smaller firms can gain the advantage over bigger companies which have better resources and bigger markets. Importantly, the smaller firms are able to test out unprecedented ideas on products and services which enable them to create new markets for their products. With regard to this, the firms are able to capture bigger consumer markets which were originally owned and controlled by large companies (Govindarajan, Kopalle, & Danneels 2011). In effect, smaller firms have a competitive advantage over large companies when implementing new technologies due to lack of bureaucracies.
Further, disruptive technologies cause innovations that simplify the manufacturing of products and add value (Christensen 2003). Notably, for the society to adopt disruptive technologies, they must be simpler to use and more efficient than the existing ones. In turn, this enables faster manufacturing of products which cause increased productivity. In the long run, this effective manufacturing leads to cost cutting. Furthermore, technologies such as the internet have replaced the newspaper industry and have led to better online advertising platforms (Christensen, Johnson, & Horn 2008). Moreover, disruptive technologies such as mobile telecommunication enable consumers to access information faster and wherever they are through a click of a button. As can be seen, this reduces advertising cost, creates quicker awareness and improves sales. Consequently, this gives companies that embrace innovations an advantage over those that are yet to adopt it.
In summary, disruptive technologies and innovations are the wheels that today’s businesses rely on for survival. Adoption and assimilation of these technologies lead to unprecedented efficiencies in production, bigger market shares, a cut down in operational costs, performance delivery, and value-addition, which effectively lead result in firms having a competitive advantage in the market. In light of this, there is need for a research to investigate the effects of disruptive innovative technologies especially on prevailing technologies that are owned and managed by big companies. Furthermore, large companies have a long implementation period of existing technologies due to existence of lengthy bureaucratic processes in decision making.
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