Disruptive innovation

Your friend is in the car with you and you are both trying to locate tonight’s dinner party. After a full ten minutes of searching for the place, you come up with a brilliant idea and ask your friend to ‘Melway it’. For the following five minutes you get to watch him methodically look up the street name in the index and then struggle to flip to the right page, under some hopelessly dim light source in the car. But wait, it’s not over yet. You roam around aimlessly in the car until one of you finally recognises a street sign that corresponds to your Melway page, nailing down your location and arriving just in time for the main course.

What would we do without Melway?

Let’s drive further down memory lane. Just ahead is where I distinctly recall my delight at being given an amazing Nokia branded device that not only enabled me to text and call, but more importantly allowed me to play ‘Snake’ anytime and anywhere. On the right is my younger self gripping tightly onto a Kodak film roll whilst walking down to the local chemist to have it developed.

What do these brands have in common? Well, these icons once dominated their respective industries but are now lagging behind in an age of technology and innovation. Today, a few clicks of a button can track down your location and your next left turn, compliments of Google Maps. In 2005, Nokia was considered the fifth most valuable company in the world and led the cellphone market until late 2007 with its wide array of models. So what happened in 2007?

The iPhone happened.

Similarly, Kodak was once a leading icon of the photography industry. However, their stubbornness to digitalise spelled its rapid decline from the photography scene.

The common term addressing these phenomena is ‘disruptive innovation’, coined by Bower and Christensen in 1995. Essentially, the phrase refers to the ability of a certain innovation to create a new market and value network, whilst displacing a previous technology.

Nokia is a good example of a brand that was built upon ‘sustained innovation’ in which each phone model saw small improvements over previous models; this could mean a better camera, more storage space or a longer lasting battery. Albeit profitable, the linear trajectory that Nokia travelled upon quickly took a turn for the worse as Apple completely disrupted the market with both their hardware and software offerings.

The 21st century setting is characterised by technology that connects individuals to the extent that a product such as Flappy Bird may be downloaded over one million times within the 24 hours since its inception, reaching smartphones across the globe. Whereas previous innovations that were considered disruptive may have had small and slow ripples flow across borders over time, today’s rapid globalisation has compounded these effects so that such a phenomenon could make a dramatic splash that hurtles waves across the world. Technology has not only broken down borders, but has also enabled American YouTube videos from Khan Academy to teach me physics, Melbourne culture to be spread to Germany via a teenager’s blog on WordPress, and me to fund a radical idea in Iceland via Kickstarter whilst sitting on a toilet.

We have observed a distinct shift in mindset whereby enterprises realise that they need to be adaptable and innovative to keep up. Nokia has since introduced the Lumia, Blackberry has made touch screens standard across their models and LG has integrated the Android system onto their phones. Even age-old establishments such as restaurants that have traditionally relied upon word of mouth and longstanding reputations have recognised the need to innovate. Whether it is through maintaining an attractive website, interacting with customers via Facebook and Instagram or offering patrons the option of booking online, these restaurants have recognised the need for improvement when competition is at the point where a quick scroll through Urbanspoon could quickly reveal the other seven Thai places within a mile’s radius.

If we delve further into the economic effects of disruptive innovation, we can see that new technology, products and services will certainly mean new jobs. There are many occupations today that involve skills that were not used even just a few years ago. An example that comes to mind is how my lecturers (a few of whom have been teaching before this century began) are now required to manage the virtual university Learning Management System which includes recording lectures online, making materials available for download and consistently managing an email platform. This upward trend in technological progress has been recognised by the US Department for Labour who predicted in 2012 that 65 per cent of children attending primary school in the U.S. will end up working in jobs that are yet to be created.

At this point, the future might seem a little bleak given that my stocks in Enron could potentially sink tomorrow or that my Microsoft PowerPoint skills that I have cultivated since fifth grade may quickly become obsolete. This unshakeable uncertainty means that any investments, whether it is into skills or material matter must be carefully considered. For instance, whilst quite a few high schools in Victoria have recently implemented Mandarin as their second language, there are still many that teach German and Japanese. Don’t get me wrong; both languages are immeasurably useful, but the value of learning these languages was much more relevant in the twentieth century when both economies were developing at rapid rates as opposed to the landscape today. So, with such an innovative and disruptive world around us, we must look to stay open minded, and invest in areas that are both durable and adaptable.

Image: ‘Kodak’ by Insomnia Cured Here, https://flic.kr/p/3a4SUa. Licence at https://creativecommons.org/licenses/by-sa/2.0/. by-sa