Thursday, April 12, 2007
Everyone loves disruptive technologies...well, except for the disrupted. A disruptive technology is a technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market. Think Steamships and Sailing ships. Think automobiles and horses. Think muskets and crossbows. Think iPods and compact discs.
But are there any true disruptors? "Clayton M. Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is strategy that creates the disruptive impact." My favorite disruptive technology/innovation is one that does away with all of the inefficiencies in a certain market.
Like Chris Anderson's "The Long Tail," in the music market, music stores(Tower Records or a Wherehouse) had gross inefficiencies in offering the amount of music because of cost of storage space. Online retailers had much larger warehouses and were able to make their way down this tail capture a sizeable piece of these inefficiencies. Companies like Apple, with iTunes, and Rhapsody were able to take this to the next level and become perfectly efficient and in doing so created niche markets for specialized music tastes. These disruptions changed the music industry as a whole. Getting every listener the ability to get to the music he wants to listen to.
Another example of this, which was brought to my attention from my Grandfather, is when the Investment Banks began to lower trading commissions for their securities. Although no special technology was involved, the ability for investors to execute trades at 1/8 of the previous price completely changed (increased) the opportunities available. Day trading became much more common and profitable.
Some recent examples of great new disruptors who I think are doing it right take an example right out of eBays playbook.
www.Zillow.com free real estate platform with good valuations
- Help home buyers and owners with finding value, buyers and sellers. (New version real estate brokerage)
www.Zopa.com (peer-to-peer lending)
- Helps find good rates to lend and borrow money.
(New version of a bank)
www.Odesk.com (The On Demand Global Workforce)
- The marketplace for remote work.
(New version of a staffing company)
I look to Leverage Long Odesk, Zillow, and Zopa. Look for these three and maybe a few more to really shake things up. Out with the old guard.