Discussion

What are the key features of traditional disruptive innovation?

1. Start with a lower-priced, inferior alternative: "It assumes that disrupters start with a

lower-priced, inferior alternative that chips away at the least profitable segments."

2. Target the least profitable segments: "It assumes that disrupters start with a lower-priced,

inferior alternative that chips away at the least profitable segments."

3. Gradual improvement and market expansion: "When these disrupters appear, we’ve learned,

it’s time to act quickly - either acquiring them or incubating a competing business that embraces

their technology. Nearly two decades of management research, beginning with Joseph L. Bower

and Clayton M. Christensen’s 1995 HBR article, “Disruptive Technologies: Catching the Wave,”

have taught businesses to be on the lookout for upstarts that offer cheap substitutes to their

products, capture new, low-end customers, and then gradually move upmarket to pick off

higher-end customers, too."

4. Give incumbents time to respond: "It assumes that disrupters start with a lower-priced, inferior

alternative that chips away at the least profitable segments, giving an incumbent business time to

start a skunkworks and develop its own next-generation products."

5. Follow a planned market adoption pattern: "Big-bang disruptions don’t follow the usual

pattern of customer adoption famously described by Everett Rogers. According to his model

(shown in gray), new products sequentially gain popularity with five market segments. The

big-bang model (shown in red) is taller and much more compressed: in it, new products are

perfected with a few trial users and then are embraced quickly by the vast majority of the market."

This implies that traditional disruptive innovation follows the pattern described by Everett Rogers,

which is sequential and involves different market segments over time.

6.Enable strategic response by incumbents: "When these disrupters appear, we’ve learned, it’s

time to act quickly - either acquiring them or incubating a competing business that embraces their

technology." This shows that incumbents have the option to respond strategically to traditional

disruptors through acquisition or incubation of a competing business.

Why can big-bang disruption provide low cost,product innovation, and

several key factors:

1. Unencumbered Development:
 Rapid Prototyping: Big-bang disrupters often emerge from rapid prototyping events like

hackathons, where developers create new products in a short time with minimal investment.

This low-cost, experimental approach allows for quick iteration and testing of ideas without

significant financial risk.

 Low Overhead: These innovations are built on ubiquitous technology platforms that have low

entry barriers, such as the internet, cloud computing, and mobile devices. This reduces the

cost of development and deployment.

2. Unconstrained Growth:

 Collapsed Product Life Cycle: Traditional product life cycles with distinct customer segments

are collapsed in big-bang disruptions. This means products can be marketed to all segments

simultaneously from the start, reducing marketing costs and accelerating adoption.

 Network Effects: Big-bang disrupters often build market share quickly through network effects,

where the value of a product or service increases with the number of users. This can lead to

rapid growth without proportional increases in cost.

3. Unorthodox Strategy:

 Exploiting Technology: The rapid advancement and decreasing cost of technology, especially

in computing power, enable these disrupters to offer more for less. They leverage cloud

services, open-source software, and other cost-effective technologies to provide innovative

solutions.

4.Customer Intimacy:

 Direct Engagement: Big-bang disrupters often have direct engagement with customers

through digital platforms, which allows for real-time feedback and rapid product improvements.

This close interaction enhances customer intimacy.

 Personalization and Customization: By leveraging data and analytics, these disrupters can

offer personalized experiences and customized solutions, which traditional businesses

struggle to match due to the scale and speed of technology-enabled personalization.

crucial role as engineers and developers gather to create new products in a short time. This allows

for rapid experimentation and the generation of innovative ideas with little risk, as seen with

Twitter's humble start at a hackathon. The smartphone, a powerful digital platform, enables better

and cheaper offerings like free mobile apps that outperform dedicated devices. Consumers' access

to extensive product information via mobile and online sources, along with their ability to contribute

and share, accelerates adoption. Cloud computing and open platforms support the easy

development and deployment of new technologies, reducing the need for large upfront investments.

Moore's Law further empowers disruptors to offer better performance at lower cost, competing on

all value disciplines and fulfilling customer needs more effectively.

The article suggests that most industries will bedisrupted (p.56). Do you
agree? And why?
I agree with this assertion for the following several reasons:

1. Technological Advancements：Rapid technological progress across various fields can lead to

sudden shifts that disrupt existing business models. For instance, the advent of cloud computing

has transformed the IT industry, making traditional software models obsolete .

2. Globalization and Digitalization:The increasing interconnectedness and digitalization of the

global economy are causing significant changes in how businesses operate. This can lead to the

emergence of new competitors and business models that disrupt established industries .

3.Consumer Behavior Changes：Changes in consumer behavior, driven by factors such as

increased access to information and new technologies, can lead to disruptions. For instance, the

shift towards sustainable living has disrupted industries like fashion and food production .

4.Emerging Technologies：Technologies like artificial intelligence, blockchain, and the Internet of

Things (IoT) are poised to disrupt a wide range of industries by changing the way products are

developed, manufactured, and delivered .

Please provide an example of big-band disruption in real life (not

Traditionally, the automotive industry was dominated by conventional internal combustion engine

vehicle manufacturers. These companies had established production lines, dealership networks,

and a long history of engineering expertise centered around gasoline or diesel-powered cars.

However, the infusion of information technology has revolutionized this landscape. The
development of sophisticated software systems, high-speed data transmission networks, and

powerful computing capabilities has paved the way for the rise of new players and innovative

business models.

With the emergence of electric vehicles (EVs) and autonomous driving technology, companies like

Tesla have risen to prominence. Tesla started with a focus on building high-performance electric

vehicles, leveraging advanced battery technology and sleek designs. Their Model S, for example,

was one of the first EVs to gain significant attention in the market, offering long driving ranges and

rapid acceleration. This was not only due to its mechanical and electrical engineering feats but also

the integration of intelligent software systems that managed battery performance, power

distribution, and vehicle diagnostics.

In addition to EVs, the development of autonomous driving technology has been a game-changer.

Tesla has been at the forefront of this as well, with its Autopilot feature gradually evolving to offer

more advanced driving assistance capabilities, such as adaptive cruise control, lane centering, and

even the promise of full self-driving in the future. Behind this lies a complex web of sensors,

cameras, and radar systems that continuously collect and transmit data in real-time. This data is

then processed by powerful onboard computers running advanced algorithms, which are often

updated and refined using machine learning techniques. The ability to handle and analyze vast

amounts of data in a timely manner is a key aspect of the success of autonomous driving

technology.

These innovations have led to a rapid shift in the automotive landscape. Consumers are

increasingly attracted to the environmental benefits of EVs, such as reduced emissions and lower

operating costs. The idea of a vehicle that can drive itself, at least to some extent, also holds great

appeal, promising increased safety and convenience. The adoption rate of these new technologies

has been accelerating, much like the pattern seen in big-bang disruptions in other industries.

Reasons for Big-Bang Disruption

A. Unencumbered Development

Electric vehicle and autonomous driving technology companies have been able to innovate freely.

For EVs, they could experiment with different battery chemistries, charging infrastructure designs,

and vehicle architectures. Tesla, for instance, has been continuously improving its battery

technology to increase range and reduce charging times. If a new battery design didn't meet

expectations, it could be refined or replaced without the massive sunk costs associated with

retooling an entire traditional automotive manufacturing plant.

Regarding autonomous driving, companies could test and develop software algorithms in a virtual

environment before deploying them on the road. They didn't have to rely on the same physical
manufacturing and assembly processes as traditional automakers. This allowed for rapid iteration

and improvement. For example, Tesla's Autopilot software is constantly updated over the air,

enabling the company to add new features and fix bugs without customers having to bring their

vehicles into a service center.

Moreover, the utilization of information technology has enabled these companies to access a global

pool of talent and resources. Through online platforms and collaborative software tools, engineers

and researchers from different regions can work together on projects. They can share code,

designs, and research findings instantly, accelerating the pace of innovation. Additionally, cloud

computing services provide scalable and cost-effective computing power for processing the large

amounts of data generated by autonomous vehicles and for running simulations.

Also, these new players have been able to leverage the existing technology ecosystem. They didn't

need to build their own extensive R&D facilities from scratch for every component. Instead, they

could partner with tech companies for things like sensors, chips, and software development. This

enabled them to focus on their core competencies of integrating these technologies into a

seamless driving experience.

B. Unconstrained Growth

Continuous Improvement and Expansion: Electric vehicle companies are constantly working on

improving battery range, reducing charging times, and enhancing vehicle performance. Tesla, for

example, has been expanding its Supercharger network globally, making it more convenient for

customers to take long trips in their EVs. Autonomous driving capabilities are also being enhanced

continuously, with the goal of achieving safer and more reliable self-driving experiences. As these

improvements are made, more consumers are attracted to the technology, leading to a cycle of

growth. In contrast, traditional automakers have been slower to adapt, facing challenges in

transitioning their existing production lines and engineering know-how to accommodate EVs and

autonomous driving.

Undisciplined Strategy (in the Traditional Sense)

The new entrants like Tesla have been able to disrupt the market by not following the traditional

playbook. They have adopted direct-to-consumer sales models in many cases, bypassing the

traditional dealership networks. This has allowed them to have more control over the customer

experience and pricing. Traditional automakers, on the other hand, have been tied to their

established dealership relationships and sales channels, which can sometimes be a hindrance to

rapid innovation and adaptation to the new trends in the automotive industry.