What Is Disruptive Technology?

Disruptive technology is the technology that affects the normal operation of a market or an industry. It displaces a well-established product or technology, creating a new industry or market. A professor at Harvard Business School, Clayton M. Christensen, invented the term “disruptive technology.”

New technology can either be sustaining or disruptive. While sustaining technology depends on the incremental improvements in the already existing technology, disruptive technology is a completely new one. Hence, the practical application of such types of technology may not have been proven yet. Also, disruptive technologies often attract a small audience and generate performance problems. They do not occur frequently; however, they are more suitable for long-term use.

Disruptive vs Innovative

People are sometimes confused about the difference between innovation and disruption. It’s not exactly black and white, but there are real distinctions, and it’s not just splitting hairs. Think of it this way: Disruptors are innovators, but not all innovators are disruptors — in the same way that a square is a rectangle but not all rectangles are squares. Still with me?

Innovation and disruption are similar in that they are both makers and builders. Disruption takes a left turn by literally uprooting and changing how we think, behave, do business, learn and go about our day-to-day. Disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.

Sustaining innovations are typically innovations in technology, whereas disruptive innovations change entire markets. For example, the automobile was a revolutionary technological innovation, but it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908. The mass-produced automobile was a disruptive innovation, because it changed the transportation market. The automobile, by itself, was not.

Examples of Disruptive Technologies (Both Past and Present)

Throughout the modern history of technological innovations and developments – and currently, with evolving advanced technologies – a myriad of disruptive technologies have come about that have one critical thing in common – they have greatly shaken up “business as usual,” and have changed the current markets in a significant way. As noted by Statista, as early as 2025 experts estimate that there will be major economic impacts on different markets as a result of the evolution of several key, novel technologies, such as AI, Blockchain and Cryptocurrency to name a few.

Here’s a list of Examples of Disruptive Technologies both in the past and into the Future:

1. The Internet

The Internet equates with a global connection of servers and clients, and other networked devices in a very large interconnected network of WANs (Wide-Area-Networks) and LANs (Local-Area-Networks), allowing computer systems all over the globe to communicate with one another via centralized and decentralized servers. The HTTP-based World Wide Web allows people to surf the Internet’s myriad of websites, which has radically changed the way people study, research, learn, and communicate. The Internet has effectively altered businesses on a global scale, and has even helped with globalization by creating a more interconnected world, while also creating entirely new markets such as e-commerce.

2. Email

Before electronic mail was available, paper and fax communications were used to distribute personal or business messages to other parties using whatever technology was available at the time (either via phone lines or couriers, etc.). Email greatly decreased the required timeframes for personal or business message communications, while offering a more secure and efficient way to communicate with others, including those across the globe (using the Internet) andallowing new markets associated with the evolving Internet to thrive.

3. Cellphones

Before cell phones became standard technological systems, personal communications were limited to pagers and car phones. Cell phones connect to cellular towers and use radio waves to transmit data in an analog format, along with complex telecommunications engineering protocols to transducer those signals into discrete, digital data. Like email, Cellphones allowed for quick and efficient communications between personal parties or business parties, greatly altering how people operated, and effectively making the pager and car phone markets obsolete.

4. Artificial Intelligence

While Artificial Intelligence isn’t entirely new, the advent of Machine Learning and Deep Learning, in conjunction with Robotics, allowed machines to “learn,” grow and rewrite their own algorithms to simulate the way a human brain grows in knowledge with learning and experience. Advanced AI has radically changed how businesses analyze their business data, how SMEs and large enterprises create corporate strategies, and how everyday applications use data to “learn” and help make products better for consumers. Along with automation, machines, and apps that can “think” and “learn” have the ability to change entire job markets and create new economies, while changing the efficiency and bottom lines of most companies that deploy them.

5. Blockchain

The Blockchain is a new, advanced technology platform that uses complex cryptography and a decentralized network as a distributed ledger technology that can build apps, record data transparently, or carry out financial transactions via a chain of blocks. While blockchain technology is typically equated with “Bitcoin,” it has become a platform used for a variety of decentralized and transparent projects, such as smart contracts and even a completely decentralized Internet. Blockchain technology has the ability to completely alter the entire market associated with the Internet and application development.

6. Cryptocurrency

While Bitcoin remains the premier cryptocurrency, the desire for globalized consumers to conduct financial transactions transparently without the middlemen of banks created the phenomenon of cryptocurrency, which has the potential to completely change the face of financial systems on a global scale. Cryptocurrencies are essentially digital tokens or assets generated by and transacted via the distributed ledger technology known as the blockchain. Thus, as a digital currency, cryptocurrency has radically changed how the concept of “currency” is regarded, while new cryptocurrencies spring up on a yearly basis – some based on businesses, concepts, or even private interests. How financial institutions and governments have reacted to the disrupted innovation known as cryptocurrency defines its truly disruptive nature as an alternative currency that does not rely on banks or governmental institutions.

The Potential of Disruptive Technology

Risk-taking companies may recognize the potential of disruptive technology in their own operations and target new markets that can incorporate it into their business processes. These are the “innovators” of the technology adoption lifecycle. Other companies may take a more risk-averse position and adopt an innovation only after seeing how it performs for others.

Companies that fail to account for the effects of disruptive technology may find themselves losing market share to competitors that have discovered ways to integrate the technology.

Key Points

Disruptive technology is a technology that affects the way businesses, consumers, or industries function.
Disruptive technology generally attracts a limited audience, performance issues, and unproven practical application.
Artificial intelligence, virtual/ augmented reality, internet of things, blockchain technology, and e-commerce are some of the disruptive technologies significantly influencing the future.

Conclusion : Opportunity In Change

While disruption brings radical change to industries, it also presents an opportunity for established businesses to adapt and grow. In a recent KPMG International survey, 98 percent of business leaders said they see technological disruption as more of an opportunity than a threat.

As disruptive technologies continue to emerge across business sectors, entrants and incumbents alike are afforded the chance to innovate in the face of shifting market demands.