Disruptive innovation
Disruptive innovation

‘Digital disruption’ refers to changes enabled by digital technologies that disrupt established methods of value creation, social interaction, business processes and, more widely, our thinking.

Often portrayed in negative terms, disruption can be seen as both a threat and an opportunity. Digital technologies do threaten and invalidate existing business models, but they also create opportunities for entrepreneurs to innovate and compete with established competitors in a range of industries.

Digital disruption doesn’t just affect the way we do business – it changes the basis on which we make sense of, give meaning to and understand our business and work-life practices.

Think of how mp3 disrupted the music industry. Initially dismissed as a fringe technology with inferior sound quality, mp3 has fundamentally redefined not only the music industry, but what we understand music to be.

When the original iPod was released, many people asked “why do I need 1000 songs in my pocket?” Today we take it for granted. Quality is no longer a mainstream issue. Music consumption is about easy accessibility and mobility. This change has redefined our very understanding of what counts as a product in this industry.

New technologies often do not make much sense to established industry players at first. And despite what the name suggests, ‘disruption’ doesn’t happen suddenly. The disruptive technology, product or service has usually been around for a while before it unfolds its disruptive potential.

Why then do we frequently (dis)miss it? Because incumbents cannot see the disruptive potential in an emerging idea. It does not make sense initially, because it challenges the tacit background on which the industry is understood, causing it to appear as irrelevant, as a niche or fringe product.

Kodak could not see the potential of digital photography, even though the company owned most of the relevant patents. Blackberry and Nokia could not see how a phone without keyboard could be taken seriously. Yet, the iPhone has redefined what counts as a phone.

Disruption is very hard to spot and predict when it is unfolding, because disruptive innovation is revolutionary and path-breaking, not just evolutionary. The ensuing change cannot simply be extrapolated from the past into the future.

In hindsight, such changes often look inevitable, which is why we ask how incumbents didn’t see the writing on the wall. But the world was very different back then!

This article was originally published within The University of Sydney Business School’s Magazine, Sydney Business Connect (p4, October 2015 edition). Read the original article.