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Disruptive Technology



 
 
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  #1  
Old October 17th 04, 01:58 AM
Steelgtr62
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Default Disruptive Technology

From the late Dr Petr Beckmann

The Innovator's Dilemma - When New Technologies Cause Great Firms to Fail by
Clayton M. Christensen, Harvard Business School Press (1997), is a very
perceptive analysis of the dynamics of technological advance - especially the
introduction of radically new products.

Christensen defines two types of technology - "sustaining technology'' and
"disruptive technology.''

Sustaining technology is that with a developed market. In well-managed
companies which supply this technology, the products advance as rapidly as
improvements in science and engineering permit -along the lines desired by the
customers of the company. Managers carefully determine the desires of their
customers and plan engineering development projects to satisfy those customers
as quickly and cost-effectively as possible. These companies develop and infuse
their work force with ethics, procedures, and goals consistent with this
process in their respective industries.

Disruptive technologies, on the other hand, are usually simpler and cheaper
than the sustaining technology, but also offer less capability. They do not fit
the sustaining market and, typically, provide lower profit margins. For this
reason, they are usually shunned by well-managed companies - which are often
later destroyed by them.

Christensen illustrates these ideas with real examples from different
industries including those producing computer disk drives, earth excavators,
motor bikes, insulin for diabetics, and (as an illustration of a possible
future case) automobiles - conventional vs. electric cars.

Figures 1, 2 and 3 (adapted from numerous excellent figures with which his book
is illustrated) show some of his primary ideas.

In Figure 1, the dotted lines represent the range of performance required by
consumers. For example, in disk drives this could be drive capacity, where the
sustaining technology was, at the time, the 5.25 inch disk, while the new
disruptive technology was the 3.5 inch disk.

During the first part of the illustrated time interval, performance of the 5.25
disk satisfies the market, while the capacity of the 3.5 disk is too low. In
the course of time, however, improvements in the 5.25 move its capacity beyond
that desired in the market, while the 3.5 gradually achieves capacity
sufficient to enter the large market.

The critical time is before this happens - when the disruptive technological
innovation cannot yet satisfy the requirements of the mainstream market. During
this time, those who are developing the new technology obtain a great
advantage, so that late entering competitors cannot catch up. At the same time,
the new technology must be marketed for alternative applications (that may not
even be known at the time of its introduction), at low profit margins, and in
relatively minor markets. This makes it unattractive to the mainstream
companies whose customers are not asking for it and whose profits are so large
that the emerging technology would be a nuisance without economic advantage.
Moreover, the mainstream companies are continually striving for innovations
that will increase the capabilities of their product and, thereby, allow them
to enter markets above them where profit



margins are greater - not below them where margins are less.

The result of this phenomenon is that most mainstream companies - even though
they are very well managed, increasing in profits, and very responsive to their
customer's wishes - are unable to adopt disruptive technologies which
eventually drive them out of business. Christensen, by means of real examples,
shows that the most effective strategy is for large companies to start small,
independent companies which they control financially - but not otherwise - to
establish bases in disruptive technologies.



Figure 2, illustrating some of the same points, also shows (illustrating with
computer disk drives) the evolution of a product from a high-margin item to a
commodity.

When the disruptive technology (a smaller disk drive) improves to the point
that its capacity is adequate, competition then shifts to size and then to
reliability. Ultimately, when both technologies have outrun the technological
needs of the market, competition shifts to price alone - a commodity market.

Notice that throughout these steps, the established company must keep
engineering its products downward and competing in markets with decreasing
profit margins - while the disruptive company engineers upward and finds higher
margin markets. This and the lead from early entry assures the demise of the
established company.

The understanding of these phenomena can affect the actual emergence of new
technologies. Science and engineering are not enough. Many wonderful
technological products are not available to us because industrial managers have
not effectively brought them to market.

In a final chapter, Christensen applies these lessons to the electric
automobile. Clearly, as has been discussed in previous issues of Access to
Energy, electric car technology cannot now produce a product that competes with
the internal combustion engine. Is the electric automobile, however, a
disruptive technology? Perhaps. The answer to this question depends upon
whether or not electric cars can reach consumer standards. Figure 3, giving
Christensen's estimates for these standards and the rate of development,
suggests that they will.



Meanwhile, as a beginning disruptive technology, the electric car must seek
alternative markets that will value its disadvantages, and it must enter (and
develop) those markets with a cheap, simple product. These markets will sustain
its development.

One such market suggested by Christensen is the potential for runabouts for
teenagers. Parents might like the idea that their teenagers are driving cars
with low range, poor acceleration, and low maximum speeds. If these cars were
also much cheaper than conventional cars, this market might develop. As far as
government forcing (with reference to California's rule that car companies must
sell 2% electric cars in that state) and subsidies are concerned, Christensen
observes that these merely distort the market and delay technological
development.

What cannot be accomplished is premature entry of the disruptive technology
into the sustaining market. Therefore, for good reasons, automobile companies
are resisting electric cars. Those auto companies that are wise, however,
should set up small autonomous companies to deliver electric car technology to
whoever will buy it for whatever use arises. Then they will be well-positioned
if electric cars do eventually start to disrupt their market.

If instead, the only market entries are forced upon the large auto companies by
government regulation and subsidy, these entrenched malinvestments could
prevent the advance of electric car technology and deprive consumers of a
product that would eventually prove beneficial to them.






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  #2  
Old October 17th 04, 03:32 PM
Vaughn
external usenet poster
 
Posts: n/a
Default


"Steelgtr62" wrote in message
...

Disruptive technologies, on the other hand, are usually simpler and cheaper
than the sustaining technology, but also offer less capability. They do not

fit
the sustaining market and, typically, provide lower profit margins. For this
reason, they are usually shunned by well-managed companies - which are often
later destroyed by them.


While the start of this thread is obviously a spam, I think that we are
finally seeing some disruptive technology in the GA field. In particular,
flat-panel displays. These will probably dominate the new aircraft market in
the next few years and will certainly push down into the retrofit market as
certification issues are gradually resolved. They are already appearing in the
homebuilt market.

My personal opinion is that these systems are unlikely to last as long as
the airframe in which they are installed, but given their relative cost, ease of
replacement, and the continuous improvement in their capability, we may be able
to live with that.


Vaughn


  #3  
Old October 17th 04, 03:50 PM
C J Campbell
external usenet poster
 
Posts: n/a
Default


"Vaughn" wrote in message
...

"Steelgtr62" wrote in message
...

Disruptive technologies, on the other hand, are usually simpler and

cheaper
than the sustaining technology, but also offer less capability. They do

not
fit
the sustaining market and, typically, provide lower profit margins. For

this
reason, they are usually shunned by well-managed companies - which are

often
later destroyed by them.


While the start of this thread is obviously a spam, I think that we

are
finally seeing some disruptive technology in the GA field. In particular,
flat-panel displays. These will probably dominate the new aircraft market

in
the next few years and will certainly push down into the retrofit market

as
certification issues are gradually resolved. They are already appearing

in the
homebuilt market.

My personal opinion is that these systems are unlikely to last as

long as
the airframe in which they are installed, but given their relative cost,

ease of
replacement, and the continuous improvement in their capability, we may be

able
to live with that.


The flat panel displays are likely to last much longer than the items they
replace, however. They are solid state, all electric, have few or no moving
parts, etc. Compare that with traditional attitude indicators, heading
indicators, and turn and bank coordinators. All of these generally require
replacement every few hundred hours, along with vacuum pumps, hoses, clamps,
etc.


  #4  
Old October 17th 04, 04:15 PM
Bill Daniels
external usenet poster
 
Posts: n/a
Default


"C J Campbell" wrote in message
...

"Vaughn" wrote in message
...

"Steelgtr62" wrote in message
...

Disruptive technologies, on the other hand, are usually simpler and

cheaper
than the sustaining technology, but also offer less capability. They

do
not
fit
the sustaining market and, typically, provide lower profit margins.

For
this
reason, they are usually shunned by well-managed companies - which are

often
later destroyed by them.


While the start of this thread is obviously a spam, I think that we

are
finally seeing some disruptive technology in the GA field. In

particular,
flat-panel displays. These will probably dominate the new aircraft

market
in
the next few years and will certainly push down into the retrofit market

as
certification issues are gradually resolved. They are already appearing

in the
homebuilt market.

My personal opinion is that these systems are unlikely to last as

long as
the airframe in which they are installed, but given their relative cost,

ease of
replacement, and the continuous improvement in their capability, we may

be
able
to live with that.


The flat panel displays are likely to last much longer than the items they
replace, however. They are solid state, all electric, have few or no

moving
parts, etc. Compare that with traditional attitude indicators, heading
indicators, and turn and bank coordinators. All of these generally require
replacement every few hundred hours, along with vacuum pumps, hoses,

clamps,
etc.



I still have an IBM PC XT that works as well as the day it was bought back
in 1985. It just doesn't do anything useful in today's world. I expect the
"glass cockpits" to be the same. The big power hungry LCD screens will
quickly give way to much lighter and brighter OLED screens and enough
additional useful features will be added to make the old systems obsolete
even if they still work.

I expect to see very light weight glass cockpits installed in Sport Light
Aircraft that would look at home in a 777. If I had an opportunity to buy a
tiny, fast single seater with a 100 HP diesel that was fully IFR capable,
I'd jump at it.

  #5  
Old October 17th 04, 04:27 PM
Vaughn
external usenet poster
 
Posts: n/a
Default


"Bill Daniels" wrote in message
news:Z%[email protected]_s02...

I still have an IBM PC XT that works as well as the day it was bought back
in 1985. It just doesn't do anything useful in today's world. I expect the
"glass cockpits" to be the same.


That is precisely my point.

Where I work we have tossed at least three generations of perfectly good
computers over the last ten years. We are now replacing all of our phones with
the new VOIP technology, and I am willing to bet you will not be able to find
one of these units still in service five years from now.

Vaughn


  #6  
Old October 17th 04, 04:50 PM
Bill Daniels
external usenet poster
 
Posts: n/a
Default


"Vaughn" wrote in message
...

"Bill Daniels" wrote in message
news:Z%[email protected]_s02...

I still have an IBM PC XT that works as well as the day it was bought

back
in 1985. It just doesn't do anything useful in today's world. I expect

the
"glass cockpits" to be the same.


That is precisely my point.

Where I work we have tossed at least three generations of perfectly

good
computers over the last ten years. We are now replacing all of our phones

with
the new VOIP technology, and I am willing to bet you will not be able to

find
one of these units still in service five years from now.

Vaughn



I was at the Ralph Barnaby Lecture last night in Denver (About gliders and
soaring presented by Russell Lee, curator at the Smithsonian National Air
and Space Museum ). A lot of the diner table conversation was about the
impending TSA regulations on flight instructors but another topic came up in
relation to the Transportation Safety Administration.

It seems that the government wants to know where every airborne aircraft is
at all times. The FAA of course said "transponders" but it was pointed out
that radar coverage still has large gaps particularly at low altitudes.
(Burt Compton who operates a glider FBO in the west Texas town of Marfa
pointed out that his tow plane transponders almost never blink.) NASA
proposed ADS-B or automatic GPS position reporting. I expect that a variant
of ADS-B will be mandated soon so get ready to yank that old Mode C
transponder.

Bill Daniels

  #7  
Old October 17th 04, 05:21 PM
Vaughn
external usenet poster
 
Posts: n/a
Default


"Bill Daniels" wrote in message
news:[email protected]_s04...

It seems that the government wants to know where every airborne aircraft is
at all times. The FAA of course said "transponders" but it was pointed out
that radar coverage still has large gaps particularly at low altitudes.
(Burt Compton who operates a glider FBO in the west Texas town of Marfa
pointed out that his tow plane transponders almost never blink.) NASA
proposed ADS-B or automatic GPS position reporting. I expect that a variant
of ADS-B will be mandated soon so get ready to yank that old Mode C
transponder.


That is not "Disruptive Technology", but rather "Disruptive Bureaucracy".
We will all get a vote in a few weeks... Enough said.

Vaughn





  #8  
Old October 17th 04, 09:55 PM
Orval Fairbairn
external usenet poster
 
Posts: n/a
Default

In article ,
"Vaughn" wrote:

"Bill Daniels" wrote in message
news:[email protected]_s04...

It seems that the government wants to know where every airborne aircraft is
at all times. The FAA of course said "transponders" but it was pointed out
that radar coverage still has large gaps particularly at low altitudes.
(Burt Compton who operates a glider FBO in the west Texas town of Marfa
pointed out that his tow plane transponders almost never blink.) NASA
proposed ADS-B or automatic GPS position reporting. I expect that a variant
of ADS-B will be mandated soon so get ready to yank that old Mode C
transponder.


That is not "Disruptive Technology", but rather "Disruptive Bureaucracy".
We will all get a vote in a few weeks... Enough said.

Vaughn






Yes -- but I don't think that it will matter regarding TSA. We have
created a bureaucratic monster, at the behest of BOTH political parties!
  #9  
Old October 17th 04, 10:44 PM
Blueskies
external usenet poster
 
Posts: n/a
Default


"Orval Fairbairn" wrote in message
news
In article ,
"Vaughn" wrote:

"Bill Daniels" wrote in message
news:[email protected]_s04...

It seems that the government wants to know where every airborne aircraft is
at all times. The FAA of course said "transponders" but it was pointed out
that radar coverage still has large gaps particularly at low altitudes.
(Burt Compton who operates a glider FBO in the west Texas town of Marfa
pointed out that his tow plane transponders almost never blink.) NASA
proposed ADS-B or automatic GPS position reporting. I expect that a variant
of ADS-B will be mandated soon so get ready to yank that old Mode C
transponder.


That is not "Disruptive Technology", but rather "Disruptive Bureaucracy".
We will all get a vote in a few weeks... Enough said.

Vaughn






Yes -- but I don't think that it will matter regarding TSA. We have
created a bureaucratic monster, at the behest of BOTH political parties!



Neither one of which is right. The middle will take back control...someday.




  #10  
Old October 18th 04, 01:33 AM
Orval Fairbairn
external usenet poster
 
Posts: n/a
Default

In article ,
"Blueskies" wrote:

"Orval Fairbairn" wrote in message
news
In article ,
"Vaughn" wrote:

"Bill Daniels" wrote in message
news:[email protected]_s04...

It seems that the government wants to know where every airborne aircraft
is
at all times. The FAA of course said "transponders" but it was pointed
out
that radar coverage still has large gaps particularly at low altitudes.
(Burt Compton who operates a glider FBO in the west Texas town of Marfa
pointed out that his tow plane transponders almost never blink.) NASA
proposed ADS-B or automatic GPS position reporting. I expect that a
variant
of ADS-B will be mandated soon so get ready to yank that old Mode C
transponder.

That is not "Disruptive Technology", but rather "Disruptive
Bureaucracy".
We will all get a vote in a few weeks... Enough said.

Vaughn






Yes -- but I don't think that it will matter regarding TSA. We have
created a bureaucratic monster, at the behest of BOTH political parties!



Neither one of which is right. The middle will take back control...someday.



I hope that you are right -- before they destroy us in the process.
Unfortunately, history, in other countries has shown that the middle
doesn't act until it is too late: Russia, post WWI Germany, etc. The
fringes take control of political organizations and run things into the
ground.
 




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