What is Considered a Disruptive Technology – Definitions & More [2019]

What is Considered a Disruptive Technology

Innovations in technology are often associated with a disruption in the marketplace. While creating products and services in a cost effective manner are characteristic to a competitive advantage, it is technological innovations in the business processes that create impactful disruptions across industries.

Following Harvard Business School Professor Clay Christensen’s definition of disruptive innovation – true disruption is a combination of an innovative process and an undervalued market.[1] The modern business landscape is meeting more disruptions than ever before as technologies offer more effective business processes and diversity in competitive digital marketplaces.

The Threat of Rapid Technological Change

The past decade has proven the disruptive power of digital technologies and has shaken the business landscape, pushing forward new companies in place of legacy giants. In a poll conducted by Fortune Magazine, Fortune 500 CEOs were asked, “What is your company’s greatest challenge?” The overwhelming response was, “The rapid pace of technological innovation”, with 72% of all CEOS feeling the pressure to stay ahead of their competition through technological solutions.[2]

In the digital era, staying ahead of innovative technology has proven to be a major concern for the longevity of a company’s success. In the same poll by Fortune Magazine, 94% of CEOs said their companies will need to adapt better to technological innovations in the next five-years than they have in the past five.[3] This is largely due to a digitally-enabled workforce and digital marketplace that has grown to expect online services.

The Digital Era in Numbers

Although, technology use has always had a rich history of changing markets, the rate of innovation in existing technologies continues to grow faster as more Americans use mobile devices to perform everyday tasks. According to the Pew Research Center, in 2015:[4]

  • 64% of American adults own a smartphone
  • 32% of American adults own a tablet computer
  • 62% of smartphone owners have used their phone in the past year to look up information about a health condition.
  • 57% have used their phone to do online banking.

In another study conducted by Pew Research Center, 84% of American adults use the internet in 2015.[5] For young adults between the ages of 18 to 20, this number has increased steadily to 96%.[6] As Americans become more enabled to use digital technologies, companies are investing in digitizing their processes and opening themselves to new markets.

The Digitization of Business Processes

The use of technologies in business processes is no longer restricted to massive industries or enterprises. Many companies are utilizing web applications and cloud computing to automate and integrate their business processes, leading to greater competitive advantages.

Process Automation

When most people think of automated technologies, they normally think of heavy machinery within large industrial factories. While machinery has seen greater precision with software, the recent wave of automation is coming from service-oriented industries.

The financial industry has seen tremendous change with digital automation through web and mobile applications. Companies like Intuit’s TurboTax and eTrade use web and mobile applications to provide a service that was once conducted by financial professionals. The permeability and speed of the internet have made it easier for consumers to access financial services, expanding service channels through a digital marketplace.

Process Integration

A study conducted by Intuit and Emergent Research predicts the number of companies using cloud computing is expected to more than double by 2020, jumping from 37% to nearly 80%.[7]

Robert McDonald, CEO of Procter & Gamble, have digitized their entire operations to connect with retailers. By connecting operations to the point-of-sale, Procter & Gamble have streamlined their logistics of inbound, outbound, raw materials, and finished products.[8] As the second-largest user of trucks in the United States, connecting operations to sales has reduced their “deadhead” movement by 15%.

What is considered a disruptive technology, technology has become the focal point of attention for companies across all industries and sizes. While technology has helped create products and deliver services more efficiently, companies can best benefit in using technology within their business processes. It is often times the redefining of how a product or service is done that spearheads competitors over their incumbents for greater returns.

Stay competitive with software development solutions that meet your business needs by consulting with a Solutions Architect at Tiempo Development. We offer comprehensive business analysis and solution design for complex software systems to enhance your business processes. For more information about your next software solution, contact a Solutions Architect today!

About Tiempo

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[1] Clay C. “Disruptive Innovation”. ClayCristensen.com. http://www.claytonchristensen.com/key-concepts/

[2] Alan M. “5 things you didn’t know about the Fortune 500”. Fortune Magazine. http://fortune.com/2015/06/04/fortune-500-facts/

[3] Ibid.

[4] “Mobile Technology Fact Sheet”. Pew Research Center. http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet/

[5] Andrew P. et al. “Americans’ Internet Access: 2000-2015”. Pew Research Center. http://www.pewinternet.org/2015/06/26/americans-internet-access-2000-2015/

[6] Ibid.

[7] Graham W. “How the Cloud Will Transform Business by 2020”. Inc. Magazine. http://www.inc.com/graham-winfrey/why-the-cloud-will-transform-small-business-by-2020.html

[8] Michael C. Inside P&G’s digital revolution.” McKinsey Quarterly. http://www.mckinsey.com/insights/consumer_and_retail/inside_p_and_ampgs_digital_revolution