Based on research by Erwin Danneels of Worcester Polytechnic Institute. Image of Sarrell Dental Bus, © Greene County Democrat.
Companies should invest in long-term studies on the effects of disruptive technologies in order to remain competitive in the marketplace, according to a new report from Erwin Danneels.
Danneels’s report critiques and follows up on Clayton Christensen’s popular theory in the business world of disruptive technology.
“A disruptive technology is a technology that changes the basis of competition by changing the performance of metrics along which firms compete,” according to Danneels.
One example is the personal computer. In its infancy, IBM was not interested in marketing and developing this computer, as IBM already dominated the mainframe computer market. Initially personal computers were technically far inferior to their mainframe counterparts. Nevertheless – on other performance metrics they were superior, such as cheaper pricing and greater convenience. Failure to adjust to the PC market by the 1980s meant losing out in marketshare for the whole computer industry, though. IBM spotted this disruptive technology and entered the market with its own PC.
A more recent, emerging example is the Sarrell Dental Center in Alabama. This medical non-profit is filling a void in the market by providing dental care to the children who qualify for Medicaid.
This bare bones facility is not state-of-the-art; it uses a mobile bus to deliver dental services to children across the state. But it is an example of potential disruptive technology precisely because it is less expensive than the established dental industry. The facility would not be a disruptive source if it did not provide quality dental care. However, no complaints have been made to the Board of Alabama Dental Examiners, and it obtained the same legal status as traditional dental clinics in Alabama in 2011.
This industry would serve as an ideal study considering the recent implementations from the Affordable Care Act, as well as the components that will be implemented in the near future. However, Danneels’ report argues that improving upon Christensen’s theory is necessary for industries to succeed.
“To increase both the theoretical and managerial merit of the theory, predictions need to be developed and to be tested about which technologies will become disruptive and which firms will succumb versus prosper in their emergence,” Danneels said.
Disruptive technologies are “typically simpler, cheaper, and more reliable and convenient than established technologies,” according to Christensen. The Sarrell Dental Center fits this criteria.
Predicting which emerging technologies are disruptive is difficult. One method? Extrapolate a potential disruptive technology, like the mobile dental clinics that serve Medicaid recipients, to understand its impact at a greater scale.
As for Danneels, he looks forward to a future full of thought leadership. “My hope is that this article will encourage further research along these lines and will spur debate by practitioners and scholars alike,” he said.
