The traditional narrative around disruptive innovation is that those doing the disrupting are nimble, agile, and generally taking advantage of the winds of technological change. It’s a narrative that sees cumbersome incumbents unable (or unwilling) to respond to these changes and having their lunch taken from them.
New research from the University of Southern California explores whether this narrative is accurate, and examines the difficult choices both incumbents and new entrants face when disruptive technological changes are afoot.
The paper highlights how for incumbents, the question is often whether to adopt the new technology and potentially cannibalize their existing offerings, try to survive with their existing offering, or some combination of the two. Such a dilemma requires them to understand the risk posed by the new technology, whether in terms of the likelihood of its success, the impact it might have on existing sales, and even whether old and new technology could co-exist.
For new entrants, the dilemma revolves around whether a specific niche should be targeted to avoid any reaction from the incumbent, or whether to target the mass market and risk provoking such a reaction from the incumbent.
Managing disruption
The researchers argue that for disruption to be effectively managed, companies need to answer a few key questions:
- Can the old technology coexist with the new technology or will it go into immediate decline?
- To what extent will the new technology cannibalize the old technology and over what timeframe will this occur?
- Can any coexistence, cannibalization, and leapfrogging be explained within customer segments?
To attempt to answer these questions, the researchers developed a model that charted the diffusion of various technologies. The model chronicles the rate of disengagement from the old technology, which is likely to be a different rate to the adoption of the new technology, thus allowing a degree of co-existence, even if only for a time.
The model highlights how common disruption is, but that this disruption is often neither quick nor universal due to the coexistence of the two technologies alongside one another.
“Our generalized model of diffusion of successive technologies can help marketers capture disruption or coexistence due to the rate of disengagement from the old technology, which can vary from the rate of adoption of the new technology,” the researchers explain. “This model enables a superior fit to data on technological succession over prior multi-generational models that do not include such flexibility.”
Adopter segments
The researchers identified four distinct adopter segments that they believe account for most of the competition between successive technologies:
- Leapfroggers, who drive much of the growth of the new technology
- Switchers and opportunists, who account for most of the cannibalization of the old technology
- Dual users, who account for most of the coexistence of both technologies
The researchers believe that the model can help to provide important signals about both disruption and survival by helping to estimate the cannibalization and co-existence of new technologies.
“Incumbents often wait until the market for the new technology is large enough to be profitable before committing resources to its development. Our analysis suggests that managers should be careful not to underestimate cannibalization by switchers, especially when they dominate dual users, or the growth of new technologies via leapfroggers (especially in developing countries),” the researchers conclude.
