3.2 Disruptive Innovations Guaranteed A+

3.2 Disruptive Innovations Guaranteed A+ Disruptive Innovations causing Bankruptcy ️Kodak (2011) Blockbuster (2010) Clayton Christensen on Disruptive Innovation ️"...some of the best firms fail because they listen responsively to their customers..." Identify This Slide? ️First ever Hard Drive made by IBM in 1980's and could store 5MB. Its the size of a refrigerator The HDD ️Fruit fly has a 1 week life cycle, short life span. Geneticists can study generations of fruit flies in a short amount of time, unlike humans. The HDD is the fruit fly of the technology industry because there is a lot of data about the HDD because there are so many companies in the space. The industry is an ideal start for studying the technology industry Disk Drive Industry ️Between 1976 and 1995: 129 firms entered the industry and 109 failed. In 1995: Only one survivor out of the 17 firms that dominated in 1976 Why was the failure rate in the disk drive industry so high? ️ Technology Mudslide Hypothesis - Reason for Failure ️The idea that technology was moving so fast that the company could not keep up HDD Example: Capacity increasing at 35% per year and Size was decreasing at a rate of 35% per year. Sustaining Innovations (2) ️1. Incremental Innovation 2. Radical Innovation Established companies did well with sustaining technologies ️Established companies led in the development of sustaining technologies Technology Mudslide Hypothesis Conclusion ️Doesn't apply because firms were not failing because of a pace of change 8 Inch Disk Drive vs 5.25 Inch Disk Drive ️- 8 Inch Drive is superior in cost/MB, capacity and speed - 8 Inch Disk Drive used in Minicomputers - 5.25 Inch Disk Drive used in Microcomputers Minicomputers vs Microcomputer ️Minicomputers targeted businesses (Capacity and speed were important to the consumer) Microcomputers targeted individuals. (Size, Low unit cost and low weight were important to the consumer) Why did firms fail graph? ️x-axis is Time y-axis is Average Hard Disk Capacity (MB) Technology Line plots the average capacity change over time (Supply of Technology) Demand line - The capacity on the median priced technology (Demand of Technology) Technology increasing at a rate of 40%/50% a year Demand increasing at a rate of 25% a year 1987 - 5.25 Inch HD was good enough for the minicomputer market and started directly competing and replacing 8 inch HD's Why did 8 inch HD's not react to the threat of 5.25 inch HD's ️8 inch HD was disrupted by a technology that was initially inferior to them. They did not focus on beating inferior technologies because they were focused on beating companies superior to them. Disruptive Technologies ️- Initially cannot be used in mainstream market sinc