Examples of the Impact of Disruptive Technology 

 

Some examples of leading businesses and their business models being disrupted by new technologies

watch industry (for centuries the Swiss firms dominated the mechanical watch industry. Even though they had the chance to use the digital technology in the 1970s, they decided to stay with their traditional mechanical watches. Japanese and Chinese manufacturers used this new technology and very quickly dominated the industry. The Swiss made a comeback with the concept that watches were more than a timepiece - they were an accessory like jewellery.) 

photo-processing industry (Kodak dominated this industry until Instagram forced it into bankruptcy.) 

mobile phones (Nokia was the market leader for around 15 years in this industry until smart phones were developed. Even though it had the chance to use the technology and develop smart phones, it decided to stay with its version of the mobile phone. As a result, it sold its mobile phone technology to Microsoft, who later discarded it)
 

software for computers (when IBM dominated the computer industry, it had the chance to buy Microsoft's software. IBM preferred to stay with its own successful products.) 

personal computers (Microsoft dominated this industry until the development of the Apple computers and smart phones)
 

video streaming services (Blockbuster had the chance of developing video-streaming services but preferred their DVD late fee revenue stream. Also, Blockbuster had the chance to buy a young Netflix!!!) 

NB Most of these firms had the chance of using the potential disrupting technology but preferred to maintain and protect their current successful products and services. These decisions had drastic, negative impacts on these previously successful firms, eg some are no longer in business.
 

More details on the Kodak and Swiss watch industry 

Kodak

The patterns signalling Kodak's downfall started several decades before its collapse. In 1976 Kodak captured 90% of film sales and 85% of camera sales in the USA (Stefan Hajkowicz, 2015). The company's revenue peaked at US$ 16 b (1996). However, as the digital era progressed, Kodak's revenues from print film plummeted. The introduction of digital cameras, mobile phones that could capture, store and send images, development of Facebook (whose revenue would come from advertising), etc, was the wave of digitalisation that wiped out Kodak, ie in 2012 Kodak filed for Chapter 11 bankruptcy protection. It had no offloadable valuable assets or technology patents. While Fujifilm, which had witnessed its print film revenue drop by 60% of the total revenue, responded differently.

Booksellers (Dymocks) 

Since 2010, competition from on-line booksellers, such as Amazon, Book Depository, Booktopia, etc, has resulted in the collapse of the traditional "bricks and mortar" bookseller like Borders, Angus and Robertson plus scores of independent operators. Yet book sales of printed books has continued to increase in Australia by 1.4% in 2017 but bookstores sales have fallen, ie 

"...an average of 6.7% over the past five years..." 

IBISWorld as quoted by Sue Mitchell 2019 

As the book industry is not a high-growth industry, is in a very competitive marketplace and retail industry is going through enormous technological changes, there is a need to diversify so that they are better able to handle the customers' needs. Dymocks, for example, has developed into 

- the "bricks and clicks" strategy

- refurbishing stores

- adding non-book products like cards, journals, educational toys, etc

- harnessing the power of big data to build loyalty programs

- complimentary categories like premier stationary, eg Telegram Group, and open designer stationery and accessories stores, eg Milligram,

- property interests like 80 year art deco Dymocks arcade in Sydney

- chocolate maker, ie Patons

- macadamia farms

- tutoring business, ie Potentia (this is leveraging off the strengths of the Dymocks brand and contributing to improving literacy. Education was identified as an opportunity with tutoring as a starting point. Dymocks has started with 2 tutoring hubs, each with 7 classrooms and capacity of about 1,000 enrolments in a range of academic subjects. It is planned to open more hubs and to franchise so that there are around 30 hubs across Australia in 5 years 

Swiss watch industry

In the 1500s, watches (neck, pocket, wrist, etc) became important as the Protestant reformers, like John Calvin, banned anything to do with luxury, like jewellery. By banning jewellery, tradesman turned their skills to the watch and its functions, ie telling time. It was deemed a practical necessity rather than a luxury. Since then the wristwatch has expanded its function beyond timing function (chronograph) to chiming function, perpetual calendar, alarm, etc, and more recently the smart watch (a mini-computer).

(source: Bani McSpedden, 2017a)

In the early 20th century Switzerland dominated the world watch industry with high standards of manufacturing quality, cutting-edge technology, unparalleled time accuracy and cost-efficient production processes. The industry was steeped in tradition and focused on mechanical watches. In the early 1960s, a new range of electronic, digital and quartz analogue watches changed the industry. These new watches gave improved time accuracy compared wit mechanical devices. In 1969 Seiko released the first quartz wristwatch (Astron) and it began to dominate the world's watch industry.

Another wave of disruption came with digital watches using LED/LCD technology. This improved the functionality of the digital watches. In 1980 Seiko introduced a digital watch with a tiny inbuilt TV screen which allowed users to watch live broadcasts.

As a result since the 1960s Switzerland has lost its dominance in watchmaking; USA Japan and Hong Kong became the major players in the global market with new devices that improved functionality and time accuracy and lowered the cost to the consumer.

On the other hand, the Swiss watchmakers have revived their industry by using watches as a status symbol to achieve market differentiation.

This is an example of a megatrend, ie advanced technology and mass production followed by a counter trend around timeless quality.

Since 2015 the Swiss wrist watch industry has experienced another disruptor, eg Apple Smart Watch. In around 2 years (by 2016) the Apple watch has become the second most sold watch after Rolex. Exports from Switzerland of mechanical watches have dropped every month since 2015. On the other hand, women wrist watches are becoming more popular (Bani McSpedden, 2017)

 

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