To competition and disruptor to the existing higher educational

To conclude, there
are many pathways to expand our understanding of how respond to potentially
disruptive technologies and innovations. Future technology and innovation is,
by definition, yet to be discovered. Therefore, even proper strategy must
accommodate unpredictability.

 

Conclusion

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Lastly, Joseph and Clayman acknowledge that
sometimes their theory doesn’t reflect reality. One example is when the
disruption is incredibly slow. For centuries,
innovative ideas have been introduced to compete with the higher education’s
four-year liberal arts programs in the US and UK, such as two-year colleges and
land-grant universities and two-year colleges. Although these entrants
attempted to improve upon the growth, prestige, and capacity of education, by
heavily investing in research institutions, athletic facilities, amongst other
upgrades. However the higher education market remains mostly unchanged, with
the top universities centuries ago being similar universities today. Disruption
may happen at a century-old pace, but Joseph and Clayman argue that this
doesn’t nullify their strategy on how to identify and manage disruptions (Christensen, Raynor
and McDonald, 2015). The turn of the
millennium has seen new entrants with the approach of using online education,
to provide a low-cost, high quality, and high accessibility education. Based on
the trajectory of these innovations and market demand; the online education may
rise to be a significant competition and disruptor to the existing higher
educational system.

 

Reflection
on anomalies in disruptive technology

 

This is another reason why Uber did not start
as a disruptive innovation, as they first attempted to improve the existing
service from using taxis, by introducing booking rides via smartphone, paying
by phone, and letting customers rate Uber drivers to encourage improvements.
These improvements to an existing service are considered sustaining innovation.
Uber also priced itself lower than taxis (Christensen, Raynor and McDonald, 2015).

 

Another distinction, that Joseph and Clayman
make, is between disruptive and sustaining innovations. While sustaining
innovations are those that upgrade an existing product or service for existing
customers (e.g. slimmer phone, bus with more horsepower, etc.), a disruptive
innovation often doesn’t meet the quality demand of existing customers. But as
time passes, and the quality rises, the disruptive technology can become a
considerable alternative to the existing technology (Christensen, Raynor
and McDonald, 2015).

 

Distinguishing
innovations that are disruptive or sustaining

 

As a counter example, when Uber was a small
but rapidly expanding business, the media often referred to Uber’s innovation
as disruptive. However, according to Joseph and Clayman’s theory, Uber did not
provide a disruptive innovation. Disruptive innovations must start from one of
the two footholds, which Uber did not. It wasn’t in the low-end foothold, as
it’s hard to argue that the taxi industry only served premium customers, as
some taxis were quite modest. As well, Uber didn’t enter a new market, as they
weren’t targeting non-consumers, but instead targeted consumers who used taxis.
Uber did increase overall demand, but it took the opposite approach to creating
disruptive innovation, which was to target the mainstream market, then expand
to overlooked segments (Christensen, Raynor and McDonald, 2015).

 

A low-end foothold is a market that exists on
the fact that, large firms for existing technologies often create a product or
service that meets the demand for customers with high expectations and those
with low expectations. But those with low expectations can do with a lower
quality product or service. The market entrant, with the disruptive technology,
tends to create a lower quality, but cheaper, alternative, which steals the
customers with lower expectations (Christensen, Raynor and McDonald, 2015).

 

A new-market foothold is a market where
non-consumers of the existing technology are transformed to become consumers of
the disruptive technology. An example is that, in the 1950s, when photocopying
was first introduced, Xerox developed it to target the high quality
expectations of large corporate customers. In doing so, they overlooked
personal use, and smaller organizations, who had to make do with mimeograph
machines or carbon paper. But by the late 1970s, new market entrants developed
the personal copier. This copier grew in the new-market foothold to become a
significant competition against Xerox (Christensen, Raynor and McDonald, 2015).

 

The first distinction is in which market
disruptive technologies can arise. These markets are called: a low-end
foothold, and a new-market foothold (Christensen, Raynor and McDonald, 2015).

 

Types
of markets

 

In 2015, Joseph and Clayman continued writing
about how firms can manage disruptive technology. Their intention this time was
to clarify what makes technology disruptive. I reference them again, because it
allows me to be more specific about identifying disruptive technology, so that
the above 5 paragraphs can be used as a strategy in an appropriate context.

 

Revisiting
the disruptive technology research

 

Last, Joseph and Clayman, re-emphasize
keeping new firms in disruptive technology independent from their parent firm.
As these new firms grow, upper management may demand the two firms integrate.
Their rationale would be to share knowledge about the innovations. While this
is a good intention, problems arise when upper management has to decide how to
allocate future resources into technology (Bower and Christensen, 1995).
Larger problems arise when the vision of the two firms are different. Managers
must understand that existing technology and their markets can become obsolete
with the arise of new technologies and their markets. Lost in the moment, upper
management can make the right decisions, in circumstances that are about to
become obsolete.

 

Sometimes, when a larger firms does not
create an independent organization to develop a disruptive technology, they do
not underestimate the growth potential of the technology, but in fact they do
the opposite. With inflated optimism, and probably heavy investment into a
technology, they overlook the demand of its customers (Bower and
Christensen, 1995). This mistake was made by Apple. In the
1990s, when Apple was developing the Newton, a personal digital assistant
(think of it like the palm pilot), they expected the product to contribute
significantly to corporate growth, and subsequently invested large sums into
its development. However, the Newton was largely unaligned with customer
demands and expectations. Apple should have invested a smaller sum to
experiment with the market, like they did for the Apple I (Bower and
Christensen, 1995).

 

Creating
an independent organization

 

Besides “second to invent”, large firms can
found independent organizations that focus primarily on the disruptive
technology. This is needed when the profit margin is currently lower for the
disruptive technology than it is for the existing technology, because in such a
scenario, employees (developers, engineers, technicians, etc.) will be pulled from
projects for the disruptive technology, to be moved to “higher priority”
projects with higher profit margins. Over time, these actions can mean that the
large firm is too slow to enter the disruptive technology’s market to capture
significant amounts of revenue. Instead, the new firm must be free to meet the
different needs of different customers for the disruptive technology. The
features of profiting must be independent from those of the larger firm (Bower and
Christensen, 1995). To illustrate, in the 1980s, the Control
Data Corporation (aka. CDC) was a firm that was market leading in the supplying
of 14-inch drives for mainframe computers. Later, when the 8-inch drive was
beginning to be developed, CDC created projects to develop the technology.
However, engineers assigned to these projects were repeatedly re-assigned to
other projects for 14-inch drives, because they were considered higher
priority. As a result, CDC was 3 years late to enter the market for 8-inch
drives, and struggled to capture less than 5% of the market. A few years later,
when the technology for developing 5.25 inch drives began to emerge, CDC
learned from its mistake. They created an independent organization with a group
of engineers and markets, and established it in another city. By creating a
separation, even physically, they sheltered the new organization from its
talent being taken away. Without the expectations for the high profit margins
of the existing technology, the team could be enthusiastic about developing its
position relative to a new market niche. When the 5.25-inch market became
mainstream, the independent organization had a 20% market share (Bower and
Christensen, 1995).

 

For example, when Seagate had a business in
the 5.25-inch hard-drive market that generated $300 million per annum, and the
market for 3.5 inch drives was emerging, Seagate did not consider entering this
market worth their investment. While overlooking the growth potential, they only
saw that entering the business in the 3.5 inch market would be much smaller
than their existing business in the 5.25-inch market. When Seagate finally did
enter the market, $750 million hard-drives had already been sold, over double
what they considered a worthy investment (Bower and Christensen, 1995).
This was a lost opportunity for them to attain profits; these profits were
given to their competitors.

 

 

There is, however, a problem with the “second
to invent” strategy. It is that established firms may wait too long before
entering a disruptive market, out of a tendency to believe that an emerging
technology and its market must generate as high of a profit margin compared to
the established firm’s business in an existing technology before this firm is
willing to enter. Firms can overlook the growth potential, as they focus on the
current state of profit margins as unestablished and smaller (Bower and
Christensen, 1995).

 

In practice, however, firms that are heavily
invested in existing technology should not divert funding from existing,
profitable business units, into unpredictable experiments. So some firms adopt
a strategy called “second to invent”, meaning they let another firm be first to
test the market, then if entering the market will still be profitable, they
create upgrades or variations that capture another market share. For example,
during the early days of the personal computing industry, IBM waited for
Commodore, Tandy, and Apple to create and market the first personal computers.
IBM learned from the failures of these companies, so that it could build its
own personal computers to become a significant competitor for the other firms (Bower and
Christensen, 1995).

 

Second
to invent as a strategy

 

Once a technology is identified as both
disruptive and strategically significant, next we identify its “initial
market”. This market can’t be identified by marketing teams. For example, when
Edwin Land, Polaroid’s co-founder, asked the Polaroid market research team to
estimate the potential number of sales of his at the time new instant
photographic camera, the team returned with an estimate that Polaroid could
sell 100,000 cameras during its lifetime (Bower and Christensen, 1995).
This was a gross underestimation. Therefore, what firms must do is experiment
with the market, to get market data that’s real, by selling simpler variations
of the technology. Another example is when Apple first launched the Apple I in
1997. Most considered the sales campaign as a failure, but Apple learned a lot
from the experiment. It learned about who its early users were, and what these
users wanted and did not want, and how to produce the technology. With this
data, Apple launched the Apple II, with much more success (Bower and
Christensen, 1995).

 

Identify
initial market

 

Given a list of disruptive technology, step
two is to identify those that are strategically significant. Strategically
significant technology is defined as technology that technologists believe have
a potential to improve at a rate that surpasses their market demand. It’s not
about comparing the market demand for disruptive technology, with the market
demand for existing technology. In contrast, if the development of the
disruptive technology grows slower than its market demand, then the technology
will take a long time before being ready to compete with market-leading
existing technology (Bower and Christensen, 1995).
For example, near the early 1960s, Seagate, who was a producer of 3.5 inch
hard-drives, attempted to enter the personal computing industry by selling
these hard drives. However, because the trajectory of Seagate’s improvements to
the hard-drive far outpaced its demand, Seagate was stunted in its growth; so
it left the industry. However and at the same time, in the market for
engineering-workstations, there were two other producers of hardware, Maxtor
and Micropolis. They could not keep up with their market’s demand for technological
improvements. Therefore, it would have been strategically significant for
Seagate to enter the engineering-workstation market (Bower and
Christensen, 1995).

 

Identify
strategic significance

 

Joseph and Clayman state that the first step
is to identify disruptive technologies and innovations. Most firms have
elaborated processes to identify sustainable technologies, but few to identify
emerging technologies. One approach is to find disagreements within the
company, between financial managers and technology managers. Here, usually, the
financial manager sees a technology as unprofitable, but technology managers
see the technology as having great potential to be more efficient than existing
technology. These disagreements are a signal. Upper management can investigate
the technology further to identify how it can threaten their existing value
proposals (Bower
and Christensen, 1995).

 

Identify
disruption

 

Joseph and Clayman have contributed greatly
to the topic of firms managing disruptive technologies. In 1995, as part of
Harvard Business Review, they published an article titled, Disruptive
Technologies: Catching the Wave. It discussed how market-leading firms are
formidable when maintaining existing technologies, but when disruptive
technologies and innovations arise to compete with them, history shows that
they fail to adapt. The problem is that they lock themselves to mainstream
customer demands, without changing to accommodate niche customers (Bower and
Christensen, 1995). But there are several steps that a market
leading-firm can follow, to properly respond to disruptive technologies and
innovations.

 

Part B: Discuss how firms can respond to the emergence of
potentially disruptive technologies and innovations.

 

Despite changes after Gregory’s paper, the
core of technology management processes has remained constant, in so far as it
speaks about human behaviour through organizations. At every level within an
organizations, human skills in negotiating, teamwork, communication, and
leadership will remain relevant for technology management.

 

In 1995, Gregory stated that future
technology management processes should be recursive, accommodating revisiting
of prior processes to better align with profits (Gregory, 1995). In 2016 and 2017, from my
experiences with Accenture, these recursions have become the norm (Accenture,
2016). Agile change management means that the cycle of gathering requirements,
developing a technology feature, and testing it, have become so short that the
cycle is repeated every 1 or 2 weeks (Amber, 2014).

 

Gregory wrote his paper in 1995. Since then, the business
environment has changed. In 2012, the University of Cambridge CTM
(Centre for Technology Management) published a paper on Technology
Acquisitions. In it, we see updated key activities. These include: for the
selection process, measuring technology maturity, which is an analysis to
measure how many initial faults have been discovered and solved; and absorptive
capacity (for the acquisition process) which quantifies the human and financial
resources available flexible enough to re-specialize in the emerging technology
(University
of Cambridge, 2012).

 

Modernized
Changes

 

The last process is protection. The issue is,
how to protect ownership of the technology. And another issue, is that, as time
passes, how does a firm ensure it is compatible with its surrounding ecosystem
of newer technology. Gregory states that a key activity is to, during the
development of products for the technology, routinely ensure that the partially
developed product is, and will remain, able to be copyrighted; and routinely
ensure that the product is compatible with essential structure of other emerging
technologies. A firm can also capture additional profit, by licensing its
technology to other firms (Gregory, 1995).

 

Protection

 

Process four is
exploitation. The issue is, how does a firm convert an emerging technology,
into a product or service that a customer would buy. Kodama states that a key activity
that Japanese firms have excelled at is the combining of technologies to create new features that customers
will demand (Gregory,
1995). Another example is when the iPhone was invented; the combination
of a camera and a phone sparked market-leading demand (tech management course
source) (Minshall and Kerr, 2018). Also
consider other activities in this process, such as maintenance of the
technology (e.g. customer
support), and developing a platform that synchronizes and enables the products
from the emerging technology.

 

Exploitation

 

Process three is acquisition. The
issue is, if the firm chooses to do so, how does it integrate an emerging
technology with its larger business. Gregory lists a range of acquisition
types, from internal-to-the-firm, R teams that now must share their
knowledge within the firm, to the firm outright purchasing other firms that
already have a business in the emerging technology (Gregory, 1995). Personally, I
work for Accenture Canada. From my experience, they use a integrate
documentation from different technology management methodologies (Accenture, 2016). I was involved in the mapping
of documentation from two software development methodologies, being: Waterfall
and Agile Scrum. Given 1-to-1 relationships (1 document maps to another 1
document), or 1-to-many, or many-to-many, all documents were mapped, so that
consultants from either side could leverage the traceability matrix to better
understand the other side (Shuhay, 2016).

 

Acquisition

 

The second technology management process is
selection. The issue is, how to measure the size of the threat for competitor’s
existing products and services, and how to forecast developments in the
emerging technology (measured as lowered production costs, a larger market,
etc.) For this, Gregory approaches the issue by not focusing on what the
competition threatens with, but what the firm specializes in. With a competence
analysis, a firm can identify its existing talent, and match it with an
emerging technology that best utilizes the talent (Gregory, 1995). In addition, technology
developments that are unacceptably high risk, can be scaled down to smaller
increments. By considering fractional increments to an emerging technology, a
firm can have better opportunities to choose from.

 

Selection

 

The first process is identification. The
issue is, how does a firm identify a technology as emerging. Then, how does the
firm establish communication pathways, to increase its understanding of the
technology over time. Gregory states that the key activities are to:
systematically scan for technologies, then to make apparent disruptive
technologies by contrasting them from technologies we know already exist (Gregory, 1995).
Second, and this activity was originally researched by Leonard Barton, it is to
partner with R&D firms that specialize in the emerging technology
(Leonard-Barton, 1992). In addition to Gregory’s work, we can also recognize
that firms can research the upstream suppliers of parts for the technology, and
downstream consumers of the technology’s products and services; so as to
identify business application.

 

Identification

 

Therefore, firms can engage in “key
activities” that are designed to address these key issues. The next 5
paragraphs will be for the 5 technology management processes, where each
paragraph describes the key activities for that process.

 

 

Before I answer part A, I want us to have a
common understanding of what is a key activity. In Gregory’s paper, he lists
key issues for each of the 5 technology management processes (Gregory, 1995) in
Fig.1.

x

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