disruptive vs. incremental innovation · disruptive vs. incremental innovation ... adoptability...
TRANSCRIPT
Disruptive vs. Incremental Innovation Positioning for Local, Regional and Global Competition
SME Conference October 2nd 2009
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Innovation and Innovators
• Innovation: a positive improvement to an existing product, service or process – Does not cover the new – non-consumption
• Who are innovators – Visionary genius
– Out of the box thinker
– Critical thinker
– Day Dreamer
– Rebel
– Rabble Rousers
– Insane
– Danger to Humankind
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Diffusion of Innovation** and Economics of Standards A very short explanation of how Innovation is adopted.
Niche Initial Fast Adoption
Experimental Evolving Technology
Slow Mover Slow, Steady Adoption
Difficult Individual Adoption
Dominant
Product Low Barriers;
Rapidly Dominates
Organization
Adoptability (Diffusion of Innovation)
Implementation, Adaptability,
Routinization
•Relative Advantage
•Compatibility
•Complexity
•Trialability
•Observability
Community Adoptability
(Economics of Standards)
Transient Incompatibility and Risk of Stranding
•Prior Technology Drag
•Irreversibility of Investment
•Sponsorship
•Expectations
High
Low
High Low
**Everett Rodgers
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The Disruption Framework** An even shorter explanation of how disruption occurs.
Time
Time
Established Markets
New Market Disruption – Going After Nonconsumption
Pe
rfo
rma
nce
Ne
w M
etr
ics F
or
Pe
rfo
rma
nce
Market Transition
Market Transition
**Clayton Christensen The Innovators Dilemma and Solution
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Innovation Tiers
• Incremental/Sustaining Innovation
– Fits within a planned business model and time horizon
• Disruptive/Revolutionary Innovation
– Creates a new business model within an industry over long time frame
• Uber/Radical Innovation
– Shifts the world economy and people’s life style for a generation or more
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The Innovation Tree
Uber Innovation
Disruptive Innovation
Within Industries
Disruptive Innovation
Within Industries
Disruptive Innovation
Within Industries
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Incremental Innovation
Within Markets
Global Every 10 to 30 years.
Global/Regional Every 5 to 15 years.
Regional/Local Every year.
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Innovation Dynamics
Disruptive (Industry Changing)
Incremental (Sustaining)
Existing Business Model New Business Paradigm
•Public Policy Support
•Research Oriented
•Proprietary Invention
•High Failure Rate
•Long Time Horizon
•Private Industry Funded
•Planned Insertion
•Standardized Buying
•Focus on Productivity
•Short Time Horizons
•Regulatory Environment Changes
•Ecosystem Formation, Job Creation
•Proprietary Going to Standards
•High Value Creation Under New Model
•Start of Long Term Business Transition
•Lobbying for Government Relief
•Rapid Consolidation of “Losers”
•Skills and Job Transition
•Focus on Cost Control
•Slow March to Extinction
Uber Innovation Restructures the Global Economy
Uber (Global Restructuring)
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Innovation’s Economic Impact
Job
Growth
Time and Market Phase
Disruptive
Innovation
Commercialization
Standardization
Research Lowest Cost
Producer
Rapid Market
Expansion
Commoditization
Incremental
Innovation
Ireland’s Prior
Inward Investment
Ireland’s Future
Inward Investment
Volume Production
Ecosystem Development
& Spin-Offs
Broad
Adoption
Existing Companies
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The Web is Dead – Long Live the Web
‘90 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09
‘98 ‘00 ‘02 ‘04 ‘06 ‘08 ‘12
European Carriers & Equipment Vendors
North American Carriers
“Internet” Companies
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• The move to integrated
communication and
entertainment services
with a focus on video
and social networking is
almost complete.
• Wireless broadband is
bringing previously
wireline based services
to mobile devices.
Ten Year Market Cap Relative Value Trends
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The Tip of the Iceberg Mobile Broadband Will Dramatically Accelerate Web Usage
WORLD INTERNET USAGE AND POPULATION STATISTICS
World Regions Population
( 2009 Est.)
Internet Users
Dec. 31, 2000
Internet Users
Latest Data
Penetration
(%
Population)
Growth
2000-
2009
Users %
of Table
Africa 991,002,342 4,514,400 65,903,900 6.7 % 1,359.9 % 3.9 %
Asia 3,808,070,503 114,304,000 704,213,930 18.5 % 516.1 % 42.2 %
Europe 803,850,858 105,096,093 402,380,474 50.1 % 282.9 % 24.2 %
Middle East 202,687,005 3,284,800 47,964,146 23.7 % 1,360.2 % 2.9 %
North America 340,831,831 108,096,800 251,735,500 73.9 % 132.9 % 15.1 %
Latin America/Caribbean 586,662,468 18,068,919 175,834,439 30.0 % 873.1 % 10.5 %
Oceania / Australia 34,700,201 7,620,480 20,838,019 60.1 % 173.4 % 1.2 %
WORLD TOTAL 6,767,805,208 360,985,492 1,668,870,408 24.7 % 362.3 % 100.0 %
•June 30th, 2009 Internet World Stats
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Wireless Is the Global Future
Source: Cisco, 2009
Video will be 64% of mobile traffic by 2013
Mobile data traffic grows by 63X between 2008 to 2013
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Web 2.0: IP Video and Social Networking
• Web 2.0 expanded broadband subscribers, services, and connection time
– Online Video Market $15.6B by 2012
– 66% year over year video increase
– Average online viewer consumed 75 videos/month
• Web 2.0 consuming all dark fibre
– Metro fibre at 1% to 10% utilization
• Video drives number of switches required
– Draining carrier CAPEX/OPEX budgets
– No increase in revenue or margin
• Future traffic projections
– 44 Exabytes/month by 2012
– CAGR of 46% through 2012 driven by video, broadband penetration and cloud computing
– Business IP traffic CAGR of 35%
• Growing in unpredictable ways
– Carrier ability to plan and control has collapsed
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Long Tail Power Curve Every business in the world is affected and will dramatically change
• Most popular products and services decline • Most unknown become accessible with deeper coverage of the unseen • Infrastructure to profitability access and monetize small and narrow
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Cloud Computing and ICT Virtual Services
The Next Mass Utility Service
• $160B+ market and growing
– $95B in business and productivity apps
– $65B in new online advertising
• Gartner: “Top 10 disruptive trends”
• IDC: “33% of all IT spending by 2012”
• Over 85 top IT companies investing
• Broadband mobility quality of experience
– Liquid Bandwidth with Dynamic Allocation
• Web Services Application Interfaces are Key
programmableweb.com
• Cloud computing is all about Web Services APIs
• Mapping, video, and photo APIs are the fastest growing – and drive bandwidth
• ICT APIs are just now starting to emerge ala Google Apps and IT companies
• Shopping APIs were first created by Amazon, eBay and others catching up
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Green Comes to Telecom
• Each Cisco CRS-1 consumes 1020kW of power with specialized facilities
• IP routers & switches complexity and resource consumption level mandates a step change
• Technician truck rolls to maintain current optical networks needs to be reduced
• Carriers now applying a carbon tax to all vendor equipment as part of purchasing decision
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Top ICT Innovations Over the Next 10 Years (This will be wrong)
• Wireless Broadband: Connect anywhere at anytime
• Optical Computing, Storage, and Networking
• Virtualization of Computing, Services and Networking
• Cloud Computing and Software as a Service
• Green Technologies within Every Industry
• Smart Grids for all Utilities
• Food and Water Management
• Health and Biological
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What Can Ireland Do
• Public Policy and Regulatory Schemes
– Encourage making money – low taxes, open economy – reduce the public sector
• Infrastructure Projects to Support 10M People
– Will need a larger population base to be a global player
• Inward Metro Development (Brown field vs Green Field)
– Need to concentrate and optimize
• Magnet within the EU for Select Technology and Markets
– Attract the best and brightest from around the world
• Coordinated Research for Select Sciences
– Cannot do it all, make choices which are symbiotic and supportive
• Inward Investment on the Front End of Innovation
– Ireland will never be the low cost production location again
• Education in ICT and Sciences pre-University
– Gap year is a mess – everyone needs to know ICT as a fundamental skill
• Whole Island Strategies – Competing with the World
– The Isle of Ireland as a Digital Island to the World
Exemplar Network A Digital Leapfrog for Ireland
Infrastructure Program for an Open Access
Next Generation Network Test Bed
What is Intune Doing How is it doing it?
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Key Drivers of the Next “Innovation Wave”
• Network operators will never let themselves become dumb pipes again where “Over the Top” services grab all of the value, revenue, and margin
• Virtualized networks and services are key to developing and delivering a next generation network infrastructure based on liquid bandwidth
• Resource consumption is the largest operational expense component of the expanded Internet and must be dramatically reduced
• Web 2.0 is all about IP
multi-media everywhere
-- driving switch and
fibre exhaustion
• Cloud computing and
broadband mobility
access create a new set
of network issues
• The “Greening” of
Telecom is critical and
now part of all equipment
selection criteria
Industry wide agreement that Optical Burst Packet Switching is the path forward.
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1994 - 1999
1999 - 2002
2002 - 2006
2006 - 2010
World Class Technology; Globally Validated Used in Leading Research and Development Programs Worldwide
European Space Agency Project
DARPA Program Demonstrator
EU Project with Telefonica: FIRM
First OPST Prototype at GlobalComm 2006
Transponder Technology
Successfully Completed 1 EU Program
1. FIRM (CELTIC) • With Telefonica
Successfully Completed 4 ESA Programs
1. SUAS 2. RADIATION 3. ULTRA 4. BACKPLANE
Successfully Completed 3 DARPA Programs
1. TERABIT OPTICAL ETHERNET 1 2. TERABIT OPTICAL ETHERNET 2 3. LASOR
Commercial Customers Included: • Tier 1 Carrier R&D Labs • Tier 1 Equipment Vendors • Blue Chip Technology Companies
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Development Programs for:
•Content & Data Centres
•Smart Utility Networks
•Web 2.0 Services
•Network Virtualization
•Cloud Computing
•Software as a Service
Actual network topology TBD
All Ireland Exemplar Network World’s Most Advanced NGN Test-bed
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Multi-Source Personal/Business Services
Fixed or Mobile Access – PC or NetBook
Real-Time View Of Billing & Setup 1
Liverpool Statistics & Quiz Application 2
7-Way Real Time Video Conferencing 3
Liverpool v. Real Madrid Live in High Definition 4
Local Pizza Delivery Ordering Application 5
Normal Internet & Email Application 6
iPhone Display Using Bluetooth 7
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IP is a “connectionless” protocol –
delivering services over a “connection oriented” network
• IP over fixed optical transport = driving a car on train tracks!
Service & Application Layer
IP Routing Layer
Ethernet Paths & Switching
Optical Transport Layer
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Optical vs. Silicon = Green Telecom Growing consensus that optical packet switching is the future
• A new technological approach is required…
– Move from 20th century to 21st century – from silicon to optical
• Optical Packet Switching validated by several Tier 1 network
operators and University research programs
– Most large operators will transition their networks over next ten years
• Optical Packet Switching is the only innovation that enables
real time dynamic virtualization of the physical optical network
– Ireland has access to this disruptive technology today
First Global Analyst Report on Emergence Of OBS/OPST - March 2009
• ~75% Power reduction
• ~50% Space reduction
• ~50% Capex reduction
• = >50% TCO reduction
