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  • Disruptive vs. Incremental Innovation Positioning for Local, Regional and Global Competition

    SME Conference October 2nd 2009

  • 2

    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

  • 3

    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

  • 4

    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

  • 5

    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 peoples life style for a generation or more

  • 6

    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.

  • 7

    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)

  • 8

    Innovations Economic Impact

    Job

    Growth

    Time and Market Phase

    Disruptive

    Innovation

    Commercialization

    Standardization

    Research Lowest Cost

    Producer

    Rapid Market

    Expansion

    Commoditization

    Incremental

    Innovation

    Irelands Prior

    Inward Investment

    Irelands Future

    Inward Investment

    Volume Production

    Ecosystem Development

    & Spin-Offs

    Broad

    Adoption

    Existing Companies

  • 9

    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

    sfasfasdfasdfasd

    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

  • 10

    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

    http://www.internetworldstats.com/stats1.htmhttp://www.internetworldstats.com/stats3.htmhttp://www.internetworldstats.com/stats4.htmhttp://www.internetworldstats.com/stats5.htmhttp://www.internetworldstats.com/stats14.htmhttp://www.internetworldstats.com/stats10.htmhttp://www.internetworldstats.com/stats6.htm

  • 11

    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

  • 12 12 12

    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

  • 13

    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

  • 14 14

    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

  • 15 15

    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

  • 16

    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

  • 17

    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

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