What is the Difference Between…

Sustaining Innovationand

Disruptive Innovation

Sustaining Innovation

•“Doing it Better”•Way For Products to Change•Does Not Create New Growth

Disruptive InnovationPS3 vs.

Wii•“Playing the Game

Differently”•Creates a New Market•Transforms or

Destroys Current Market

•Products Become▫Simpler▫More Affordable▫More Accessible▫Customizable

•Drives Growth

Technology is Going to Advance and There is No Stopping it, Even if it Ruins an Industry…

…The Good News is That it Often Creates a New Industry

Companies Either Get on Board…

…Or Get Left Behind

The Technology Industry

VOIP•35% of Businesses Use VoIP•Allows For One Phone Line•Avoids Long Distance Charges

Communication

•Post Office to Today

•Communication Forms are Merging

•Mobile Computing Could Replace Desktops and Notebooks

Music Industry’s Current State

•Lower Profit Margins•Whatever song you want, whenever you

want

New Music Industry Business Models•Subscription Services

▫Pandora, Spotify, Grooveshark•Digital Download Services

▫Apple iTunes, Amazon MP3•Partnering With Tech Companies

▫EMI and Warner•Online Album Promotions

▫The Killers

Ethical Questions•Difference Between Downloading Free

Music Versus Listening to Music for Free Over the Radio or Internet?

•Is Downloading Free Music Unethical?

Name That Disruptive

Technology!

Disruptive Innovation•Helps Create New Markets•Disrupts an Existing Market and Value

Network▫Can Take a Few Years or Even Decades

•Displaces an Earlier Technology•Unpredictable•Designed for a Different Set of Consumers

in a New Market•Lowers Prices in Existing Market

AKA Creative Destruction•Leads to Paradigm Shifts

▫A Change in the Basic Assumptions or System Conditions

▫Permanently Disrupting the Framework•The Idea of Punctuated Equilibrium With

the Emergence of New Eras

Where There is Risk, There is Reward

The S-Curve

The Future of Hollywood•Digital Content

•Netflix and Hulu Plus are Looking at Original Content

•Consumers are Willing to Pay for Access to Content

•Ticket Sales have fallen 200 million since 2002

Early Adoption Risks•Picking the Wrong Technology

▫HD-DVD vs. Blu-ray•Not Following Real Consumer Trends

▫GM’s Hummer•Further Technological Innovation

Late AdoptersKodak Hasbro

Major Success StoriesGoogle Apple

• Apps• beta releases• Adwords

• Reinvention• iPod• iPhone• iPad

“You don’t know when the transition period will start. The

idea is to understand that it will…and become prepared for it.”

-Dr. Timothy BishopFuture Studies, University of Houston

Sources• http://clients.ibisworld.com/industryus/M

ajorcompanies.aspx?indid=894• http://www.ksla.com/Global/story.asp?S=

12533107• http://nymag.com/nymetro/news/media/co

lumns/medialife/6099/• http://www.theregister.co.uk/2010/03/08/

npd_home_streaming/• http://

www.fool.com/investing/general/2012/06/18/streaming-music-will-make-your-ears-and-pockets-r.aspx

• http://www.hollywoodreporter.com/news/music-film-industries-average-lowest-167422?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+thr%2Fnews+%28The+Hollywood+Reporter+-+Top+Stories%29

• http://articles.businessinsider.com/2011-02-18/tech/30052663_1_riaa-music-industry-cd-era

Sources cont.• http://www.zdnet.com/blog/storage/when-

will-the-ipad-replace-desktops/1631• http://voipstrategy.com/University/VoIP_B

enefits.aspx.html• http://voipstrategy.com/University/VoIP_B

enefits.aspx.html• http://www.lightreading.com/document.as

p?doc_id=190826• http://www.macworld.com/article/115781

7/tv_movie_future.html• http://www.washingtonpost.com/wp-dyn/c

ontent/article/2005/11/11/AR2005111101644_2.html

• http://myventurepad.com/jeffweinberger/91147/apple%E2%80%99s-plight-will-disruptive-innovation-make-it-winner

• http://www.the-numbers.com/market/