We’ve all watched as video and book stores have vanished, and newspapers and retailers have struggled with the transition to online commerce.
The impact of globalisation and technology is so destructive in so many sectors that there are people now who have developed a career helping companies manage the change.
Professor Clayton Christensen, of the Harvard Business School, is credited with coining the term ‘Disruptive Technology’ in 2005. He was referring to these technologies with the power to destroy entire business sectors.
The same disruption is now threatening universities as MOOCs (Massive Open Online Courses), being offered at no cost, threaten to steal students from the traditional campus experience. Universities have been warned ‘change or go broke’.
Christensen has looked at a range of sectors over many years as diverse as excavators, motorbikes, disk drives, mini steel mills, laptops, mobile phones, and many more and discovered a pattern.
It is a pattern of paradoxes.
For instance, he noticed that these innovations were initially designed to fail. There was little potential to generate income (think of the difficulty newspaper companies have had in growing online subscribers), so little motivation for companies to invest in the change.
And again paradoxically, he noticed that while good companies motivated by profit and growth, initially and appropriately, rejected these disruptive technologies, they were later destroyed by them.
Professor Christensen has written three books that address this topic: The Innovator’s Dilemma, The Innovator’s Solution; The Innovator’s DNA.
How long will it be before online education cannibalises traditional campus life in the same way that online newspapers have destroyed so many papers? Prof. Christensen noticed that even the most successful organisations mismanaged the introduction of disruptive technologies in a pattern. He developed six steps in the destructive process, below, after interviews with 80 managers in the disk drive industry during its period of change. The steps hint at which companies might survive the transition:
1. The disruptive technologies were first developed by innovative staff within established firms and pitched to management. The management in well run companies appropriately considered the proposal.
2. Marketing personnel sought opinions from their established customers. They didn’t want the new innovation as they had no use for it. Instead they wanted to compete with improvements in their existing products. The company did the correct thing – listened to its customers and it was precisely because companies listened that they failed to develop the innovation.
3. Instead, established clever firms stepped up the pace of (what Professor Christiansen calls) sustained technological developments, which improved company performance with the existing customer-base.
4. New companies were started and exploited the disruptive innovation. These ‘start-ups’ necessarily operated on a very low cost base with the charter of finding new markets, which they did by trial and error. Initially these markets were tiny. Some of these companies were supported by the ‘parent’ companies; others were formed by disillusioned and frustrated employees.
5. As the technology developed, so did the markets. Customers’ behaviour also changed as the new technology became relevant to their lives (increase band width, improve performance, etc.) The newly formed entrants moved up market, now competing with the established firms (think of the growth of Amazon and its competition with the book stores).
6. Established firms, some of them belatedly, jumped on the bandwagon to exploit the new-found opportunity. And some of them survived. 
So, which organisations survived and why? Unfortunately we can’t summarise it quickly – Christensen wrote a whole book, ‘The Innovator’s Solution’, to address this (see particularly Chapter 7). But clearly, first companies must recognise the technology as a threat (‘Is it a duck or rabbit?’). It’s not always clear – many companies are dismissive; others are in denial. Then, big companies with established customers and inflexible values and processes struggle; small companies can often better face the challenge to commercialise a simpler product that sells for less money and appeals to an entirely new (possibly undiscovered) customer.
