Disruptive Technology

The concept (and phenomenon) of Disruptive Technology has been without a doubt the most influential in my career. The term was coined by Clayton Christiansen in this breakthru book The Innovator’s Dilemma in 1997. In it he defined a disruptive innovation (or technology) as a product or service targeted at customers who have need that was previously unmet (or over met) by existing company’s:

“Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.”

Clayton and that seminal work were the inspiration for LeanLogistics in 1999 after attending a trail-blazing “High Tech/High Touch” YPO University in San Francisco — which was coined “The Woodstock of the New Economy”. That is where I had the opportunity of meeting and spending some time with him after his filming of a segment of the Charlie Rose Show from that event. (The show was filmed for the entire week at our event and had the Internet/Technology movers/shakers/innovators all in attendance.)

You usually only hope to come away from a conference with a little nugget of some sort to show for your time and expense there. I came away from that week-long University with the nugget that became LeanLogistics, now part of Brambles, an international supply chain solutions provider. LeanLogistics was all about reinventing the way transportation was to be managed and paid for, a true disruptive innovation — to more than one industry.

In the late 1990’s and early 2000, when asked “will the Internet affect my industry?” I routinely suggested that they needed to think about it completely differently. The assumption that they needed to come from was that the Internet was absolutely going to affect their business and industry. Their question should be “how will it not?”

Just like then, mobile technology and their applications are disrupting entire industries today.

To give you an idea of impact; Apple launched their app store in 2008 and since then over 10 billion mobile apps have been downloaded. According to AdMob 2010 revenue for all apps was $2.5 Billion, which IDC suggests is on its way to $35 Billion by 2014. On penetration; in their paper, “apps culture” last September, the Pew Research Center discovered that 35% of adults already have cell phones with apps. That was over 5 months ago and before the Verizon iPhone 4 launch and just a few after the Android Market got its legs under it. What will it look like next year?

The Next Disrupters?

Mobile applications are already driving some of our next great companies. Will they not disrupt entire industries themselves?

• Foursquare has created entirely new kinds of social networks built specifically for the mobile user. (If you are not aware of what Foursquare and these other applications are, ask your kids or grandkids about them — or better yet explore them yourself!)
• Shazam has fundamentally changed how people discover new music, making the process mobile and more spontaneous—further disintermediating record labels and physical store (it must be driving the Recording Industry Association of America nuts).
• Instagram (which just hit their 2 millionth download).
• PicPlz looks like they could be a next generation of flickr for photos.
• Rovio is reinventing online gaming.

Not to mention the thousands of novelty apps from androidify to doggy squeak toys have replaced the dancing babies and flying toasters people were sending around over a decade ago.

All of these companies and more, along with the applications that they have developed, threaten to topple the existing business models within their domains. This is the cycle of disruptive technology and innovation that lead to the explosion of Internet content and web sites that fueled the infamous dot-com boom. It is disruption — this time it is centered around mobile applications that will power the growth of these technologies and the value they create today.

Heady times for Mobile Applications indeed.