Disruptive Technologies U. B. Desai SPANN Lab. Dept. of EE IIT-Bombay www. ee. iitb. ac. in/~ubdesai 2008 Sem ICT 4 SED 1
What is disruptive technology? n Working Definition: n n n Technology which creates a major (positive) disruption in the way society functions Best explicated thru examples 2008 Sem ICT 4 SED 2
Examples of Disruptive Tech. n Sun Microsystems Workstations: disrupted the market for main frame computers. n PCs disrupted the market for workstations Xerox plain paper copier: disrupted the market for offset printing. n Cannon’s desktop photocopiers: disrupted Xerox’s high speed photo copying market. n 2008 Sem ICT 4 SED 3
Honda motorcycle of 60 s n Japanese cars of 70 s n Korean Cars of late 80 s n Wireless telephony (GSM, CDMA): disrupted the market for wire-line telephony. n Nirma … n 2008 Sem ICT 4 SED 4
n Impacting technologies are disruptive n Disruptive innovations are products and services that initially aren't as good as those that historically have been used by customers in mainstream markets, and therefore can take root only in new or less-demanding applications, amongst non-traditional customers Stuart Hart and Clayton Christensen 2008 Sem ICT 4 SED 5
Historically: Major waves of growth thru forays at the bottom of the developed markets (DM) 2008 Sem DM ICT 4 SED 6
The World Pyramid Population in millions Purchasing Power Parity (PPP) >$20, 000 $2000 to $20, 000 less than $2000 2008 Sem Tier 1 Tier 2 & 3 Tier 4 ICT 4 SED ~ 200 mil ~ 800 mil ~ 5000 mil 7
The Pyramid Examples of Xerox, Cannon copiers, PCs, Cell phones, etc. represent technologies developed for the second Tier (to some extent Tier 3) n To date most disruptive technologies have been attacking Tier 2 n 2008 Sem ICT 4 SED 8
Advocated by C. K. Prahalad Attack the bottom of the pyramid. Likely to create greater disruption bottom of the pyramid 2008 Sem ICT 4 SED 9
Pyramid for India Population in million Purchasing Power > 5 lakhs T 1 3 to 5 lakhs T 2 1 to 3 lakhs 50 K to 1 lakh less than 50 K 2008 Sem T 3 T 4 10 mil 50 mil 150 mil 200 mil 550 mil T 6 ICT 4 SED 10
Opportunities at the Bottom of the Pyramid Nearly ½ billion in India (4 to 5 billion world wide) at the bottom of the pyramid n Need to develop new technologies for Tier T 4 and T 5 n New business models are needed n 2008 Sem ICT 4 SED 11
Examples of Attacking the Bottom of the Pyramid n New Business Models n n n 2008 Sem n PCO-STD-ISD booths (Pitroda) Hindustan Lever (Chache Story) Amul Dairy Grameen Bank, SEWA Bank (Micro-financing) Grameen Telecom (Bangladesh) Microfinance (Vikram Akula) ICT 4 SED Technologies n n N-Logue (Village Internet Kiosk using Cor. Dect Wireless Tech. ) TVS (Kirana Shop Computers) 12
N-Logue: cor. DECT Village Kiosk n Consists of n n n Wireless cor. DECT wall-set for Internet and telephone, PC, dot matrix printer, battery back up, web-cam, speakers, microphone --- for Rs. 50 K Local entrepreneur operates the kiosk These kiosks becoming community centers Expect cities to outsource their work to villages (Indian villages could become back office to Indian urban centers ~ a hyperbole) RTBI: Rural Technology Business Incubator 2008 Sem ICT 4 SED 13
TVS Kirana Computers For Kirana stores with sales of Rs. 100, 000 per month n A rugged PC n No out right purchase of software or hardware: Pay Rs. 2, 500. 00 per month. n Software for accounting, inventory, etc. n In 180 days there was a 3. 9% increase in profit n 2008 Sem ICT 4 SED 14
Change of Mindset. . . (from C. K. Prahalad) n Poor as a Problem n n Poor as Wards of State Old Technologies n n n Old Technologies Follow the F West Resource Constraints n Poor as an opportunity Global Market of 4. 5 billion? Poor as Active Market Innovation and development of new technologies with usefulness to the Poor Imagination Constraint Information Access will be a great asset 2008 Sem ICT 4 SED 15
Change of Mindset … (from CK Prahalad) The Poor of India is an Intractable Problem Poverty Alleviation, Subsidies 2008 Sem The Poor of India is a Potential Market The Poor of India can be A Source of Innovation Creating a New Market, Innovation, Growth ICT 4 SED 16
Challenges § The Market is Very Fragile: (Monsoons, Subsidies, …. ) § Middlemen and Moneylenders § Fragmented Experiments § Lack of a Global database § Traditional Ways of Thinking 2008 Sem ICT 4 SED 17
References n C. K. Prahalad and Allen Hammond, Serving the World’s Poor, Profitably, Harvard Business Review, September 2002 n n C K Prahlad, spoke about at the annual session of the Confederation of Indian Industry, held recently in Bombay. Prahlad said the Indian economy has the potential to grow 10 to 15%. http: //www. moneycontrol. com/promos/prahlad. html The Great Leap Downward: http: //idbdocs. iadb. org/wsdocs/getdocument. as px? docnum=996849 2008 Sem ICT 4 SED 18
Home Work: Questions Why is there so little technological innovation and development, where the need is maximum? n Why has Fortune at the bottom of the Pyramid not taken off? n Is there something wrong with theory? n Think of three disruptive technologies that can change the lives of poor in India n 2008 Sem ICT 4 SED 19
2008 Sem ICT 4 SED 20
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