DisruptiveTechnologiesU.B.DesaiSPANNLab.Dept.ofEEIIT-Bombaywww.ee.iitb.ac.in/~ubdesaiWhatisdisruptivetechnology?WorkingDefinition:Technologywhichcreatesamajor(positive)disruptioninthewaysocietyfunctionsBestexplicatedthruexamplesExamplesofDisruptiveTech.SunMicrosystemsWorkstations:disruptedthemarketformainframecomputers.PCsdisruptedthemarketforworkstationsXeroxplainpapercopier:disruptedthemarketforoffsetprinting.Cannon’sdesktopphotocopiers:disruptedXerox’shighspeedphotocopyingmarket.Hondamotorcycleof60sJapanesecarsof70sKoreanCarsoflate80sWirelesstelephony(GSM,CDMA):disruptedthemarketforwire-linetelephony.Nirma……ImpactingtechnologiesaredisruptiveDisruptiveinnovationsareproductsandservicesthatinitiallyaren'tasgoodasthosethathistoricallyhavebeenusedbycustomersinmainstreammarkets,andthereforecantakerootonlyinneworless-demandingapplications,amongstnon-traditionalcustomersStuartHartandClaytonChristensenHistorically:Majorwavesofgrowththruforaysatthebottomofthedevelopedmarkets(DM)DMTheWorldPyramidTier1Tier2&3Tier4Populationinmillions~200mil~800mil~5000milPurchasingPowerParity(PPP)>$20,000$2000to$20,000lessthan$2000ThePyramidExamplesofXerox,Cannoncopiers,PCs,Cellphones,etc.representtechnologiesdevelopedforthesecondTier(tosomeextentTier3)TodatemostdisruptivetechnologieshavebeenattackingTier2AdvocatedbyC.K.PrahaladAttackthebottomofthepyramid.LikelytocreategreaterdisruptionbottomofthepyramidPyramidforIndiaT1T2T3T4T6Populationinmillion10mil50mil150mil200mil550milPurchasingPower>5lakhs3to5lakhs1to3lakhs50Kto1lakhlessthan50KOpportunitiesattheBottomofthePyramidNearly½billioninIndia(4to5billionworldwide)atthebottomofthepyramidNeedtodevelopnewtechnologiesforTierT4andT5NewbusinessmodelsareneededExamplesofAttackingtheBottomofthePyramidNewBusinessModelsPCO-STD-ISDbooths(Pitroda)HindustanLever(ChacheStory)AmulDairyGrameenBank,SEWABank(Micro-financing)GrameenTelecom(Bangladesh)Microfinance(VikramAkula)TechnologiesN-Logue(VillageInternetKioskusingCorDectWirelessTech.)TVS(KiranaShopComputers)N-Logue:corDECTVillageKioskConsistsofWirelesscorDECTwall-setforInternetandtelephone,PC,dotmatrixprinter,batterybackup,web-cam,speakers,microphone---forRs.50KLocalentrepreneuroperatesthekioskThesekiosksbecomingcommunitycentersExpectcitiestooutsourcetheirworktovillages(IndianvillagescouldbecomebackofficetoIndianurbancenters~ahyperbole)RTBI:RuralTechnologyBusinessIncubatorTVSKiranaComputersForKiranastoreswithsalesofRs.100,000permonthAruggedPCNooutrightpurchaseofsoftwareorhardware:PayRs.2,500.00permonth.Softwareforaccounting,inventory,etc.In180daystherewasa3.9%increaseinprofitChangeofMindset...(fromC.K.Prahalad)PoorasaProblemPoorasWardsofStateOldTechnologiesOldTechnologiesFollowtheWestResourceConstraintsPoorasanopportunityGlobalMarketof4.5billion?PoorasActiveMarketInnovationanddevelopmentofnewtechnologieswithusefulnesstothePoorImaginationConstraintInformationAccesswillbeagreatassetThePoorofIndiaisanIntractableProblemChangeofMindset…(fromCKPrahalad)ThePoorofIndiaisaPotentialMarketThePoorofIndiacanbeASourceofInnovationPovertyAlleviation,SubsidiesCreatingaNewMarket,Innovation,GrowthChallengesTheMarketisVeryFragile:(Monsoons,Subsidies,….)MiddlemenandMoneylendersFragmentedExperimentsLackofaGlobaldatabaseTraditionalWaysofThinkingReferencesC.K.PrahaladandAllenHammond,ServingtheWorld’sPoor,Profitably,HarvardBusinessReview,September2002CKPrahlad,spokeaboutattheannualsessionoftheConfederationofIndianIndustry,heldrecentlyinBombay.PrahladsaidtheIndianeconomyhasthepotentialtogrow10to15%.http://www.moneycontrol.com/promos/prahlad.htmlTheGreatLeapDownward:http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=996849HomeWork:QuestionsWhyistheresolittletechnologicalinnovationanddevelopment,wheretheneedismaximum?WhyhasFortuneatthebottomofthePyramidnottakenoff?Istheresomethingwrongwiththetheory?ThinkofthreedisruptivetechnologiesthatcanchangethelivesofpoorinIndia