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  • Subject Code : BUSM4496
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Disruptive Innovation

A disruptive innovation can be defined as an innovation that on introduction disrupts an already established market and value network. Disruptive innovation brings about a huge change in the market impacting the leading companies and products in demand

The term “disruptive technology” was first used in 1995 by Clayton M. Christensen, a United States based scholar, that came up as the most powerful business idea of present day.

Example of Disruptive Innovation

One of the most relevant examples of disruptive innovation today is Alexa by Amazon. Alexa has shown a rapid growth and disruption in the world of Internet of Things. Alexa was introduced by Amazon in 2014. It is a voice-based virtual personal assistant that enables user to interact with it, play music, stream podcasts, get real time traffic information, weather forecasts, news, play audiobooks, set alarms, reminders etc. It can also work as a home automation system enabling the user to control various smart devices.

Today, millions of people worldwide interact with Alexa through some Echo speaker by Amazon like the Dot, the Plus, the Show, or the Spot. These days Alexa is available in nine different languages and works on seven different platforms. 

Alexa came up as disruptive technology in the category of intelligent personal assistants disrupting the artificial intelligence market. Before Alexa, the popular product in the market was Siri by Apple Inc. Alexa disrupted the market of Siri and became one of the most demanded products today.

Clayton M. Christensen Theory of Disruptive Innovation

Clayton M. Christensen Theory of Disruptive Innovation describes “Disruption” as a process in which the small companies that possess less resources come forward and introduce their products in the market challenging the already established firms, that shakes the whole market upside down. While the existing firms are busy in satisfying their already made customer base ignoring the other segment of people, the introduced business get the hold of market by targeting those excluded set of customers by providing their needed product with more functionalities at a lesser price. Major advantage introduced business faces is that the existing firms do not respond as their focus is different from the new entrant. As a result the business gets established and it moves upward in the market. Adding new features and functionalities in the product, the product starts getting popularity in the market and the mainstream customers start adopting the product. Here the disruption takes place.

According to Clayton M. Christensen, there are some conditions can be used to access a technology’s disruptive nature. Some of these are:

  1. According to  Christensen’s theory, one major condition for considering a technology as “disruptive” is that the technology should lead to either low-end disruption, or  new-market disruption. According to him, a case is when disruptive innovation business starts its establishment from a low-end market. It mainly focuses on the market segment that was previously ignored by the existing firms. The other case is when the disruptive business establishes an entirely new market making new customers. If we consider the case of Alexa here, it is applicable to the first assumption. Alexa was launched when already there were intelligent virtual assistants in the market like Siri by Apple Inc. Alexa came up as a strong competitor. It entered the artificial intelligence market and disrupted the market of smart virtual assistants including Apple Inc.’s Siri. Customers now have choices. They are now getting the same features of the virtual assistant at a very low price as compared to Siri. 

  2. According to Christensen, a disruptive technology starts its establishment with less featured product, then slowly spreads itself in the mainstream market by improving its quality. The initial Alexa features were not very vast. The earliest versions possessed simple, child-like features. Those features were not definitely attractive to the mainstream customers who had already seen smart assistants like Siri. Alexa attracted only those customers who didn’t care about advanced functionalities or were early adopters of smart assistants. Theoretically, this is about disruption, as Alexa targeted those segments of the customers that have been overlooked by its competitor, and delivered an alternative, at a much lower price. Time went on and more functionalities were added in Alexa and it became smarter and more helpful. Eventually, Alexa moved up so rapidly in the market by adding the features and functionalities that mainstream customers wanted. Alexa can now interact, remind you, talk about news, sports, play audiobooks, play podcasts, play music, assist and even can control some smart devices by working as a home automation system.

HRM Professionals and disruptive innovation threat

When a new introduced innovation disrupts the market and leads the already established firms to bring about some changes in their business or market strategies in order to survive, disruption has occurred. When this happens, every department of the established firms should bring about some changes in their strategies to survive in the market or to suffer consequences. Same is the case with Human Resource Management.

When potential threat from disruptive innovation hits the market and an organization from outside there are two cases- either the HRM professionals ignore the threat and continue their working as usual and hence suffer in the end or the professionals take proper measures in time, protecting the organizational position in the market.

When there is a threat of disruptive innovation, HRM professionals have a great responsibility to bring an organization out of this challenge. They should respond by upgrading or making modifications in the existing practices in an organization. These modifications are necessary to make the organization flexible so that the organization become ready to face the disruptions caused. Disrupted innovations completely change the face of an existing market. The HR professionals should respond by getting involved in altering the existing business strategies and forming new ones to support the organization to survive in changed market conditions. The HRM professionals are responsible for strategic planning in an organization to cope with the threat of disruptive innovation.

When we talk about the threat of disruptive innovation, there are two approaches that must be followed by the HRM professionals. The first is that they should always be ready and make their minds to face any disruptive technology from outside of the organization. They should be prepared that disruptive innovation can hit the organization anytime. The HRM professionals should make sure that the organization has enough resources and proper strategies to cope with the disruptive innovation. They should be aware of the potential threats that can harm an organization along with the weaknesses that the organization possess and methods to protect the organization from that harm.

There should be proper planning in advance to respond in the worst cases that could be encountered.

HRM Professionals Role

Traditionally HRM professionals role and responsibilities were limited to hiring, recruitments, training and development but in today’s business world where competition is very fierce and there is an era of disruptive innovations, HRM professionals’ roles and responsibilities also increases. They now have the responsibility to inculcate the innovative technologies in their work too. The HRM professionals role is now extended to collaborate, cooperate with the executive management. They are responsible for creating various employee engagement activities, stewarding the business, roles in business operations, accessing the knowledge base of the employees and provide trainings as per the knowledge. They are also responsible for implementing new strategies and inculcate new processes of hiring, employee management, employee retention techniques, etc. The HR professionals are also getting involved into a new role of ensuring the sustenance of the company in case of disruption. 

The HRM roles have evolved over time and from the sole administrative roles, the HRM professionals have shifted into the combination of administrative as well as strategic roles within an organization. In strategic roles, the HRM professionals are involved in making strategies along with the executive management to make the organization more secure from disruptions and value creation is also done for organizational success in disasters.

This is also a responsibility of the HRM professionals to make strategies and implementing them as soon as they realize that the market is going to be change by some disruptive innovation. They should be far-sighted. The following are some of the measures that could be taken in order to sustain in changing disruptive market:

  1. Identification of disruptor at an early stage.

  2. Expansion of technology and innovation.

  3. Proper business planning and strategy.

  4. Uncertainty management.

  5. Collaborations

  6. Considering industry dynamics

  7. Outsourcing

Conclusion

In a brief we came to know about the disruptive technology that on introduction disrupts an already established market and value network. Disruptive innovation brings about a huge change in the market impacting the leading companies and products in demand. To cope with the disruptive technologies the organizations need to be very focused and updated as the introduction of disruptive technologies bring about revolutions in the market from where only the organizations that are prepared to face the disruption survive while the others face consequences. In these cases all the departments in an organization are equally responsible for preparing the organization for disruption, a major role is played by the HRM professionals that bring about strategies and planning to cope up with the disruptive innovation from outside the organization.

References

  1. Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). What is disruptive innovation. Harvard Business Review, 93(12), 44-53.

  2. Disruptive Innovation: Why Uber isn’t disruptive but Netflix is, Retrieved from https://medium.com/datadriveninvestor/why-uber-isnt-disruptive-but-netflix-is-disruptive-innovation-explained-198d250f4db0

  3. Markides, C. (2006). Disruptive innovation: In need of better theory. Journal of product innovation management, 23(1), 19-25.

  4. Ray, J. (2012). Evolving Human Resource (HR) Management to Cope with Disruptive Innovation Technologies. Available at SSRN 2173815.

  5. Smith, Jason. 4 Industries Amazon Alexa Will Disrupt, Retrieved from https://dotcms.com/blog/post/4-industries-amazon-alexa-will-disrupt

  6. Yu, D., & Hang, C. C. (2010). A reflective review of disruptive innovation theory. International journal of management reviews, 12(4), 435-452.

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