Disruptive technology and innovation
Disruptive technology and innovation

Business disruption and how to capitalise on industry 4.0


The term 'disruption' can ignite fear in the hearts of small- and medium-sized business operators when, in fact, they are best poised to flourish and thrive from the opportunities that disruption – especially disruptive technology – presents.

The smaller and more nimble the business operation, the easier it is for them to change and adapt compared to their multinational counterparts. Up-front investment in disruptive technology is also smaller and the cost-to-benefit ratio reduced.

To understand how businesses can manage and embrace disruption, let's first look at the concept itself.

What is disruptive technology?

Harvard Business School's Clayton Christensen first coined the term 'disruptive technology' in his 1997 book, The Innovator's Dilemma. When exploring why and how successful businesses still lost market leadership, the results of his cross-industry study led him to conclude that they shared a fundamental similarity: they failed to capitalise on new waves of technology.

Christensen separates new technology into two categories: sustaining and disruptive. While sustaining technology relies on incremental improvements to an already established technology, disruptive innovation has a greater impact by tapping into, or creating, brand-new markets by providing an industrial advancement that attracts new types of customers.

A good example of an original disruptive technology was Alexander Graham Bell's "electrical speech machine", which we all now know as the telephone. The next wave of disruptive technology was the mobile phone, as it created an entirely new market without replacing an existing demand.

Examples of disruptive innovation

Netflix is often quoted as an excellent example of contemporary, innovative disruption. Initially targeting a niche market, Netflix did not try to introduce a service or product that served every customer. Instead, it focused on an audience that was being neglected by existing providers. Netflix removed the storefront obstacle (driving to rent and return a video) by offering a mail distribution service. Introducing disruptive technologies is feasible for smaller, entrepreneurial start-ups for precisely that reason: they don't serve the entire market. Netflix then went on to leverage developing web technologies and faster internet speeds to create yet further disruption through their online subscription model. Now searching through rows of DVDs is a thing of the past.

Other examples that show how innovative technology created new customer markets include:

  • The internet - with billions of users worldwide, has there ever been a bigger technological disruption?
  • Social media - by disrupting telephone, email, event planning and creating real-time connections between individuals, Facebook, Instagram, Snapchat and others have changed the communication landscape.
  • The cloud - enabling the 'work from anywhere, anytime' paradigm, cloud computing, supported by laptops and portable devices, has disrupted an entire workforce generation.

In the Industry 4.0 era, there are so many exciting examples of innovative, disruptive technology: renewable energy, artificial intelligence, bitcoin, 3D printing – the list goes on. However, what does this all mean for small- and medium-sized business? How can they ensure they remain relevant through the ‘fourth industrial revolution’?

Business success in a disruptive era

Understanding and meeting the ever-changing preferences, demands and needs of customers is at the heart of what is often referred to as continuous transformation.

According to experts, businesses who want to remain viable must be willing at a systemic level to adapt to and embrace the inevitable – change. Change strikes at the heart of business culture, nurturing a philosophy of encouraging new ideas and innovative thinking.

Ray Wang of Constellation Research says the challenge faced by many small businesses when addressing the issue of adapting to new technologies and addressing customer engagement is that they’re not moving fast enough.

"Even Amazon’s not moving fast enough," says Wang. "Now you can see exactly what’s going on because they’re competing with global players like Alibaba, JD. All these people are working at that pace. And it’s because of that pace that’s happening, people are wondering hey, can we compete? Can we compete fast enough?"

"The short answer of it is that there’s a lot of work that’s going to be required, a lot of heavy lifting for folks to make those shifts,“ Wang continues.


“One way to do it is to create separate entities. More than just innovation labs, but create separate entities and bring them back in the fold. The other way is to really try to change the company fast enough across the board culturally. Both ways work, you really just have to think about where your leadership style is and what parts of the business are you willing to disrupt."

How can these technologies support small business growth?

A recent article by the online technology site, Good Audience suggests "organisational leaders should disrupt themselves before the technology disrupts their business". Understanding the power of innovations such as information technology or artificial intelligence can increase business opportunities and growth.

Looking at the role of artificial intelligence (AI), expert RL Adams defines a truly artificially intelligent system as one that "can learn on its own".

"We're talking about neural networks from the likes of Google's DeepMind, which can make connections and reach meanings without relying on pre-defined behavioural algorithms. True AI can improve on past iterations, getting smarter and more aware, allowing it to enhance its capabilities and its knowledge."

In his article 10 Powerful uses of Artificial Intelligence, Adams notes that AI is all around us. "From voice-powered personal assistants like Siri and Alexa to more underlying and fundamental technologies such as behavioural algorithms, suggestive searches and autonomously-powered self-driving vehicles boasting powerful predictive capabilities, there are several examples and applications of artificial intelligence in use today."

Embracing AI developments can have profound effects on productivity, innovation and customer service at the small business level.


Intuit's Alex Chriss recommends these five instant applications of AI to help power small- and medium-sized business and help them stay ahead of their competition:  

1. Automate back-office tasks

Every business has time-consuming, repetitive administrative jobs. Why not put AI to use so you can focus on more strategic and business-oriented tasks?

2. Make smarter business decisions

As an 'independent advisor', AI tools can be used to analyse data and unearth insights that can be used to help inform important business decisions.

3. Deliver highly personalised customer experiences

Think Netflix and Amazon recommendations - how these can provide a more enriching, intuitive and profitable customer experience. Machine learning, an advanced form of AI, uses algorithms to learn from past experience and glean hidden insights from data without programming.

4. Gain customer insights for product development

Using AI to analyse customer data can also shed light on patterns of customer behaviour and future predictions. This behaviour can help inform decisions about the direction of product development that is going to meet future customer demands.

5. Employ a virtual personal assistant

By using voice-powered Siri (Apple) or Alexa (Google) in day-to-day business life as virtual assistants can help solo or smaller business operators plan and schedule their calendars and send reminders via email, to make optimal use of their valuable time.

While some of these innovations may seem too radical to implement now, a recent Forrester study found half of the surveyed businesses were considering implementing AI. Small- and medium-sized business owners should be no exception.

Disruptive technologies, including AI, have proven their worth to organisations across multiple sectors. Now it's not just a case of 'if', but 'when' your business takes the same step.

Could an MBA help you capitalise on today’s disruptive environment with more confidence and success? Learn more about Victoria University (VU) Online’s 100 per cent online MBA course or get in touch with our Enrolment team on 1300 043 531.