The Opportunity and Threat of Disruptive Technologies

I know all of you have a memorable teacher that made an impact in your life. For me, mine did not come along until l was studying for my Masters. This stand-out professor within my learning journey was Clayton M. Christensen.

Clayton introduced me to the attribute of Disruptive Technology and how those that embraced the understanding of it typically thrived and initially owned the market. But for it to qualify, the Disruptive Technology had to be distinctively different to make an impact.

A favorite example is that of the cassette tape. As kids we had our recorders and worked hard to copy songs from the radio airwaves creating our own personal playlist. ... then Sony introduced the walk-man and BOOM! the pre-recorded cassette sales took off and made Sony a plethora of money.

I have to be honest it seems like the world has embraced Artificial Intelligence (AI) as the latest Disruptive Technology. It seems like every article, or product offering now has an AI attribute added to make it super special. But I do not think it really is ...

All AI does is reach into a huge inventory of documented knowledge and regurgitates it in a new format with a conversational format. It did not add anything new, except maybe bringing in something you were not aware of, and of course you need to fact check and verify before using. I have heard great things from Programmers who have used AI as a coding tool ... more about this topic at the end of our article.

Now back to Clayton ...

We are on the thin edge of perhaps the biggest "Disruptive Technology" to descend on our society and I really don't think we fully understand all of the repercussions just yet.

Now Clayton may have gotten it wrong when we look at the Electric Vehicle ... perhaps. Elon Musk broke the paradigm when he introduced the electric vehicle (Tesla) to us ... it was a significant shift and definitely not a low-cost alternative. People still fear the duration capability of a "full charge", but the environmentalists have us convinced this technology is in the best interests of society ... and most likely is.

Now every car company is scrambling in their own way bringing to market their own version of environmentally friendly vehicles although the electric option seems to be winning. But let us look at Clayton's thoughts back then about the subject of Disruptive Technology and apply it to Electric Vehicles ...

Litmus test for high-potential disruptive innovations

• Technologically simple

• Starts at low price point

• Does not depend on other infrastructural or technological changes

• Market application is financially unattractive to existing competitors

• Facilitates or makes more convenient existing patterns of customer behavior; success is not predicated upon behavioral change.

– It is a sustaining innovation from the customer’s point of view, but a disruptive innovation to the competition.

But I don't think we fully comprehend the extent.

• Gas Stations will be replaced by Charging Stations

• Electric vehicles are much simpler in design so our component supply chains will shrink

• Repairs will minimize and mechanics may become obsolete

• Battery Recycling will become a new industry

I have always been a big fan and promote when involved in Product Design and Development the adage of allowing "Mass customization within a Modular Formats".

This then creates the following evolutionary progression.

• Functionality of products overshoots what customers want or need in a tier of the market that can be absorbed.

then

• The basis of competition begins to shift. Customers in that tier no longer reward further

improvements in functionality. Speed to market, and the ability to customize features and

functions for ever-smaller customer sets, becomes the basis for getting ahead and earning

premium margins.

then

• Product and process architectures become modular.

then

• Well-defined interfaces between modules enables markets to emerge between elements of value-added. The dominant business model evolves from large, vertically integrated firms to smaller, focused, non-integrated firms.

then

• The ability of designers and assemblers to sustain differentiation in the functionality, features and cost of their products diminishes. Margins drop, and the speed of the development cycle treadmill accelerates.

then

• Whereas the integrated firms made the money, and their suppliers got hammered, in the era of technological integrality, it is the suppliers of scale-intensive, integrated components or subsystems that make money in the modular era. Their customers get hammered.

Enjoy your front row seat and observe how perhaps the biggest Disruptive Technology engulfs our society. The speed of influence is even being accelerated by proclomations by countries and governments creating a milestone of anticipated and expected acceptance, but will we be ready?

How is it going to impact you? or perhaps how are you going to impact it?

This is a lead in to what many perceive as the latest element of Disruptive Technology, Artificial Intelligence or is it?

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Reprinted sections of an article published by Alyson Shontell ....

It now seems that every company, all marketing and general statement have now managed to wordsmith into their communication the use of AI.

I was chatting up Anthropic’s newest version of Claude, powered by its most recent drop Opus 4.6, which is stunningly good. If your last impression of AI was, “Eh, this is overhyped and faulty,” get yourself a paid version of GPT or Claude and try again (the paid versions are far superior technologically to the free). It has come a long way from even a few weeks ago.

The other thing I was doing was reading a well-articulated essay by AI startup founder Matt Shumer: “Something big is happening in AI.”

Matt captured what so many of us who are watching AI closely are feeling: Our friends and families don’t get what’s coming. Those on the front lines, however—the software engineers—are seeing it, and it’s hugely disruptive.

Anthropic’s Dario Amodei has been the most vocal about the hit the workforce will take over the next few years. But even Sam Altman recently lamented that AI was so much better than he was at accomplishing a task that it made him feel nostalgic.

The latest version of ChatGPT largely wrote itself. Anthropic’s and OpenAI’s top engineers say AI now writes 100% of their code.

Shumer’s argument is that software engineers were the first jobs targeted by AI, because then AI can write and improve upon itself. But lots of other jobs will be similarly replaced. He likened this moment to early COVID, February 2020, when scientists could see a pandemic brewing but the public hadn’t stockpiled toilet paper yet.

Get yourself “toilet paper ready” by reading Shumer’s essay, which he’s published on Fortune. Then do yourself a favor and listen to the foremost expert in AI, Google DeepMind CEO Demis Hassabis, paint a more optimistic future on my podcast, Fortune 500: Titans and Disruptors. Hassabis sees an AI shakeout that will last 10 to 15 years, followed by a renaissance period, where many diseases will be “solved,” as Hassabis puts it, and most of our critical needs, from housing to health care and education, will be available in abundance.