Deck 6: Disruptive Technologies: Understanding the Giant Killers and Considerations for Avoiding Extinction

Question 1

What are the characteristics of disruptive technologies? Give an example of disruptive technology.

Answer 1

In Christensen's view, True disruptive technologies have two characteristics that make them so threatening. First, they come to market with a set of performance attributes that existing customers don't value. Second, over time the performance attributes improve to the point where they invade established markets.
These attributes are found in many innovations that have brought about the shift from analog to digital. The first digital cameras were terrible-photo quality was laughably bad (the first were only black and white), they could only store a few images and did so very slowly, they were bulky, and they had poor battery life. Much the same could be said about the poor performance of early digital music, digital video, mobile phones, tablet computing, and Internet telephony (Voice-over IP or VoIP), just to name a few examples. But today all of these digital products are having a market-disrupting impact. Digital cameras have all but wiped out film use, the record store is dead, mobile phones for many are their only phone, tablets are selling faster than laptops, Internet phone service is often indistinguishable from conventional calls, and Skype can be considered the world's largest long-distance phone company.

Question 2

Which of the following is a way to recognize potentially disruptive innovations?

A) Pay attention to slow-expensive advancements in technology.
B) Seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff.
C) Become more consumer-focused.
D) Indulge in bottom-line obsession.
E) Increase conversation within same product groups.

Answer 2

B

Question 3

Why can't big firms simply wait until disruptive innovations prove themselves before they invest in these new areas?

Answer 3

By the time the new market demonstrates itself, start-ups have been at it for quite some time. They have amassed expertise and often benefit from increasing scale and a growing customer base. The brands of firms leading in developing disruptive innovations may also now be synonymous with the new tech. If this happens, big firms are forced to play catch-up, and few ever close the gap with the new leaders.

Question 4

Why do big firms fail to see disruptive technologies as a threat?

Question 5

Firms might not want to use ARM chips because they are incompatible with Intel chips.

Question 6

Yahoo!'s mobile team didn't have an executive champion to protect and nurture the team during the pioneering phase when financial results couldn't be realized. It couldn't show substantial results, so managers were reassigned. This is an example of:

A) social engineering
B) the Creosote Bush effect
C) overspending on unproven projects
D) the options portfolio of innovation

Question 7

ARM provides logic in the majority of smartphones, including products by Apple and Samsung.

Question 8

Firms that listen to existing customers and tailor offerings based on this input are far more likely to identify potentially disruptive technologies than those that experiment with products that existing customers do not demand.

Question 9

Firms may want to use ARM chips because they draw less power than Intel chips.

Question 10

Many disruptive firms were started by former employees of the disrupted giants.

Question 11

Big firms fail to see disruptive innovations as a threat because:

A) they primarily focus on the bottom line.
B) they fail to listen to customer needs.
C) they overestimate the impact of these innovations.
D) they don't indulge in playing catch-up.
E) they concentrate only on future financial performance.

Question 12

Which of the following is true of disruptive technologies?

A) The tech industry is the least fertile ground for disruptive technologies.
B) Initially underperforming incumbents, over time their performance attributes improve to the point where they invade established markets.
C) They come to market with a set of performance attributes that existing customers have demanded.
D) Disruptive technologies and disruptive innovations are independent concepts.
E) The term disruptive technologies is a simple one because few technologies are able to create market shocks and catalyze growth.

Question 13

An option is a right and an obligation to make an investment.

Question 14

Profit margins for disruptive innovations are usually worse than those for incumbent technologies.

Question 15

ARM is one of the only firms, aside from Intel, that has scale allowing it to own and operate its own fabs.

Question 16

Disruptive innovations don't need to perform better than incumbents; they simply need to perform well enough to appeal to their customers (and often do so at a lower price).

Question 17

Identifying and nurturing potentially disruptive technologies requires constant vigilance and relentless and broad environmental scanning.

Question 18

Microsoft's purchase of Nokia to influence the mobile market was well worth the $7.2 billion price tag.

Question 19

Intuit has avoided disruption in the shift away from packaged software by developing products that leverage cloud computing, some of which are initially provided for free.

Question 20

At the dawn of commercial mobile phone technology AT&T hired storied consulting firm McKinsey & Company to forecast US cellphone use.

Question 21

One way the package software firm, Intuit has approached the future and avoided disruptive innovation was to ______________.

Question 22

Bitcoin transctions are recorded in a public ledger known as the ____________.

Question 23

Individuals known as ____________ participate in verifying and maintaining transactions and are occasionally awarded for their efforts through the receipt of bitcoins.

Question 24

Those early customers for a disruptive technology are part of a different "___________________" than anything addressed by incumbent market leaders.

Question 25

Chips based on designs from the firm ___________________ dominate the market for smartphones, but they are not compatible with the most popular instruction set used in Intel's desktop and laptop chips. They do, however, draw far less power than Intel chips.

Question 26

Low-margin retailers are interested in bitcoin because it may allow the elimination of fees associated with credit card transactions.

Question 27

Incentives for U.S. consumer adoption of bitcoin are quite high.

Question 28

Cross-border bank transfers are not likely to adopt bitcoin since these functions are already electronic and highly automated.

Question 29

Facebook was famously late to the mobile revolution and felt forced to make billion and multi-billion purchases for __________________ and ___________________, even as SnapChat rises as a threatening rival.

Question 30

Like most open-source efforts, bitcoin was created by a consortium of for-profit corporations hoping to fuel adoption of a beneficial new standard.

Question 31

Disruptive technology is also called disruptive _____.

Question 32

List and briefly discuss current concerns that are limiting the adoption of bitcoin.

Question 33

Bitcoin transactions are recorded in a public ledger known as the bitcoin wallet.

Question 34

List the benefits of bitcoin along with possible markets for early adoption.

Question 35

Getting rid of card companies cuts out ____________, which can top 3 percent. Overstock.com was one of the first large online retailers to accept bitcoin.

Question 36

A(n) _____ is a right, but not the obligation to make an investment.