Crisil Young

Thought
Leader
Impact of Disruptive
Technology in
Businesses

Submitted byKhyati Bipin Jobanputra

Masters in Finance
JBIMS

Table of Contents
Executive Summary.3
1. Introduction....4
2. Disruptive technologies in business4
2.1. Understanding Disruptive technology...4
2.2. Disruptors of the past...5
2.3. Potential Impact Areas.5
2.4. Positives & Negatives of disruptive technology...5
3. The Road Ahead6
3.1. Technologies of the future & their impact6
3.1.1. Disruptive technology in Oil & Gas recovery mechanisms..6
3.1.2. Disruptive technology in Autonomous & Near-autonomous Vehicles.7
3.1.3. Disruptive technologies in Robotics & Artificial Intelligence.....7
3.1.4. Disruptive technologies in Cloud Computing..8
3.2. Case Study.9
4. Capitalizing on the emerging technologies..9
5. Conclusion..10
Bibliography...11

Table of Figures
Figure 1: Impact areas of disruptions in business.5
Figure 2: Estimate of known unconventional sources of oil6
Figure 3: Estimated Shale production in USA6
Figure 4: Economic contribution to areas by autonomous vehicles...7
Figure 5: Cloud analytics market size estimate8
Figure 6: Survey on drivers of disruptive innovation.9
2

Executive Summary
Contemporary world is filled with technological revolutions that have changed the face of
businesses. While some technologies took years to create disruptions, the pace is just rising. For
example, it took decades for a full-fledged adoption of a personal computer but took hardly a few
years for laptop to take on the PCs. The rapid growth & development of technologies has led people
speculating about every other technology as a Megatrend that would dominate the entrepreneurial
world.
Amongst the chaos of such advancements, there are some trends which genuinely have a potential
to disrupt businesses. There is a dire need for top business leaders to think proactively & make
calculative predictions regarding technologies which would lead businesses in the future. The past
two decades serve plenty of examples that have led to declining businesses or a closure altogether
owing to the failure of leaders to anticipate & adapt to the change.
This paper is predominantly divided into two parts. The first portion aims at defining disruptive
technologies with the positives & negatives of it. It also covers the technologies which have
transformed the way of life today. The second portion is a peek into the future showcasing
potentially disruptive technologies & their impacts on businesses in the future. The report also
explains the ways in which businesses can capitalize on such technologies to equip themselves with
the changing times.
This paper identifies the technologies with potential to disrupt businesses & their probable impacts
while providing solutions to capitalize on the same to survive & succeed.

1. Introduction
There is no reason anyone would want a computer in their home - Ken Olson, Digital Equipment
Corp, 1977. By the end of 1990s, millions of personal computers were sold worldwide. History is a
plagued with such distrustful atmosphere built around disruptive technologies although the latter
has changed the way in which the organizations function. This could be because such technologies
lack refinement, appeals to a limited crowd, might not have practical applications or might face
performance issues.
Disruptive technologies have changed the rules of the game & have potential to wipe out entire
businesses overnight. Apart from being cheaper than offerings by incumbents, these technologies
are also better integrated with products and services. With right strategy & investment in these
technologies at the right time, companies can cash in numerous advantages in terms of higher
efficiency, market share& profits. Enterprises such as Skype in video calling, Spotify in radio, Khan
Academy in education have capitalized on technologies to create disruptive impacts in businesses.
Companies across business segments are now identifying the need to adopt new innovations to
survive & grow amidst the competitive atmosphere. In response to this surge in investments in
innovations, enterprises such as Microsoft, Tesla, Facebook are spending heavily in this new-age
metamorphosis.

2. Disruptive Technologies in Business

2.1. Understanding Disruptive Technology
A disruptive technology is one that displaces an established technology and shakes up the industry or
a ground-breaking product that creates a completely new industry.
As evident from the above definition, disruptive technology may start as an innovation which may
help create a new value network or market & may eventually go on to disrupt the business models
altogether. It has the power to transform the business model into such that it creates a disruptive
impact.
This idea was popularized in the year 1997 in by Mr. Clayton Christensen, a Harvard Business School
professor in his book The Innovator's Dilemma.1He suggests that while it has the potential to
create millions for a mediocre business, it can also pose a threat for a business to become irrelevant

or to lose a significant portion of the market share. Disruptive technologies can take form of simple
harmless applications which can move on to derange the entire market & displace the incumbents.

2.2. Disruptors of the Past

Disruptor

Disruptee

Personal computers

Typewriters, mainframe & mini computers

E-mail

Letter writing, post, telegraph

Smart phones

PDAs & Cell phones

Social Networking

Instant messaging, telephone

2.3. Potential Impact Areas

Impact areas of Disruptions in Business
Customer
Satisfaction

18%
35%

Operational
Efficiencies
Revenue Models

21%

Connected
products

26%

Figure 1: Impact areas of

Disruptions on Business
Source: AT Kearney

2.4. Positives & Negatives of Disruptive Technology

The Good

The Bad

Increase in Efficiency

Threat to incumbents

First Mover Advantage

Constant need to adapt & survive

Higher Revenues

Potential
hindrance
regulations

Ensures survival in changing times

Shorter Product Life Cycles

of

government

3. The Road Ahead

3.1 Technologies of the future & its impact
3.1.1. Disruptive technologies in Oil & Gas recovery mechanisms

Technologies such as horizontal drilling & hydraulic fracturing are being used in place of
conventional oil drilling methods to extract LTO & Shale gas

These are designed to be cheaper & more effective for supply of low-cost gas

Potential impact:

Known reserves of shale to increase potential world oil reserves by 11% & natural gas
reserves by 47%2
A report3 indicates an earning
potential of $95 billion to $460
Known reserves of unconventional oil & gas
billion for the business houses by
13%
2025 (North America, Argentina,
Australia, China & Europe put
Shale Gas
together)
A projection4 states that shale
Other Known
energy could pump up the GDP by
reserves
an extra 2%-4% by the year 2020
87%
Shale production is estimated to
reach 4.9 billion barrels per day by
2020 in U.S5
Figure 2: Estimate of
Known unconventional
Source: MGI Report
reserves

6 Impact areas of Disruptions in Business (bn $)

5
4

4.9
4.2

3.8

3
2
1
0

2014

2023

Figure 3: Estimated Shale

Production inSource:
USA MGI Report

2040

3.1.2. Disruptive technology in Autonomous & Near-autonomous vehicles

Autonomous vehicles are the ones which operate with minimum human help as possible

Self-driven cars & trucks are stated to be the next big thing in this segment

Currently there are cars with self-parking features

GMs 2017 car models6 are expected to further take care of acceleration, brakes & steering
Economic contribution by autonomous
vehicles

Reduced Accidents

11%
12%

38%

Worker
Productivity
Reduced Fuel
costs

39%

Reduced Traffic &

Congestion

Potential Impact:

A survey7 conducted in USA states

that 60% of users are willing to use selfdriving cars

32% of them said they would

discontinue driving

Self-driven
cars
will
help
companies like Uber to replace their taxidrivers with autonomous cars

The cost of such replacement would be as low as $4.3 billion

This disruptive technology has the potential to wipe out incumbents such as Ford, Toyota,
General Motors etc.

Estimated yearly savings of over $1.3 trillion

It may also lead to a partial or complete collapse of the auto-ancillary industry

3.1.3. Disruptive Technology in Robotics & Artificial Intelligence

Foxconn is increasing the use of robots in assembling the Apple Iphones in China8

Apparel company Timberland is already structuring its Netherland based distribution

warehouse with robots9

Global sales of robots have increased at the rate of 6.7% per annum since 1995 as per a
McKinsey study

Potential Impact:

Help small companies to expand

Companies like Skyline Windows in NYC uses robots for window installations10
7

Capacity relieve humans from plodding in business to shift focus on more important tasks

Robotics can impact manufacturing sector greatly

AGCO, an agriculture equipment manufacture cites high improvement in manufacturing

process by use of robots11

3.1.4. Disruptive Technology in Cloud

A report12 suggests a growth in cloud based spending by business to rise three times from
2011 to 2017

Growth drivers of cloud include high proliferation of applications & services for Internet
users13

Cloud computing has potential to

disrupt practically every business

Potential Impact

As per an estimate14 by the end of

2019, cloud applications will cover
90% of the mobile data traffic
Cloud market in healthcare sector to
expand significantly for preventive
intervention by using patient data

18

Cloud Analytics market size

16
14
12

10
16.25

8
6
4
2

2013
2018

5.25

0
2013

2018

Figure 5: Cloud analytics

market
size (In&bn
$)
Source:
Markets
Markets

Benefits to businesses include higher transparency, better & live access to data, quicker
solving of customer complaints, quicker updates of latest services etc.

The opportunity in India itself is estimated15 to touch $600 million by 2020.

3.2. Case Study

Google vs Uber - The Race to Disruption

You might not be able to have a fully autonomous car

of your own for at least a few more years, but the race
to develop the best technology is already tearing up
the asphalt. Google is reportedly interested in spinning
off its self-driving unit as its own self-driving
company. And that means it will need to generate
revenue, which could mean ride-hailing. And ridehailing, of course, means Uber.
But while Uber is dominating the ride-hailing
business, Google has the advantage in autonomous car
research. It has been developing the technology since
2009 (It also employs staff who've been working on it
for far longer than that). The company's self-driving
cars have logged over a million miles on the streets of
Mountain View, California, and Austin, Texas. Uber
only got around to opening its own self-driving lab in
Pittsburgh earlier this year.
But who isn't developing self-driving technology these
days? Tesla's Autopilot system is already on the road
in beta form. Many are pointing to 2020 as a turning
point for fully self-driving rides. Tesla, Nissan,
Mercedes Benz,
Nissan,
BMW,
& others are all
4. Capitalizing
on the
emerging
technologies
permitted
to test self-driving
carssignificant
in California,
which
A survey suggests
that the most
factor
driving technology is considered to be the ever
has become a hotbed for autonomous testing in recent
changing consumer needs & behavior followed by competition. With technologies transforming
years.
businesses in the blink of an eye and external pressures constantly threatening survival of the
business,
there
is a huge onus
whichGoogle
lies onplans
the business
leaders.
According
to Bloomberg
Business,
to
start small by deploying its multi-sized autonomous
External areas
forceslike
driving
Disruptions
fleet in confined
college
campuses, military Top leaders must not just be well-versed
bases, & corporate4%
office parks. This could Consumers
be stated as with technologies & its functioning but they
6%
a smart move because it would likely help Google get must also possess foresight to mould new
New out
market
additional miles under its belt before rolling
its
technologies to meet strategic goals. They
entrants
self-driving cars onto city streets.
must create change rather than waiting for
49%
Competitors
37%
The question,
then, may be whether we would Google it. They must also be ready to disrupt their
own business model to keep up with the
an Uber? Or Uber a Google? Regulations
technological revolution.
9

Companies must be ready to adopt a leaner structure of business, find ways to procure workforce
suiting their needs & engage with policy formulators to invest in training & development of talent.
Such comprehensive efforts on the part of businesses will help them identify and win their
competitive battles early on.
5. Conclusion

While disruptive technologies may start as an attempt to resolve a small problem or to meet a small
purpose, it has the prospect of completely restructuring the way in which a business works. It can
be beneficial for businesses, both small & big alike. The qualitative & quantitative benefits which
these technologies offer enormous growth scope to companies.
While it comes with many advantages, there are certain inherent challenges which accompany.
However the trade-off of the advantages against the challenges is high & thus, the companies must
seek to create maximum value out of the technologies.
The past decade has been favorable for such advancements & the pace is rising rapidly. It is
beneficial for firms to forecast & invest in technologies to sustain & grow. Continuous adaptability
coupled with a good foresight & risk-taking ability will increase the possibility of success, if not
entirely guarantee it.

10

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