How companies succeed in embracing the best of such innovations may influence who dominates the market in the coming years. The disruptive technology concept also is getting attention in wireless because it causes entrenched companies to reassess the platform that they're building from, says Craig Farrill, managing director and chief technology officer at inOvate Communications Group, formed last year specifically to develop companies that are building breakthrough products. The availability of new innovations is causing companies to make their decisions earlier than they normally would. The main challenge for both large and small companies that are facing such decisions is to identify disruptive technologies at the right time and embrace the good ones, thereby turning them into opportunities, not obstacles. Otherwise, according to the theory, market-leading companies could lose their competitive edge over time if they bypass strategically important innovations that are introduced by startup firms.
Disruptive technologies have a few general characteristics.
Often the innovation offers customers distinct performance or cost advantages, but the technology is difficult to incorporate into a legacy production process or business approach-the primary reason an established company may pass it by. Any disk manufacturer who refused to adopt the new approach is now a marginal player-if they're still in business at all. Dominant companies may not give much priority to serving the low-end segment because such services would cannibalize existing revenue streams. Thus a newcomer who grabs those customers cost-effectively can, over time, whittle down an incumbent's hold on a given market. Cricket Communications Inc., the domestic wireless service operated by Leap Wireless International Inc., has been described as just that type of technology.