Demystifying Disruption: On the Hazard of Being Replaced by New Technology

Sood Ashish and Tellis Gerard J.
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Sood Ashish: Assistant Professor at Goiueta Business School, Emory University and Visiting Professor at the Wharton School of Business, University of Pennsylvania, www.ashishsood.net
Tellis Gerard J.: Neely Chair of American Enterprise, Director of the Center for Global Innovation, and Professor of Marketing, Management and Organization at the USC Marshall School of Business www.gtellis.net

NIM Marketing Intelligence Review, 2013, vol. 5, issue 1, 24-30

Abstract: In many industries, new technologies represent a serious threat to established companies. If underestimated, they can endanger their survival. Even if the chances of being disrupted are rather low, companies are well advised to watch out for emerging trends. A large-scale study analyzed the technological evolution of seven markets over several decades and found surprising results, which were not always in line with the most common theories on the topic. The researcher observed that it was not always easy to predict which technology would ultimately prevail because old and new technologies regularly coexisted for some time and evolution was often erratic. New technologies were introduced both by incumbents and newcomers to the market. Chances of success were higher when the new technology was priced lower than the established technology, but price was less important than quality. Technologies with higher introduction prices also succeeded when they were superior. New technologies always introduced new dimensions of importance, which gained importance in competition over time. In many cases it was not the pioneer who ultimately succeeded with the new technology. It seems important to believe and invest in new technology, and to not abandon it too early. Further, companies might consider a “self-cannibalization strategy” during the times of transition from the old to the new technology.

Keywords: New Technology; Innovation; Technology Disruption; Substitution Competition; Obsolescence; Market Entry Strategy (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:gfkmir:v:5:y:2013:i:1:p:24-30:n:1005

DOI: 10.2478/gfkmir-2014-0023

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