ID2 2013 - Harnessing the Power of Disruptive Technologies to Drive Social Change by Nava Levy

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This session took place on January 8 2013 at the Israel Designed International Development (ID2) Gathering (www.id2.org.il) in Mizpe Ramon, Israel.

Transcript

Slide 1

Israel Designed International Development 2013

Nava Levy, January 8th 2013, Mizpe Ramon, Israel

Introduction

What are disruptive innovations, examples from the business sector

How disruptive innovations are / can drive social change

Recommendations and Q&A

Ludwick Marishane in TED: Dry Bath

Introduction

Definition, example for disruptive technologies, etc.

A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.

The term is used to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.

Source: Wikipedia

A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.

The term is used to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.

Source: Wikipedia

Digital Camera

Inkjet Printers

Online bookstore

SaaS Free long distance

Internet distance calls

Internet subscription Service for videos

Online digital Music store

Free Operating System

Wireless Telephony

Inferior Performance

Innovation that mainstream

customers dont want today due to

their inferior performance today

Cheaper, Simpler, Smaller More Convenient

But, has other attributes, that

other customers, usually in smaller

emerging markets, value

Technology Progression

And so, the technology evolves

and advances in market segments and opportunities that are outside of incumbents radar

Performance Target Market

Disruptive

Inferior performance

Mainstream customers dont want today

>Low-end disruptions

>New-market disruptions

Sustaining

Superior performance

>Incremental

> Discontinuous/ revolutionary/ radical

Existing & higher tiers customers do want today

Performance Target Market

Disruptive

Inferior performance

Mainstream customers dont want today

>Low-end disruptions

>New-market disruptions

Sustaining

Superior performance

>Incremental

> Discontinuous/ revolutionary/ radical

Existing & higher tiers customers do want today

Term disruptive technology was coined by Prof Clayton Christensen in the 90s

He then replaced disruptive technology with the term disruptive innovation ..

because he recognized that it is the strategy or business model that the technology enables that creates the disruptive impact

Term disruptive technology was coined by Prof Clayton Christensen in the 90s

He then replaced disruptive technology with the term disruptive innovation ..

because he recognized that it is the strategy or business model that the technology enables that creates the disruptive impact

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Digital Camera

Digital

Photography

CMOS Image

Sensors

Film & Instant

Photography

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler smaller, more

convenient

Technology Progression

Digital Camera

- Low picture quality -Low resolution -Long shutter lag

-No need to buy & develop film -Smaller, simpler, instant photos -Cheap: e.g. built in phones - Store many pictures on memory card -Edit & share digital photos

On going improvements e.g. in image quality & resolution, memory card capacity, thanks to CMOS technology, to the point of threatening also highest end markets

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Inkjet Printers

Inkjet

printing

Key: thermal inkjet

technology based on

MEMS using thin-film

resistors to supply heat

pulse

Laser

printers

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more convenient

Technology Progression

Inkjet Printers

-Low picture quality and resolution: 96-dpi output, did not support full color pictures -Slow: 150 characters per second

-Smaller, affordable pricing (although per page pricing customers may pay more compared laser printers)

- Going upstream through on going improvements mainly in picture quality - HP has filed over 300 patents over the years to support these technological improvements

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Online Bookstore

.com

retailers

Internet

Brick & mortar

retailers

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more convenient

Technology Progression

Online Bookstore

-TTM: waiting for book to arrive via post -Unable to browse through book before buying -Customer service

-Anywhere anytime -Longtail books that are not readily available at bookstores

- Moving upstream through technology progression and innovations and by leveraging cloud & big data technologies: personalized recommendation engine, reviews, browsing inside a book, etc.

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Online Bookstore

.com retailers

Internet

Brick & mortar retailers

Kindle, iTunes eBooks, eMusic

Downloadable digital goods

Internet,

Kindle, E-Ink, iPod

Physical goods sold via Brick & mortar or .com

retailers

Kindle Lending Library, Oyster

subscription

Digital goods- as-a-service, subscription

based

Internet, DRM,

streaming

B& M retailers and/or eGoods

retailers not supporting

subscription

Phase 1

Phase 2

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Online Bookstore

.com retailers

Internet

Brick & mortar retailers

Kindle, iTunes eBooks, eMusic

Downloadable digital goods

Internet,

Kindle, E-Ink, iPod

Physical goods sold via Brick & mortar or .com

retailers

Kindle Lending Library, Oyster

subscription

Digital goods- as-a-service, subscription

based

Internet, DRM,

streaming

B& M retailers and/or eGoods

retailers not supporting

subscription

Phase 1

Phase 2

Phase 3

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

CRM On Demand

SaaS (software-

as-a-service)

Multi-tenancy, cloud

computing

On Premise

Software

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more

convenient

Technology Progression

CRM On Demand

-Low Integration -Low customization -Breadth of Functionality - Security concerns

-Affordable, per subscriber pricing -Accessible anywhere, anytime -All you need is a browser, no hardware or software to install -Web based consumer like user interface

-Beginning at the low end of the market: SMBs

-Moving upstream through technology progression by

leveraging the broad and rich foundation of the internet

The Internet, mobile, semiconductors and cloud computing are key infrastructural technologies that are enabling the disruption of many industries

This is enabled by going to the low end of the market and gradually moving upstream through a series of innovations, eventually displacing mainstream solutions

However, in all of these examples this low end of the market was merely the bottom of developed markets

Mobile

Cloud

Computing

Internet

SaaS

Semiconduc

tors

For Social Change

Disruptive

Technologies

& Innovations

M-Health,

Telemedicine

VoIP,

Mobile

Comms

eLearning,

mLearning,

OER

M-money

Micro

financing

Solar

Energy,

Wind

Energy

*a.k.a catalytic innovations

Images of pyramids adapted from Christensen, Hart, MIT Sloan Management Review , 2002

Images of pyramids adapted from Christensen, Hart, MIT Sloan Management Review , 2002

Images of pyramids adapted from Christensen, Hart, MIT Sloan Management Review , 2002

In the past decade Mostly recently, and accelerating

Images of pyramids adapted from Christensen, Hart, MIT Sloan Management Review , 2002

Mobile Baby

TeleDoc

In the past decade Mostly recently, and accelerating

Solar energy (e.g.Innoafrica)

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Cellular Phone

Wireless

Telephony

Semiconductors: GaAs and CMOS

Wireline

Telephony

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more

convenient

Technology Progression

Cellular Phone

-Low coverage -Low voice quality -Disconnects -Radiation

-Mobile -Caller ID -Contacts stored -Built-in watch, camera, digital assistant, etc. -Pre paid

-While in the 90s these were cheap phones for the mass, through series of improvements in voice quality, coverage, etc. moved upstream cannibalizing wireline telephony at first for voice and then data

Re

pa

ck

ag

ing

te

ch

no

log

y

Grameen Village Phone

A decade ago more than 3 Billion

people still lacked reliable

telephone service, however

mobile phones still too expensive

for BoP

So instead, Grameen bank gave

loans to lady entrepreneurs in

rural Bangladesh to buy phone

and resell it to villagers

Result:

Lifting from poverty the lady

entrepreneurs, with money

spent mainly on health &

education for kids

Positive financial impact of

service to customers, with value

of each call of up to 10% of

monthly income

Today

Mobile phone use in developing

countries surpassed that of

developed areas

In Africa, mobile subscribers

grew from 25M in 2001 to 650M

Mobile apps empower individuals

users enrich their lifestyles and

livelihoods, and boost the

economy as a whole.

Sources of images: Word Bank

Re

pa

ck

ag

ing

te

ch

no

log

y

Grameen Village Phone

A decade ago more than 3 Billion

people still lacked reliable

telephone service, however

mobile phones still too expensive

for BoP

So instead, Grameen bank gave

loans to lady entrepreneurs in

rural Bangladesh to buy phone

and resell it to villagers

Result:

Lifting from poverty the lady

entrepreneurs, with money

spent mainly on health &

education for kids

Positive financial impact of

service to customers, with value

of each call of up to 10% of

monthly income

Today

Mobile phone use in developing

countries surpassed that of

developed areas

In Africa, mobile subscribers

grew from 25M in 2001 to 650M

Mobile apps empower individuals

users enrich their lifestyles and

livelihoods, and boost the

economy as a whole.

Sources of images: Word Bank

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Leveraging

OpenSource & Crowdsourcing

over the Internet to generate high

quality free encyclopedia

Internet & Wiki

Technology (MediaWiki)

Printed and digital paid

encyclopedia

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more

convenient

Technology Progression

-Breadth -Reliability and accuracy -Images

-Free -Accessible anywhere, all you need is a browser -Always up to date -Searchable -Multi languages

-Technology progression solved technical issues such as uptime and adding images

- With time and the power of crowdsourcing reliability improved and breadth surpassed mainstream Encyclopedia

The Challenge

No available

encyclopedia in many

cultures / languages

in developing

countries -

commercial or

otherwise

The Solution

For many other cultures,

in which there are no

strong commercial

incentives to create

encyclopedia, Wikipedia is

the only comprehensive

encyclopedia available at

all. Therefore, the impact

of Wikipedia has been

more revolutionary and

crucial for those cultures

in the long tail of the

languages list.

Source: The Wikipedia Revolution

Note: While progress has been made the full impact on BoP is yet to be realized. Among the packaging challenges are the ability of the local community to contribute as well as ability to access & edit via mobile phones.

The Challenge

No available

encyclopedia in many

cultures / languages

in developing

countries -

commercial or

otherwise

The Solution

For many other cultures,

in which there are no

strong commercial

incentives to create

encyclopedia, Wikipedia is

the only comprehensive

encyclopedia available at

all. Therefore, the impact

of Wikipedia has been

more revolutionary and

crucial for those cultures

in the long tail of the

languages list.

Source: The Wikipedia Revolution

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Solar Panels

Solar

Energy sustainable

off grid solution for

energy

Semiconductors,

Solar photovoltaics

Grid

electricity

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more

convenient

Technology Progression

Solar Panels

-Availability: daytime, sunny -Storing energy -Upkeep is costly

-Clean, safe energy -Relatively mobile -No need for grid infrastructure -Modular, add more as you need

- Gradual efficiency improvements leading to grid parity and beyond (2020 for the whole of Europe, Italy already by 2013)

The Challenge

In 2002, there were 2 billion

people living without

electricity, half of them in

Africa

In these poor rural areas no

grid system exists

30% of income spent on

candles, kerosene and

diesels as alternative

dangerous, expensive and

polluting alternative

The Solution

Clean renewable off grid

solutions such as solar energy

In addition to light at night,

provides necessary electricity to

power water pumps and cool

vaccines

Repackaging for BoP:

Bring the knowhow and train

the community and its leaders

Set up a business to cover

maintenance costs (recharge

mobile phones business)

As a result, number of people

living without electricity down to

1.3 billion.

Source: Adapted from Innoafrica

The Challenge

In 2002, there were 2 billion

people living without

electricity, half of them in

Africa

In these poor rural areas no

grid system exists

30% of income spent on

candles, kerosene and

diesels as alternative

dangerous, expensive and

polluting alternative

The Solution

Clean renewable off grid

solutions such as solar energy

In addition to light at night,

provides necessary electricity to

power water pumps and cool

vaccines

Repackaging for BoP:

Bring the knowhow and train

the community and its leaders

Set up a business to cover

maintenance costs (recharge

mobile phones business)

As a result, number of people

living without electricity down to

1.3 billion.

Source: Adapted from Innoafrica

Example Disruptive Innovation

Disruptive Technology

Disrupted Markets

Dry Bath

Skin lotion made to substitute bathing, packaged in small per bath packs.

Germicidal Bath-substituting skin lotion/gel.

Bathing soap, gel; Baths and

showers

2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Example Inferior Performance

Cheaper, simpler, smaller, more convenient

Technology Progression

Dry Bath

-The pleasure of using warm water -Requires a change of mindset of what clean means

-No need for water or bath -Mobile, available anywhere, anytime -TTM quicker -Modular, pay per use (bath) model -Eco friendly

- Moving upstream from waterless hygiene solution to the poor to a bathing-alternative to more affluent - Added moisturizers, and in the future we may see other addition like sun screen, vitamins (e.g. D), etc. -Targeting upstream markets as airlines, armies, hotels, lazy teenagers -Other potential: Gyms at work, for long treks

The Challenge

2.5 billion people globally

do not have proper access

to water and sanitation

As a result, over 2 million

people suffer and often die

from easily treatable

diseases like trachoma and

diarrhoea

The Solution

Dry bath for cleanliness &

convenience

Saves 2 hours a day and

800 liters in water

The Challenge

2.5 billion people globally

do not have proper access

to water and sanitation

As a result, over 2 million

people suffer and often die

from easily treatable

diseases like trachoma and

diarrhoea

The Solution

Dry bath for cleanliness &

convenience

Saves 2 hours a day and

800 liters in water

Was made possible thanks to the flattening of the world, local entrepreneur access to knowhow and resources made possible by the internet (Google,

Wikipedia), mobile access and NGOs.

Definition: According to Gartner, Big Data is becoming a metaphor for: 1. Increasing volumes of info 2. Finding info in previously ignored or new data types 3. Hadoop and MapReduce `

Similar to the Internet, SaaS, Cloud and CrowdSourcing, Big Data, or analytics in the cloud has the potential to become one of the biggest disruptors Though Big Data is only beginning, biggest winners will be pioneers focusing on BoP

Examples for potential applications:

- Achieving double bottom line

by analyzing and /or selling the tons of data generated via mobile apps

- With Big Data, financial apps can reach the BoP by analyzing many types of market signals and data and achieving finer customers segmentations

Social Entrepreneur

Doing well while doing good high growth

profitable segments

Gradually moving upstream to more lucrative

segments eventually displacing mainstream

solution at the top of the pyramid

Blue ocean: often no need to

compete head to head with

incumbents playing in the

developed countries

Corporate Social

Responsibility Officer

Doing well while doing good high growth

profitable segments

Gradually moving upstream to more lucrative

segments eventually displacing mainstream

solution at the top of the pyramid

Defense: Necessary defensive

measure against threat to

mainstream business from

disruption from below

Doing well while doing good high growth profitable segments

Moving Upstream to more lucrative markets: Through a series of sustaining innovations, gradually moving upstream to more lucrative segments eventually

displacing mainstream solution at the top of the pyramid.

NGO

Partner with Social

Entrepreneurs &

innovators targeting

disruptive innovations

Promote innovations and

models that are self

sufficient and avoid

injecting bad aid

Social

Entrepreneur

Make sure to package and

adapt technology in a way

that fits developing

countries circumstances

Make sure to package and

adapt technology in a way

that fits developing

countries circumstances

Corporate Social

Responsibility

Officer

Good candidates: any

innovation the company

is addressing at the base

of the top of the pyramid

Good candidates: any

innovation the company is

addressing at the base of the

top of the pyramid

Look for innovation that are: 2. Cheaper & simpler

1. Inferior performance

3. Technology progression

Look to target disruptive innovations that are leveraging one of the key infrastructure technologies: Internet, SaaS, Cloud,

Semicon, Mobile, Crowd Sourcing, Open Source and Big Data

Most established companies fail in commercializing disruptive

innovations. To succeed, established vendors need to:

Start early and before mainstream business been affected

Will be achieved by addressing the BoP Timing

Dedicate an autonomous organization with size and cost structure appropriate for the

opportunity today Organization

Treat it as both a threat and an opportunity in a new and emerging market Approach

Christensen, et al HBR, 12/2006

Christensen, Hart, MIT Sloan Management Review, Fall 2002.

Christensen, et al HBR, 12/2006

Christensen, Hart, MIT Sloan Management Review, Fall 2002.

Thank You

Levy.nava@gmail.com