Technology plays a critical role in disruptive innovation since more advanced products frequently create opportunities for the organization to succeed in the market. It is the standard business cycle where more established companies try to pursue “sustaining innovations,” allowing the rivals to disrupt the market by introducing new technologies (“Disruptive innovation,” n.d., para. 2; Harvard Business Review, 2019). One of the notable examples is the establishment of FedEx, which proposed a more practical and functional way to deliver products and defined the concept of “express mail” (Mitzkus, 2022, para. 24). The company introduced this idea with the help of innovative technologies and creative thinking, showing the importance of these factors in disruptive innovation.
Nevertheless, there are multiple risks concerning disruptive innovation that might be costly for the organization. For instance, ethical issues, the possibility of financial loss, and the reluctance of employees to try innovative approaches are some of the common threats. Moreover, by definition, disruptive innovations do not satisfy the organization’s current customers, aiming for a different niche in the market (“Disruptive innovation,” n.d.). The company must carefully evaluate its rivals’ actions by assessing their strengths, weaknesses, and opportunities and estimate its comparative advantage to decide whether pursuing disruption is profitable in the short and long term (Amadeo, 2022). In summary, the greatest risk is that if the company commits to disruptive innovation, its customers might prefer the products of the organization’s rivals that provide sustaining innovations.
Lastly, the government might try to restrict disruptive innovations due to their potential threats to people’s security and privacy. The most practical way to limit the effects of new technologies is by implementing regulatory policies that specifically address the problematic issues. One of the notable examples is the ban on Amazon’s cashless stores in Philadelphia in the United States at a legislative level (Muldoon, 2019). The state government was concerned with the inability of customers to pay with cash and blocked the stores because of its perceived inconvenience and forced cashless payments (Muldoon, 2019). As a result, the government has the capacity to restrict innovative technologies in case they present risks to certain population groups or disrupt the market significantly.
References
Amadeo, K. (2022). What is comparative advantage? The Balance. Web.
Disruptive innovation. (n.d.). Clayton Christensen. Web.
Harvard Business Review. (2019, July 9). The explainer: How to be a disruptor. [Video]. YouTube.
Mitzkus, S. (2022). 15 breaking disruptive innovation examples. Digital Leadership. Web.
Muldoon, R. (2019). Don’t ban new technologies – experiment with them carefully. The Conversation. Web.