2008 Sem ICT4SED 1

Disruptive Disruptive TechnologiesTechnologies

U. B. DesaiU. B. Desai

SPANN Lab.SPANN Lab.Dept. of EEDept. of EEIIT-BombayIIT-Bombay

www.ee.iitb.ac.in/~ubdesaiwww.ee.iitb.ac.in/~ubdesai

2008 Sem 2ICT4SED

What is disruptive technology?What is disruptive technology? Working Definition:Working Definition:

Technology which creates a major Technology which creates a major (positive)(positive) disruption in the way society disruption in the way society functionsfunctions

Best explicated thru examplesBest explicated thru examples

2008 Sem 3ICT4SED

Examples of Disruptive Tech.Examples of Disruptive Tech.

Sun Microsystems Workstations: Sun Microsystems Workstations: disrupted the market for main disrupted the market for main frame computers. frame computers. PCs disrupted the market for PCs disrupted the market for

workstationsworkstations Xerox plain paper copier: Xerox plain paper copier: disrupted disrupted

the market for offset printing.the market for offset printing. Cannon’s desktop photocopiers: Cannon’s desktop photocopiers:

disrupted Xerox’s high speed photo disrupted Xerox’s high speed photo copying market.copying market.

2008 Sem 4ICT4SED

Honda motorcycle of 60sHonda motorcycle of 60s Japanese cars of 70sJapanese cars of 70s Korean Cars of late 80sKorean Cars of late 80s Wireless telephony (GSM, CDMA): Wireless telephony (GSM, CDMA):

disrupted the market for wire-line disrupted the market for wire-line telephony.telephony.

Nirma …Nirma … ……

2008 Sem 5ICT4SED

Impacting technologies are disruptiveImpacting technologies are disruptive Disruptive innovations are products and Disruptive innovations are products and

services that services that initially aren't as good asinitially aren't as good as those that historically have been used by those that historically have been used by customers in mainstream markets, and customers in mainstream markets, and therefore can take root only in new or therefore can take root only in new or less-demanding applications, amongst less-demanding applications, amongst non-traditional customersnon-traditional customers

Stuart Hart and Clayton ChristensenStuart Hart and Clayton Christensen

2008 Sem 6ICT4SED

Historically:Historically:

Major waves of growththru forays at the bottomof the developed markets(DM)

DM

2008 Sem 7ICT4SED

The World PyramidThe World Pyramid

Tier 1

Tier 2 & 3

Tier 4

Population in millions

~ 200 mil

~ 800 mil

~ 5000 mil

Purchasing Power Parity (PPP)

>$20,000

$2000 to $20,000

less than $2000

2008 Sem 8ICT4SED

The PyramidThe Pyramid

Examples of Xerox, Cannon copiers, Examples of Xerox, Cannon copiers, PCs, Cell phones, etc. represent PCs, Cell phones, etc. represent technologies developed for the technologies developed for the second Tier (to some extent Tier 3) second Tier (to some extent Tier 3)

To date most disruptive technologies To date most disruptive technologies have been attacking Tier 2have been attacking Tier 2

2008 Sem 9ICT4SED

Advocated by C. K. PrahaladAdvocated by C. K. Prahalad

Attack the bottom of thepyramid. Likely to creategreater disruption

bottom ofthe pyramid

2008 Sem 10ICT4SED

Pyramid for IndiaPyramid for India

T1

T2

T3

T4

T6

Population in million

10 mil

50 mil

150 mil

200 mil

550 mil

Purchasing Power> 5 lakhs

3 to 5 lakhs

1 to 3 lakhs

50K to 1 lakh

less than 50K

2008 Sem 11ICT4SED

Opportunities at the Opportunities at the Bottom of the PyramidBottom of the Pyramid

Nearly ½ billion in India (4 to 5 billion Nearly ½ billion in India (4 to 5 billion world wide) at the bottom of the world wide) at the bottom of the pyramidpyramid

Need to develop new technologies Need to develop new technologies for Tier T4 and T5for Tier T4 and T5

New business models are needed New business models are needed

2008 Sem 12ICT4SED

Examples of Attacking the Examples of Attacking the Bottom of the PyramidBottom of the Pyramid

New Business ModelsNew Business Models PCO-STD-ISD booths PCO-STD-ISD booths

(Pitroda)(Pitroda) Hindustan Lever Hindustan Lever

(Chache Story)(Chache Story) Amul DairyAmul Dairy Grameen Bank, SEWA Grameen Bank, SEWA

Bank (Micro-financing)Bank (Micro-financing) Grameen Telecom Grameen Telecom

(Bangladesh)(Bangladesh) Microfinance (Vikram Microfinance (Vikram

Akula)Akula)

TechnologiesTechnologies N-Logue (Village N-Logue (Village

Internet Kiosk using Internet Kiosk using CorDect Wireless Tech.) CorDect Wireless Tech.)

TVS (Kirana Shop TVS (Kirana Shop Computers)Computers)

2008 Sem 13ICT4SED

N-Logue: corDECT Village KioskN-Logue: corDECT Village Kiosk

Consists of Consists of Wireless corDECT wall-setWireless corDECT wall-set for Internet and for Internet and

telephonetelephone, PC, dot matrix printer, battery back up, , PC, dot matrix printer, battery back up, web-cam, speakers, microphone --- for Rs.50Kweb-cam, speakers, microphone --- for Rs.50K

Local entrepreneur operates the kiosk Local entrepreneur operates the kiosk These kiosks becoming community centersThese kiosks becoming community centers Expect cities to outsource their work to Expect cities to outsource their work to

villagesvillages ( (Indian villages could become back Indian villages could become back office to Indian urban centers ~ a hyperboleoffice to Indian urban centers ~ a hyperbole))

RTBI: Rural Technology Business Incubator RTBI: Rural Technology Business Incubator

2008 Sem 14ICT4SED

TVS Kirana ComputersTVS Kirana Computers

For Kirana stores with sales of For Kirana stores with sales of Rs.100,000 per monthRs.100,000 per month

A rugged PC A rugged PC No out right purchase of software or No out right purchase of software or

hardware: Pay Rs.2,500.00 per month.hardware: Pay Rs.2,500.00 per month. Software for accounting, inventory, etc. Software for accounting, inventory, etc. In 180 days there was a 3.9% increase In 180 days there was a 3.9% increase

in profitin profit

2008 Sem 15ICT4SED

Change of Mindset ...Change of Mindset ...(from C. K. Prahalad(from C. K. Prahalad))

Poor as a Problem

Poor as Wards of State Old Technologies

Old Technologies F Follow the West

Resource Constraints

Poor as an opportunity Global Market of 4.5

billion? Poor as Active Market Innovation and Innovation and

development of new development of new technologies with technologies with usefulness to the Poorusefulness to the Poor

Imagination ConstraintImagination Constraint

Information Access will be a great asset

2008 Sem 16ICT4SED

The Poor ofIndia is anIntractable

Problem

Change of Mindset …Change of Mindset …(from CK Prahalad)(from CK Prahalad)

The Poor ofIndia is aPotential Market

The Poor ofIndia can beA Source ofInnovation

PovertyAlleviation,Subsidies

Creating a New Market,Innovation, Growth

2008 Sem 17ICT4SED

ChallengesChallenges

The Market is Very Fragile:(Monsoons, Subsidies,

….) Middlemen and Moneylenders Fragmented Experiments Lack of a Global database Traditional Ways of Thinking

2008 Sem 18ICT4SED

ReferencesReferences C. K. Prahalad and Allen Hammond, Serving C. K. Prahalad and Allen Hammond, Serving

the World’s Poor, Profitably, the World’s Poor, Profitably, Harvard Harvard Business Review, September 2002Business Review, September 2002

C K Prahlad, spoke about at the annual C K Prahlad, spoke about at the annual session of the Confederation of Indian session of the Confederation of Indian Industry, held recently in Bombay. Prahlad Industry, held recently in Bombay. Prahlad said the Indian economy has the potential to said the Indian economy has the potential to grow 10 to 15%. grow 10 to 15%. http://www.moneycontrol.com/promos/prahlhttp://www.moneycontrol.com/promos/prahlad.htmlad.html

The Great Leap Downward: The Great Leap Downward: http://idbdocs.iadb.org/wsdocs/getdocumenthttp://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=996849.aspx?docnum=996849

2008 Sem 19ICT4SED

Home Work: QuestionsHome Work: Questions

Why is there so little technological Why is there so little technological innovation and development, where the innovation and development, where the need is maximum?need is maximum?

Why has Fortune at the bottom of the Why has Fortune at the bottom of the Pyramid not taken off?Pyramid not taken off?

Is there something wrong with the Is there something wrong with the theory?theory?

Think of three disruptive technologies Think of three disruptive technologies that can change the lives of poor in India that can change the lives of poor in India

2008 Sem 20ICT4SED