Disruptive

Technologies
U. B. Desai

SPANN Lab.
Dept. of EE
IIT-Bombay
www.ee.iitb.ac.in/~ubdesai

2008 Sem ICT4SED 1

 What is disruptive technology?
 Working Definition:
 Technology which creates a major (positive)
disruption in the way society functions
 Best explicated thru examples

2008 Sem ICT4SED 2

 Examples of Disruptive Tech.

 Sun Microsystems Workstations:

disrupted the market for main frame
computers.
 PCs disrupted the market for workstations
 Xerox plain paper copier: disrupted the
market for offset printing.
 Cannon’s desktop photocopiers:
disrupted Xerox’s high speed photo
copying market.

2008 Sem ICT4SED 3

 Honda motorcycle of 60s
 Japanese cars of 70s
 Korean Cars of late 80s
 Wireless telephony (GSM, CDMA):
disrupted the market for wire-line
telephony.
 Nirma …
 …

2008 Sem ICT4SED 4

 Impacting technologies are disruptive
 Disruptive innovations are products and
services that initially aren't as good as those
that historically have been used by customers
in mainstream markets, and therefore can
take root only in new or less-demanding
applications, amongst non-traditional
customers
Stuart Hart and Clayton Christensen

2008 Sem ICT4SED 5

 Historically:

Major waves of growth

thru forays at the bottom DM
of the developed markets
(DM)

2008 Sem ICT4SED 6

 The World Pyramid
Population in millions
Purchasing Power Parity (PPP)

>$20,000 Tier 1 ~ 200 mil

Tier 2 & 3 ~ 800 mil

$2000 to $20,000

less than $2000 Tier 4 ~ 5000 mil

2008 Sem ICT4SED 7

 The Pyramid
 Examples of Xerox, Cannon copiers, PCs,
Cell phones, etc. represent technologies
developed for the second Tier (to some
extent Tier 3)
 To date most disruptive technologies have
been attacking Tier 2

2008 Sem ICT4SED 8

 Advocated by C. K. Prahalad

Attack the bottom of the

pyramid. Likely to create
greater disruption

bottom of
the pyramid

2008 Sem ICT4SED 9

 Pyramid for India
Population in million
Purchasing Power
> 5 lakhs T1 10 mil

3 to 5 lakhs T2 50 mil

1 to 3 lakhs
T3 150 mil

50K to 1 lakh 200 mil

T4

550 mil
less than 50K T6

2008 Sem ICT4SED 10

 Opportunities at the
Bottom of the Pyramid
 Nearly ½ billion in India (4 to 5 billion
world wide) at the bottom of the pyramid
 Need to develop new technologies for Tier
T4 and T5
 New business models are needed

2008 Sem ICT4SED 11

 Examples of Attacking the
Bottom of the Pyramid
 New Business Models
Technologies
 N-Logue (Village
PCO-STD-ISD booths
Internet
(Pitroda)
Kiosk using CorDect Wireless Tech.)
 Hindustan
TVS (KiranaLever
Shop(Chache
Computers)
Story)
 Amul Dairy
 Grameen Bank, SEWA Bank (Micro-financing)
 Grameen Telecom (Bangladesh)
 Microfinance (Vikram Akula)

2008 Sem ICT4SED 12

 N-Logue: corDECT Village Kiosk
 Consists of
 Wireless corDECT wall-set for Internet and telephone,
PC, dot matrix printer, battery back up, web-cam,
speakers, microphone --- for Rs.50K
 Local entrepreneur operates the kiosk
 These kiosks becoming community centers
 Expect cities to outsource their work to villages
(Indian villages could become back office to Indian
urban centers ~ a hyperbole)
 RTBI: Rural Technology Business Incubator

2008 Sem ICT4SED 13

 TVS Kirana Computers
 For Kirana stores with sales of Rs.100,000
per month
 A rugged PC
 No out right purchase of software or
hardware: Pay Rs.2,500.00 per month.
 Software for accounting, inventory, etc.
 In 180 days there was a 3.9% increase in
profit

2008 Sem ICT4SED 14

 Change of Mindset ...
(from C. K. Prahalad)
 Poor as a Problem  Poor as an opportunity
Global Market of 4.5 billion?
 Poor as Wards of State  Poor as Active Market
 Old Technologies  Innovation and development
 Old Technologies Follow the of new technologies with
West usefulness to the Poor

 Resource Constraints  Imagination Constraint

Information Access will be a great asset

2008 Sem ICT4SED 15
 Change of Mindset …
(from CK Prahalad)

The Poor of The Poor of The Poor of

India is an India is a India can be
Intractable Potential A Source of
Problem Market Innovation

Poverty Creating a New Market,

Alleviation, Innovation, Growth
Subsidies

2008 Sem ICT4SED 16

 Challenges

 The Market is Very Fragile:

(Monsoons, Subsidies,….)
 Middlemen and Moneylenders
 Fragmented Experiments
 Lack of a Global database
 Traditional Ways of Thinking

2008 Sem ICT4SED 17

 References
 C. K. Prahalad and Allen Hammond, Serving the
World’s Poor, Profitably, Harvard Business
Review, September 2002
 C K Prahlad, spoke about at the annual session
of the Confederation of Indian Industry, held
recently in Bombay. Prahlad said the Indian
economy has the potential to grow 10 to 15%.
http://www.moneycontrol.com/promos/prahlad.
html
 The Great Leap Downward:
http://idbdocs.iadb.org/wsdocs/getdocument.as
px?docnum=996849

2008 Sem ICT4SED 18

 Home Work: Questions
 Why is there so little technological
innovation and development, where the
need is maximum?
 Why has Fortune at the bottom of the
Pyramid not taken off?
 Is there something wrong with the theory?
 Think of three disruptive technologies that
can change the lives of poor in India

2008 Sem ICT4SED 19

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