Disruptive developments and technologies during recession
12 March 2009
Some decades ago, studying at the prestigious Indian Institute of Technology, Bombay, we studied History of Technology as part of our degree course. At that time, we all wondered why we should be taught irrelevant stuff that was in the past when a glorious future beckoned. How wrong we were! Those who do not learn from history go into the future without direction.
I am sure that many, like myself, in these dark gloomy days of the recession have started analysing past historical trends in the development of technologies and companies to try and fathom where we are heading in the next few years. It’s almost like dusting off old copies of the writings of Marx and Engels to see where the modern day financial sector is heading.
Even the briefest study of the history of companies and the development of new innovations seems to bear out that such developments (loosely and collectively termed as ‘disruptive developments’) by and large peak during times of recession. Could this be because of the need for ‘economic survival’? A fascinating article (Lessons learned from the History of Technology Adoption in the US Textile Industry) by Dr. Douglas Cooper of the Belk College of Business, University of North Carolina, claims: “While the process of ‘invention’ is not necessarily about economic survival (necessity is the mother of invention), the adoption process of choosing among alternative technologies within a competitive business environment is about ‘economic survival’.
The depression of the 1930s in the US saw the emergence of such notables as Revlon Cosmetics, Kraft’s Miracle Whip, Nescafe, the La-Z-Boy Recliner, and Fortune Magazine. A small Illinois Company called Galvin Manufacturing set-up the world’s first manufacturing of car radios to soothe jangled nerves whilst driving, and thus Motorola was born. Meanwhile in Texas, a small service provider to Texas Oil fields, Geophysical Service Incorporated, successfully bet on the fact that oil well yields could be improved by a whole new way of measurements, and Texas Instruments was created.
There are numerable other examples of disruptive developments in recessions. Nokia, a financially strained Finnish manufacturer of rubber sheathed electrical cables and other rubber products (such as tyres and boots) emerged from Finland’s massive recession of the 1990s as the world leader in cellular telephony. Apple’s hugely successful iPod was launched in 2001 just after the Internet bubble had burst, sending shock waves throughout the technology sector. Companies such as GE, IBM, Kraft, and Electronic Arts were each formed in a recession year, and the IBM PC was also developed.
McKinsey & Co. carried out an interesting study covering the operations of 1000 companies. According to this study: “Those companies that retained or gained market leadership during the 1990-’91 recession invested cash reserves on strategic acquisitions and to pursue radically new opportunities that fit its overall corporate strategy rather than focusing on reducing operating expenses.”
If our reading of history is correct then we must also rightly expect a slew of disruptive developments to emerge from the current shambles. I purposely do not limit myself only to developments of new technologies, but also include the possibility of other developments related to countries and their economies. As an example, some recent studies cite the similarity between the USA of 1929 and China of today. Both rapidly growing economies of their time, and both with a focus on exports. Could China ‘tank’ the way of the US in 1929-’30? Now that would be hugely disruptive!
When I planned the writing of this piece I had thought of making some very bold predictions on my own, but I believe it is wiser only to toss some ideas here, by way of an indicative list, and let you come out with your own comments and predictions. We can then review these in happier times and see who was right, and who dreadfully wrong! What I think is abundantly clear is that any new electronics technologies/products must provide what the consumers actually need and want, and not the other way around. Also, I think the time has come to start looking at an inversion of Moore’s dictum of doubling of performance every two years for small to marginal price increases. What may be needed is the same or sensibly reduced functionality at considerably lower prices.
My own list of attributes for any new ‘disruptive’ product includes (not in any order of merit):
• Light/portable
• Only have required functionality
• Attractive
• Eminently affordable
• Instant ‘on’/‘off’
• Recyclable
• Carbon neutral
• Ultra low power (or even designed for energy harvesting)
• Highly reliable; long Life, with no after sales service
• Rugged/environment proof
• Very simple to operate
And here is my own indicative (hopefully provocative enough) list of disruptive developments for the next couple of years:
• Advanced and simple ‘cloud computing’
• Low cost, good performance netbooks
• Energy harvesting appliances
• Solid state disks
• Very high speed USB 3.0 drives
• Simple, low cost broadband TV
• Video/visual networking on the Internet (unified communications)
• Gallium Nitride on silicon low cost LED lights
• Polymer semiconductors/compound semiconductors
• Organic LEDs
• Server virtualisation
• The end of China as a major off shore manufacturing centre
• Reduced role of sales intermediaries (shipments direct from factories to consumers)
• Reduced importance of ‘Entrepot’ centres such as Singapore and Dubai
I eagerly look forward to your comments, opinions and forecasts. Email us with your thoughts.
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