When Old Technologies Create New IndustriesWritten by admin , August 3rd, 2016 // Technology
People understandably get excited about new digital technologies, whether it’s the digital camera that is cheaper than developing rolls upon rolls of film, or the photo-sharing apps that – in turn — make your iPhone camera easier to use than your old digital camera.
New technology is so much fun that it can be easy to forget that new business models are what drive industries forward, and that old technology can still be valuable as long as it is paired with a smart strategy.
Of course, every innovator knows that new technology doesn’t always translate into profits. In The Innovator’s Dilemma, Clayton Christensen explains how incumbents actually pay a high price for actually doing a great job and constantly improving their technological offerings and creating overserved consumers. And technological history is littered with inventions that were technologically interesting but never made money, usually because of an incompatibility with the established business models or the business model that they were encapsulated in. But who wants to stand up for old technology?
Nonetheless, entrepreneurs looking to create a disruptive new business should not overlook underleveraged old technologies that just need a new use, and a new business model, to remain valuable.
Sponsored by Accenture
No strategy is static.
Consider the Norwegian technology company Piql. Piql uses celluloid photosensitive film – a technology introduced in the 1880s first for photography and later for the cinema industry – to convert digital files into a physical safety copy that can last over 500 years. Data is written in QR codes on film, which contains readable instructions so that any person wanting to access this data at any time will know how to retrieve it regardless of specific technologies or vendors.
Piql is responding to the explosion of demand for data storage. We’re barely at the beginning of the Internet of Things, and data is already growing at 40% per year. At the same time, data-storage technology is changing so fast that public institutions and large companies are at risk of losing the ability to read the data they are storing. (Remember floppy discs?) Every few years, once the old storage solution becomes unstable, data has to be migrated to another storage medium. Technological migrations are far from perfect, as a result some data ends up inevitably corrupted or lost forever in each migration. This problem is part of what Vint Cerf, known as the father of internet, refers to as the ‘Digital Dark Age’. Migrations are also costly, representing 60% of large companies’ IT budgets.
Rather than coming up with yet another new technology to try to help mitigate this problem, Piql is using an old technology for a new purpose. This is not about making data easy to access but making sure that is 100% preserved for hundreds of years. By leveraging on an extremely tested technology that at some point in the past helped create new industries, Piql is reusing this technology to once again create a new industry: digital preservation.
Importantly, note how the basis of competition for Piql is functionality and reliability, not convenience or affordability. In this, Piql might look more like what today’s incumbents looked like when they started rather than a classical disruptor. Disruptors often do compete on convenience and affordability — the more affordable steel produced by minimills, for example, or the more convenient movie-delivery method of Netflix. Convenience and affordability are both important elements of disruption in existing markets where some customers are over-served, or you are trying to expand to non-consumers.
But to create new markets, disruptive entrepreneurs often overlook the possibility of emphasizing a different criteria. New-market disruptions go much further than incorporating non-consumers into an industry. They actually create a new nascent industry where before there was nothing, or just a few offerings that did not do the job very well. And in this case, the basis of competition mostly favor functionality and reliability – these are usually the attributes of old technologies.
In a world where it seems that it is fashionable to claim that any digital company is disruptive, or where it seems that the only viable option is to be disruptive in the business school sense by prioritizing technologies that make things more affordable and simple, such as the cloud, mobile phones, etc., Piql is seeking to disrupt the massive data-migration industry by bringing back to life an almost discontinued technology that has already proven to be reliable and functional. In the process they are creating an industry in the very same way than what today’s incumbents did in the past.
The world is full of these old and unfashionable technologies and there are many new nascent industries to exploit. Disruption is not only about making things more affordable and simple. It can also create new net growth, and if you look hard enough you might even see some new industries to create.