A Practical View

By Natasha Léger,
Editor, LBx Journal


Disruption has become a big business, consulting and media buzzword. Many of the de nitions amount to competition encroaching upon an industry or company’s territory, or so they
believe.

The Disruptive Innovation Model developed by Clayton Christensen
identified three critical components of disruption:

1. In every market there is a rate of improvement that customers can utilize or absorb. For example, the automobile companies keep giving us new and improved engines, but we can’t utilize all the performance that they make available under the hood. Factors such as traffic jams, speed limits, and safety concerns constrain how much performance can be used. [Translation: over-engineered].

2. In every market there is a distinctly different trajectory of improvement that innovating companies provide as they introduce new and improved products. This pace of technological progress almost always outstrips the ability of customers in any given tier of the market to use it. [Translation: Moore’s Law].

3. There is a distinction between sustaining and disruptive innovation. A sustaining innovation targets demanding, high-end customers with better performance than what was previously available. Some sustaining innovations are the incremental year-by-year improvements that all good companies grind out. Other sustaining innovations are breakthrough, leapfrog-beyond-the-competition products. [Translation: “Built to Last”].

Disruptive innovations, in contrast, don’t attempt to bring better products to established customers in existing markets. Rather, they disrupt and rede ne that trajectory by introducing products and services that are not as good as currently available products. [Translation: good marketing for poor quality products, or massive price competition].

Does all this innovation mumbo-jumbo make sense or just sound overly complicated? Remember that it is written by an academic.

How about something simpler: To disrupt per the dictionary means “to cause disorder or turmoil in; to destroy, usually temporarily, the normal continuance or unity of.” Disruption is usually caused by some change in the ecosystem, whether natural or man-made. In the case of business, we see change every day in terms of supply and demand, yet for some reason businesses don’t like change; they like consistency, stability, and predictability. So when competitors enter the market with better, cheaper, more convenient products, incumbents called them disruptors.

What does disruption mean for the location industry? Ironically, the location industry is all about change; it monitors the physical changes to the planet every day. Per usual, change is good as long as it doesn’t affect me and I continue to do what I’ve always done in terms of busi- ness model, product development, distribution, customer experience, etc. “Disruption,” or rather “change” in the location industry, is occurring at the supply and demand levels and is a result of three things:

→ Change in business models introduced by a competitor, for example, free data subsidized by an advertising model, instead of a straight sale of data;

→ Change in supply or distribution, for example, location data is suddenly available to millions and billions of people through the Internet and mobile devices; and

→ Change in demand, due to change in technology and supply that makes products and services more a ordable, accessible, and easier to use.

Every aspect of the location ecosystem is changing as new technologies are commercialized, and especially as entrants from outside the location ecosystem continue to adopt location technologies as a feature of their products and services, and frankly innovate on location applications much faster than the incumbents. New entrants are having a “disruptive” effect on the location industry in terms of scale of adoption, perception of value, and privacy, among other issues.

The location industry knows first hand from monitoring the physical world that everything is constantly changing. Sounds like location insights should be used by the location industry to more effectively compete in light of change. But the problem is that the location industry is still fragmented and still educating the marketplace, one vendor at a time.

The adoption of location technologies, services and applications is changing behavior among consumers, enterprise users and governments. Location insight invariably results in an unprecedented level of transparency that some organizations are not prepared to respond to, or to accept.

We have aggregated articles from across the Location Media Alliance publications that have addressed the supply and demand side of disruption—or just plain old competition. Some companies have planned accordingly; those that have not seem to complain about disruption.


Every aspect of the location ecosystem is changing as new technologies are commercialized, and especially as entrants from outside the location ecosystem continue to adopt location technologies as a feature of their products and services.