Web Applications as a Disruptive Technology

Have you used one of those office tools on the Web? (for example: Writely, Zoho) As you will probably agree, these tools work horribly if you compare them to traditional software like MS Office or OpenOffice. I discovered this a few weeks ago when I wanted to write a fancy presentation for school.

Let me tell you something about S-curves:

This is the traditional view of 2 technologies overlapping. As the performance (value) of technology 1 improves it will first go rapidly, but after a while it has reached it limits. For example the efficiency of an ordinary light bulb. As technology 2 is in it’s development peak, the performance of technology 2 will intersect technology 1. In the case of light bulbs technology 2 can be the LED or the gas-discharge lamp.

In the book, The Innovator’s Dilemma, Clayton M. Christensen proves that this S-curve graph is incomplete. This is because both technologies are not used in the same market (or value network):

For example, if we would replace market A with ‘the flashlight market’. Technology 1 will be the ordinary light bulb. Market B will be ‘light indicators in electrical equipment’. Technology 2 will be the LED. In the red marked circle one can see that the performance of the LED, which was mainly used as a simple indicator, is now mature enough to be used in flashlights. This has a profound impact on companies producing flashlights and their suppliers. Market B can be a very small market or even a bunch of nerds (no market). This makes it hard to see the new technology coming, hence it’s name ‘Disruptive Technology’.

If we would look at Market A and Market B in the case of software, we can define the following markets (better term: value network).

• Desktop Software: achieving productivity with the computer, boxed software (MS Office)
• Web Applications: collaboration, access anywhere, e-commerce, serviced software (Writely)

Web applications will soon match the values of the desktop software, it might take a while, but from the looks of it this will happen: Techniques like DHTML, AJAX and Flash make productivity/usability better in web applications Internet connections are getting more common throughout the world (and mandatory to achieve productivity in the Desktop Software market).

As ‘The innovator’s Dilemma’ proves, there is a common failure when faced with a disruptive technology. In the case of the Hard Drive industry, 15 out of 84 companies survived when faced with the new disruptive technology. Now, this happened not simply because they didn’t see the new technology coming. The main reason is that an organization’s structure and workings are shaped for their own value network. Therefore, the best known strategy for dealing with the disruptive technology is starting (or buying!) a new separate company to deal with the disruptive technology.

As the Office division of Microsoft is busy preparing for their web capable Office Live, other independent small companies are building their Web-Office products (Zoho, Writely). According to the Innovator’s Dillema, Google has the obvious advantage, because it owns a small separate company, called Writely.