Characterizing Technological Disruption: A Business-Oriented Analytical Model

Abstract

Technological disruption, a significant alteration in competitive industry standards, impacts all stakeholders within the value chain, redefining business models, collaborative and competitive relationships, value propositions, and prevailing product/service standards. Historically technological at its core, disruption arises either from the adoption of emerging technologies or the innovation on existing ones. Given the accelerated pace and increased frequency of technological disruption in recent decades, understanding its dynamics is crucial, yet challenging due to the shortening of disruptive cycles and the complex recombination of technologies.

Despite numerous analyses from various perspectives, particularly technological, a holistic conceptual model interpreting this phenomenon from a competitive strategy standpoint is lacking. This paper aims to bridge this gap by proposing a theoretical analytical framework that enables researchers, managers, and analysts to characterize and anticipate technological disruptions in competitive environments.

The genesis of disruptive processes usually involves a technological component that manifests in two primary forms: cost impact, where the cost-performance ratio of emerging technologies massively alters key competitive processes, leading to business model obsolescence; and revenue impact, where the application of new technologies generates new markets, reshaping industry size and connections with adjacent sectors.

This study introduces the concept of a "competitive paradigm" of an industry, referring to the prevailing competition rules within a certain timeframe from a multidimensional perspective. A disruption signifies a break from these rules, and therefore, from the competitive paradigm itself. The framework outlined in this paper focuses on four competitive dimensions crucial for characterizing potential disruptions: dominant business model characteristics, customer behavior in relation to the prevailing value proposition, the industry's value chain configuration, and the distribution of generated profits among stakeholders.

For instance, the shift towards digital platforms in the music industry and the rise of electric vehicles are clear examples of how new business models can redefine competitive landscapes. These models often emerge from non-traditional industry participants and drastically alter the competitive dynamics, making anticipation of such changes more complex yet vital for sustaining competitive advantage.

The analytical model provided herein sets the groundwork for identifying industry disruptions based on changes induced by new technological competitive models. It offers specific criteria for analysis across the described dimensions, thus facilitating the anticipation of disruptive shifts.

This paper contributes to the literature by detailing a structured approach to understanding and predicting technological disruptions, reinforcing the strategic implications of such shifts and providing a robust tool for both academic research and practical application in business strategy dev