2008 Sem ICT4SED 1 Disruptive Technologies U. B. Desai SPANN Lab. Dept. of EE IIT-Bombaywww.ee.iitb.ac.in/~ubdesai

2008 Sem 2ICT4SED What is disruptive technology? What is disruptive technology? Working Definition: Working Definition: Technology which creates a major (positive) disruption in the way society functions Technology which creates a major (positive) disruption in the way society functions Best explicated thru examples Best explicated thru examples

2008 Sem 3ICT4SED Examples of Disruptive Tech. Sun Microsystems Workstations: disrupted the market for main frame computers. Sun Microsystems Workstations: disrupted the market for main frame computers. PCs disrupted the market for workstations PCs disrupted the market for workstations Xerox plain paper copier: disrupted the market for offset printing. Xerox plain paper copier: disrupted the market for offset printing. Cannon’s desktop photocopiers: disrupted Xerox’s high speed photo copying market. Cannon’s desktop photocopiers: disrupted Xerox’s high speed photo copying market.

2008 Sem 4ICT4SED Honda motorcycle of 60s Honda motorcycle of 60s Japanese cars of 70s Japanese cars of 70s Korean Cars of late 80s Korean Cars of late 80s Wireless telephony (GSM, CDMA): disrupted the market for wire-line telephony. Wireless telephony (GSM, CDMA): disrupted the market for wire-line telephony. Nirma … Nirma … …

2008 Sem 5ICT4SED Impacting technologies are disruptive Impacting technologies are disruptive Disruptive innovations are products and services that initially aren't as good as those that historically have been used by customers in mainstream markets, and therefore can take root only in new or less-demanding applications, amongst non-traditional customers Disruptive innovations are products and services that initially aren't as good as those that historically have been used by customers in mainstream markets, and therefore can take root only in new or less-demanding applications, amongst non-traditional customers Stuart Hart and Clayton Christensen

2008 Sem 6ICT4SED Historically: Major waves of growth thru forays at the bottom of the developed markets (DM) DM

2008 Sem 7ICT4SED The World Pyramid Tier 1 Tier 2 & 3 Tier 4 Population in millions ~ 200 mil ~ 800 mil ~ 5000 mil Purchasing Power Parity (PPP) >$20,000 $2000 to $20,000 less than $2000

2008 Sem 8ICT4SED The Pyramid Examples of Xerox, Cannon copiers, PCs, Cell phones, etc. represent technologies developed for the second Tier (to some extent Tier 3) Examples of Xerox, Cannon copiers, PCs, Cell phones, etc. represent technologies developed for the second Tier (to some extent Tier 3) To date most disruptive technologies have been attacking Tier 2 To date most disruptive technologies have been attacking Tier 2

2008 Sem 9ICT4SED Advocated by C. K. Prahalad Attack the bottom of the pyramid. Likely to create greater disruption bottom of the pyramid

2008 Sem 10ICT4SED Pyramid for India T1 T2 T3 T4 T6 Population in million 10 mil 50 mil 150 mil 200 mil 550 mil Purchasing Power > 5 lakhs 3 to 5 lakhs 1 to 3 lakhs 50K to 1 lakh less than 50K

2008 Sem 11ICT4SED Opportunities at the Bottom of the Pyramid Nearly ½ billion in India (4 to 5 billion world wide) at the bottom of the pyramid Nearly ½ billion in India (4 to 5 billion world wide) at the bottom of the pyramid Need to develop new technologies for Tier T4 and T5 Need to develop new technologies for Tier T4 and T5 New business models are needed New business models are needed

2008 Sem 12ICT4SED Examples of Attacking the Bottom of the Pyramid New Business Models New Business Models PCO-STD-ISD booths (Pitroda) PCO-STD-ISD booths (Pitroda) Hindustan Lever (Chache Story) Hindustan Lever (Chache Story) Amul Dairy Amul Dairy Grameen Bank, SEWA Bank (Micro-financing) Grameen Bank, SEWA Bank (Micro-financing) Grameen Telecom (Bangladesh) Grameen Telecom (Bangladesh) Microfinance (Vikram Akula) Microfinance (Vikram Akula) Technologies N-Logue (Village Internet Kiosk using CorDect Wireless Tech.) TVS (Kirana Shop Computers)

2008 Sem 13ICT4SED N-Logue: corDECT Village Kiosk Consists of Consists of Wireless corDECT wall-set for Internet and telephone, PC, dot matrix printer, battery back up, web-cam, speakers, microphone --- for Rs.50K Wireless corDECT wall-set for Internet and telephone, PC, dot matrix printer, battery back up, web-cam, speakers, microphone --- for Rs.50K Local entrepreneur operates the kiosk Local entrepreneur operates the kiosk These kiosks becoming community centers These kiosks becoming community centers Expect cities to outsource their work to villages (Indian villages could become back office to Indian urban centers ~ a hyperbole) Expect cities to outsource their work to villages (Indian villages could become back office to Indian urban centers ~ a hyperbole) RTBI: Rural Technology Business Incubator RTBI: Rural Technology Business Incubator

2008 Sem 14ICT4SED TVS Kirana Computers For Kirana stores with sales of Rs.100,000 per month For Kirana stores with sales of Rs.100,000 per month A rugged PC A rugged PC No out right purchase of software or hardware: Pay Rs.2, per month. No out right purchase of software or hardware: Pay Rs.2, per month. Software for accounting, inventory, etc. Software for accounting, inventory, etc. In 180 days there was a 3.9% increase in profit In 180 days there was a 3.9% increase in profit

2008 Sem 15ICT4SED Change of Mindset... (from C. K. Prahalad) Poor as a Problem Poor as Wards of State Old Technologies F Old Technologies Follow the West Resource Constraints Poor as an opportunity Global Market of 4.5 billion? Poor as Active Market Innovation and development of new technologies with usefulness to the Poor Imagination Constraint Information Access will be a great asset

2008 Sem 16ICT4SED The Poor of India is an Intractable Problem Change of Mindset … (from CK Prahalad) The Poor of India is a Potential Market The Poor of India can be A Source of Innovation Poverty Alleviation, Subsidies Creating a New Market, Innovation, Growth

2008 Sem 17ICT4SED Challenges  The Market is Very Fragile: (Monsoons, Subsidies,….)  Middlemen and Moneylenders  Fragmented Experiments  Lack of a Global database  Traditional Ways of Thinking

2008 Sem 18ICT4SED References C. K. Prahalad and Allen Hammond, Serving the World’s Poor, Profitably, Harvard Business Review, September 2002 C. K. Prahalad and Allen Hammond, Serving the World’s Poor, Profitably, Harvard Business Review, September 2002 C K Prahlad, spoke about at the annual session of the Confederation of Indian Industry, held recently in Bombay. Prahlad said the Indian economy has the potential to grow 10 to 15%. html C K Prahlad, spoke about at the annual session of the Confederation of Indian Industry, held recently in Bombay. Prahlad said the Indian economy has the potential to grow 10 to 15%. html html html The Great Leap Downward: px?docnum= The Great Leap Downward: px?docnum= px?docnum= px?docnum=996849

2008 Sem 19ICT4SED Home Work: Questions Why is there so little technological innovation and development, where the need is maximum? Why is there so little technological innovation and development, where the need is maximum? Why has Fortune at the bottom of the Pyramid not taken off? Why has Fortune at the bottom of the Pyramid not taken off? Is there something wrong with the theory? Is there something wrong with the theory? Think of three disruptive technologies that can change the lives of poor in India Think of three disruptive technologies that can change the lives of poor in India

2008 Sem 20ICT4SED