Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

December 8, 2006

Disruptive Innovation

by @ 12:05 pm. Filed under Technology

Last summer I attended a conference that discussed the future of the news media – things like how established newspapers were being affected by blogs, websites, podcasts and other new ways of communicating with “the audience.” (“Audience” is in quotes because now, people are active participants in the creation of media, not just passive participants as has previously been the case). One of the presenters explained the “disruptive innovation” theory which is explained by Clayton Christensen, a professor at Harvard Business School, in his book, “Seeing What’s Next.” In Christensen’s view, established companies will prevail against new competitors when it comes to “sustaining innovations.” That means, if you’re already a big player in the computer business, for example, when you roll out a new and improved computer and a new competitor does the same, you’ll prevail because you have more resources, experience, etc. But when it comes to a “disruptive innovation” – that is, an innovation that’s simple, convenient and low cost – the challenger is likely to prevail because at first, the established company will ignore the new thing entirely. But eventually, as the new thing gains widespread acceptance, it will get the attention of the established company but by then it will be too late to catch up. Christensen’s prime example is the telephone. In the late 19th Century, the communications industry was dominated by Western Union and the telegraph. When Alexander Graham Bell invented the telephone, he did not see it as a threat to the telegraph, but as a complement. He envisioned it as a device for people to communicate with the telegraph office from home. In 1876, Bell offered to sell the patent for the telephone to Western Union for $100,000 ($1.7 mil in today’s dollars) but the president of Western Union laughed, reportedly saying “What would we do with an electronic toy.” Turned down by Western Union, Bell came up with an alternate business plan, which led to the creation of AT&T. The first telephone went into use in New Haven, Connecticut in 1878. In 1879, 17,000 telephones had been sold, a number that rose to one million by 1900. By 1910, AT&T owned a controlling interest in Western Union. What’s this got to do with the registry of deeds, you ask? Well first of all, it’s an interesting story on its own. But it is inspiring a project we’re about to begin which I’ll talk about more next week. Oh, in case anyone was wondering, I paid my own way to that conference.

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