Is Disruptive Tech the New Paradigm?

Earlier this week, Amazon (NASDAQ: AMZN) got the official thumbs-up from the FAA to begin testing outdoor drone delivery.

The ultimate goal of Amazon’s program is to be able to deliver packages within 30 minutes — kind of like Dominos’ business model, but with anything you want.

According to Amazon, the drones will track consumers’ locations via their smartphones.

There are different drone models to accommodate package size and weight, and all drones are equipped with sensors to ensure safe, collision-free delivery.

So, to recap: Amazon is developing technology that will ultimately allow me to be anywhere in the world, order anything I want from the digital store, and then have a flying robot deliver my purchase to my location within 30 minutes.

I feel like I’m talking about a Jetsons episode here.

The technology is still evolving, and no one is saying Amazon’s system will be up and running tomorrow. Incremental changes are how technology evolves. These increments are usually pretty small, but that doesn’t mean they should be ignored.

Every so often, one of those small increments will grow exponentially, ultimately sending a shockwave through the market. Amazon did this a few years ago when it introduced the digital storefront.

Amazon lowered the cost of products, made them more accessible to more people, and vastly improved on the printed catalogue system that companies had been using for years.

Think about how services like Amazon have already undermined the traditional consumer-supplier relationship. Then try to imagine how flying delivery robots could undermine that even further. This is what we call “disruptive.”

In 1995, Harvard Business Administration professor Clay Christensen coined the term “disruptive innovation.” He cites examples such as cell phones, which completely disrupted the landline phone industry, and community colleges, which have disrupted the framework of the four-year college.

An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.

Disruptive technologies lower cost or create additional supply avenues, and sometimes they do both. Sometimes, they open the door for entirely new markets.

They displace existing technologies and have a huge economic and social impact.

Apple (NASDAQ: AAPL) was a disruptive force when it introduced the personal computer.

Apple developed computing technology that was previously expensive, exclusive, and complicated and made it accessible to the average person.

Now, we have that technology in our pockets. Apple started from the ground up with the Macintosh’s technology and ultimately reinvented how the world worked.

These days, it’s not necessary to reinvent the wheel to be disruptive to the market.

Some companies, like San Francisco-based Uber, are still disruptive but are doing so while using existing technology platforms as springboards.

Uber is using smartphone technology to lower the cost of personal transportation.

The company has increased the number of personal transportation providers and displaced existing personal transportations services.

On a personal note, I’m a huge Uber fan. At the risk of revealing how frequently I consume alcohol, I’m going to say I use Uber pretty often.

It’s easy, I can pay for the ride right from my phone, and as a single girl, it’s nice to see a picture of who’s coming to get me.

Uber drivers are rated by their customers, so they actually care about being friendly and accommodating. I’ve had Uber drivers give me free snacks. Who doesn’t love snacks?

Uber’s business model is more appealing to me as a consumer than the traditional taxi service.

I’m obviously not the only one; the company is still in the middle of a whirlwind of regulatory debates surrounding its impact on existing taxi services, and it has even been banned in a handful of cities worldwide.

People in the investing world are putting Uber in the “unicorn” category.

The company is not yet in the market, but valuations already exceed $1 billion. Uber’s IPO is bound to be hyped, and it’s expected to happen this year. Keep a lookout.

Cloud Computing

The cloud is everywhere.

If you have a web-based email account (like Gmail or Yahoo), you’re in the cloud.

If you’ve Skyped a friend or family member, you were communicating over the cloud.

Are you on Facebook? LinkedIn? You’re in the cloud.

Cloud computing is the new status quo for this dynamic world, and it’s not just about storing your family photos…

Let’s get back to Amazon for a moment.

The company is currently strides ahead of all its competitors in the cloud services market.

One recent report revealed that Amazon’s Web Services sees more than 10 times the usage of its top 14 competitors combined.

Once upon a time, most of the important and necessary business computing (data storage, bookkeeping) required large mainframes and terminals connected to a big computer in the basement.

Software was downloaded to individual computers and hopefully backed up to a floppy disk by the user. In an office with 50 computers, you needed 50 software disks and 50 installations. There was relatively no connectivity — no shared data. Data loss was detrimental, and software updates were tedious and time-consuming.

Internet-based cloud services like Amazon’s provide businesses with relatively low-cost IT software, among other services.

It removes the hassle of managing complicated software that, after a few years, becomes outdated and obsolete. Rather, cloud services provide businesses with instant access to applications at a scale appropriate for their needs.

They also increase the possibility for collaboration amongst employees — allowing multiple individuals to access a file from any location and make real-time edits.

Cloud collaboration is possible between a firm and its clients as well, which increases the potential geographic scope of services.

And right now, cloud services are evolving into new sectors.

General Electric (NYSE: GE) uses a cloud-based system called Predix to perform energy analyses for its wind turbines.

Predix gathers data and can actually learn from the machine’s previous performance, eventually boosting efficiency and production.

The company estimates that once the technology is applied to all wind turbines, each energy farm would see a $100 million increase in value.

However, some Silicon Valley leaders are warning against what they call “cloud complacency.” As cloud technology outpaces the protective technologies, information in the cloud may lack security.

For government agencies thinking about transitioning to the cloud, security and privacy is especially an issue.

Consumers and providers alike must be diligent about information security.

Putting data in the cloud is putting it onto a busy highway that, in theory, could be accessed by anyone who knows how. It’s difficult to detect which of these virtual doors is unlocked.

So depending on the sensitivity level of information and the security expertise of an in-house IT department, transitioning data to the cloud could either be an asset or a risk.

Still, it’s only a matter of time before cloud security catches up, and the contamination or theft of sensitive information will no longer be a matter of concern.  

Ultimately, cloud computing makes essential business operations easier for both firms and clients.

It increases accessibility, lowers cost, and fosters efficiency and collaboration.

All we need is for the Department of Motor Vehicles to adopt the cloud, and all of our lives will be better.

3D Printing

The buzz around the 3D printing industry is deafening.

It checks all the boxes of a disruptive technology: It is easier, cheaper, smaller, and more convenient than previous options.

And it is opening the manufacturing door for consumers and sectors that previously did not have the capability.

Earlier this week, L’Oreal announced a partnership with Organovo (NYSE: ONVO) on an initiative to 3D print human skin.

Researchers at the Wake Forest Institute for Regenerative Medicine 3D printed a human liver.

Companies like Stratasys, MakerBot, and M3D now offer 3D printers tailored specifically for individual consumer use at an affordable price.

Think of it as having a factory that can fit on your countertop…

Except rather than only being able to produce one type of item, this miniature factory can produce nearly anything you select and customize.  

As 3D printing technology slowly extends its reach into our everyday homes and offices, it will inevitably impact the traditional manufacturing model.

Now, manufacturing will be available to anyone. If I want to design and develop a basic set of tools to repair something in my house, I won’t need to go to Home Depot to do it. If I lose my stylus, I can just print another one.

Production lines and economies of scale may soon be obsolete. Manufacturing will be democratized.

Needless to say, 3D printing has come a long way since Chuck Hull’s original stereolithography machine.

It’s even reached as far as outer space. Thanks to 3D printing, astronauts on the International Space Station are able to receive and download files containing blueprints for tools and other necessary parts that might get lost or broken while in orbit.

This eliminates the complication (and cost) of sending objects — some of which are incredibly fragile and may not survive the turbulent blast off — to space.

We all know what it’s like to get in your car and realize you left your phone in the house…

For an astronaut in space, realizing you need even the smallest tool or part is a little more serious. 3D printing is the solution to these problems.

In all seriousness, 3D printing is a phenomenal technology because it allows users to download and create literally anything they want. On a larger scale, it’s opening the door to unimaginable advancements — especially in health research and space exploration.

But 3D printing is a frightening technology for the same reason.

In 2013, leaders from a movement called The Second Amendment Foundation uploaded blueprints for a fully functional firearm called “The Liberator.”

The file, which was available worldwide and free of charge, was downloaded over 100,000 times before the government intervened and demanded its removal.

The gun was crude, plastic, and of questionable utility, but the point was made: You could manufacture things at home that you may not be allowed to buy in a store.

Several months later, a company called Solid Concepts went a step further and made a perfect model of the famed Colt 1911 pistol — completely out of aerospace-grade metals on an industrial 3D printer.

The gun was tested more than 5,000 times without failure — at pressures up to 40,000 pounds per square inch.

As a proof of concept, it was disruptive in its own right.

More Chaos = More Innovation = More Chaos

Today, innovative young companies are shaking up the status quo and keeping typical big business on its toes.

It’s only a matter of time before new disruptors are serious industry contenders. These innovations are equalizing opportunities and removing exclusivity from the conversation.

Disruptive technology has the potential to spark dramatic improvements in so many sectors.

There is an equal potential for risk as well. But we cannot let fear stifle progress. Ultimately, what we now see as “disruptive” is likely to become the social and economic norm of the future.

Who knows? Maybe in 20 years we’ll be sitting around a kitchen table I 3D printed myself talking about iPhones like they’re floppy disks.