Technology Innovation Is Enabling New Business Models
If you were to have lived in New York in the early 1900’s, you would have witnessed the conversion of surface transportation from horses to automobiles! So, some of us know people who could have actually witnessed a major new transportation technology change the world. Wasn’t that long ago, really, was it?
History has proven that “technologies” have lifecycles. They’re born, mature, and in many, if not most cases, die, when something better comes along. Sometimes they’re born with a bang but mature so slowly that you barely notice. They seem to max out and you take for granted that they’re at the end point in a long arc of technical development. You think you can’t do much better than to improve them at the margins. It takes a different kind of thinking to question these presumptions. You have to think bigger. You have to think in terms of systems.
There are many differences between transportation networks and the internet; however, they have one thing in common – they are NOT technologies.
Clayton Christiansen from MIT observed that actual new technologies – the internal combustion engine, steel, and semiconductors - are very rare. He pointed out that what we commonly refer to as technologies are in actuality new SYSTEMS - as are automobile networks, trains, and the internet. They are collections of many different existing technologies that “pop” into existence when enough of the technological ingredients become available at a reasonable cost.
For example, when Apple developed the iPod a new industry was enabled by a combination of new technologies (e.g., audio compression software such as MP3), and advances in others such as very small hard drives and low cost flash memory which allowed storing music inside the device rather than carrying CDs or tapes. This situation created an opportunity for someone to create a new product with no need to be compatible with existing products or complementary assets (except the millions of digital music tracks available for ripping from CDs or downloading from Napster or other sites). Apple took advantage by combining existing technologies in a unique way that captured consumers’ imagination and became a hit product.
The radical innovation of the iPod was not a dramatic technological advance, but rather a unique integration of hardware, software, content and services in a way that was more user-friendly and comprehensive than existing music players. Apple developed the iTunes software application to collect and manage content on a PC or Mac and easily transfer that content to the iPod. It also developed the online iTunes Music Store and tightly integrated that with the iTunes application. Apple licensed content from all the major music labels and, subsequently, from the audio book, movie and television industries, and established pricing and digital rights which enabled new business models for selling content that were much more attractive to consumers.
Automated transit networks (ATN’s) are an emerging transportation system that, like the iPod, is enabled by a combination of new technologies (e.g., control systems, nano materials, maglev propulsion) that has the potential to disrupt transportation in the same way that iPods disrupted music. ATNs and the technologies of which they’re comprised will provide new mobility and freight alternatives that give us new freedom to tackle some pressing problems associated with our aging transportation systems and allow new business models which will provide significant new economic opportunity.