Disruptive technologies displace incumbent technologies over time – that’s the basis of the theory of disruptive innovation. But incumbent technologies don’t just sit idly by while they are replaced by the new. Instead, bright minds continue to innovate old technologies, improving them in the face of increasing competition. This idea is captured in the concept of the sailing ship effect, and it offers an insight into how established technologies can respond to the challenges of disruptive innovation.
The sailing ship effect is a concept that describes how the introduction of a new technology to a market accelerates the innovation of an incumbent technology. The idea was coined in the 1960s to describe how the introduction of steamships in the 1840s triggered an acceleration in sailing ship innovation. The incorporation of steel into sailing ship manufacturing (hulls, masts) and auxiliary engines for example, extended the life of sailing ships well past the period when steam ships were expected to consign them to the technological scrap heap of history.
While the basis of the original idea has been contested (and what idea isn’t?) more recent research has confirmed the phenomena. For example, studies of electric cars suggests that innovations in that space has forced accelerated innovation in internal combustion engine (ICE) technology. In addition to driving the development and adoption of diesel engines, innovations in the electric car space have also spilled over into traditional vehicle design. A prime example of this is the development of hybrid cars over pure electric ones by incumbent motor firms. This type of innovation can be described as a ‘hybridisation’ rather than direct competition, with the disruptive technology living side by side with the incumbent one.
My own research into the spread of disruptive technologies within technological systems confirms this idea as well. In many cases, well established technological systems constrain the diffusion of a potentially disruptive technology. This is particularly the case where network effects are in play and the new innovation has to rely on parts of the system which are strongly adapted to incumbent technologies. The result is the dynamic development of both technologies, without a clear-cut displacement of the old technology by the new.
There are several take outs from this.
Firstly, disruptive technologies are seldom so compelling that they can quickly or easily sweep the competition from the field. Incumbent technologies are often owned by well-funded organisations who will use their not inconsiderable resources to innovate and defend their market position. This is easily observed in the car and energy industries, where the established players are large investors in potentially disruptive technologies (for example, Toyota in electric vehicles or Siemens in renewables). This can create problems for the disruptive innovator as it can extend the time it takes to obtain a commercial return, exacerbating the ‘funding valley of death’ problem that can beset new technologies.
Secondly, continued innovation can be a defence against disruptive innovations. This underlines the ongoing importance of sustaining innovation as well as disruptive innovation, topics covered recently in several good articles (in particular, see here). It may be that the disruptive innovation will win out in the end, and this is often the case. However, continued innovation allows companies to extract maximum value from their stock of IP and product know-how while preparing for a transition to the next wave of technology.
So while sailing ships might seem a quaint example of the contest between disruptive innovation and old technologies, the idea is a useful one for firms facing the increasingly rapid evolution of technologies in the marketplace. Of course, this requires deliberate planning and execution, but then again, this is one of the skills that makes an incumbent firm incumbent.