Disruptive innovations are those that help create new markets or value networks – and which eventually disrupt existing ones, often by displacing earlier technologies. In real estate crowdfunding, we could be witnessing another such disruptive mechanism.
Technological or other innovations are not always “disruptive” in the true sense; for that, a changing application of the technology is usually required. The automobile was a revolutionary technological innovation, but for decades it remained an expensive luxury item until the lower-priced Ford Model T debuted in 1908. The automobile by itself was not disruptive, but its mass production changed the entire transportation market.
Examples of disruptive innovations exist throughout history, but the recent technology-driven era has seen more than its fair share. E-mail has now largely replaced postal mail, because messages can be sent over vast geographic distances in mere milliseconds, without wasting paper or requiring expenditures for postage stamps. Downloadable digital media has now largely replaced CDs and DVDs, largely due to the iTunes Store andAmazon.com. Mainframe computers were eventually outgunned by personal computers, which themselves are now threatened by tablet computers and smartphones.
In each of these cases, however, larger market dynamics ultimately ended up mattering more than the technological innovation itself. Email didn’t become widely adopted until the internet allowed universal connectivity among computers. The illegal peer-to-peer file sharing technologies that eventually led to today’s downloadable media were first driven by the market need created when the music industry phased out the sales of singles. And mainframe computer manufacturers did not initially consider the minicomputers as threats to their market, since the value of distributed computing using less-powerful, individual machines was not immediately apparent to enterprises wedded to centralized, high-powered systems.
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