INNOBLOG

It is clear that some of the reporters at The Economist really get the disruptive innovation concepts. Last month, The Economist had an intriguing article that posited that Intuit could shake up the health care industry (registration required). It is absolutely true that the U.S. health care industry is confusing and frustrating to many consumers. If Intuit uses its skills in creating simple software that makes people's lives easier to help solve this task, it could indeed have an attractive growth business on its hand.

This week, The Economist's cover story ("How the Internet killed the phone business") discusses VoIP and traditional telecommunications providers. Here's the article's first sentence: "THE term disruptive technology is popular, but is widely misused. It refers not simply to a clever new technology, but to one that undermines an existing technology"and which therefore makes life very difficult for the many businesses which depend on the existing way of doing things." The article hits the nail on the head. The new business models that companies can now follow that use voice as an application instead of as a pure moneymaker challenges the fundamental business model that telephony players have used for decades. As prices continue to quickly move towards zero, incumbent companies that don't recognize that they need to start changing yesterday are going to face a whole heap of trouble.