The Ways to New

Chapter 12Price-Led Disruption

At Berliner Republik, a beer hall in the German capital, the price of a glass of beer varies according to the time of day, depending on demand. Customers can see prices rising or falling on screens. The fewer people there are, the lower the price.

It used to be that products were sold for a fixed price outside specific and limited sales times. Today, price fluctuations seem normal, because hotels, airlines, railway companies, and car rental firms all engage in yield management. These companies use the previous year's reservations to establish price models. They can predict the seasonality of demand rising and falling and model their prices accordingly—even, on occasion, down to giving the product away for free.

This book is about disruptive approaches to marketing, so I hardly have anything to say about disruptive technology or innovation based on technical breakthroughs here. Nonetheless, it is true that lower prices, which are happening across a broad range of sectors, are the consequence of what are known as exponential technologies. These are technologies that improve rapidly, with costs decreasing in parallel even more rapidly. Capacity doubles every eighteen months according to Moore's Law. Hence the exponential pace of progress and sophistication, whether in computing, in genetics, in biotechnology or nanotechnology. In each of these fields exponential technologies are helping generate a broad range of disruptive innovations.

Yet new technologies ...