The difference between innovation and disruption

by MPA15 Apr 2016

On the April 11 episode of my Lykken on Lending Internet radio show, we had the opportunity to interview technology expert Peter Froberg on some of the things going on with technology in the mortgage industry. Specifically, we talked about the difference between innovation and disruption.

Peter explained it using a few examples. First, in transportation, rail companies competed in the 1800s to develop faster trains to get passenger where they needed to go. This was innovation. However, when automobiles started to become mass-produced in the Twentieth Century, people began to abandon locomotives altogether. The technology of the automobile was, therefore, disruptive. Another example is in mobile phones. Going from the iPhone 5 to the iPhone 6 is an example of innovation. The phone might have better battery life and a better camera, but it's more or less the same technology. However, when the smart phone was developed, it was a disruptive technology that made older mobile phones obsolete.

In the mortgage industry, we see a constant stream of innovations. But there are some technologies that can quickly become disruptive. We've got to keep an eye out in the marketplace so we can tell when those technologies are arising. No one wants to be left holding the obsolete technology. You want to be on the side of the disruptor.

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