Wikipedia, the free encyclopedia, defines Disruption as radical change due to the introduction of a new idea, driving a different way of doing things, in a revolutionary way as opposed to an evolutionary way. Others call it “creative destruction.”
Disruption is happening all around us, particularly in the knowledge and flow-of-information fields. We have made some inroads into industries that will change more slowly, such as land, oil, and capital intensive industries. We’ve helped a couple of market leaders begin changing how things are done, by converting their business from paper-based to digital. This will eventually be the norm for their industries because they have disrupted that market by creating a more efficient means of operation.
A disruptive innovation is something that helps create a new market and/or disrupts an existing market by displacing an earlier technology. This is most often seen today as digital transformation; digital apps transforming the way work is accomplished. In this series of articles, we are exploring TIDE, the acronym coined by Lance Vaughn of CabForward℠, a leading digital transformation agency in Austin, to describe the rapid societal changes we are experiencing today: Technology, Innovation, Disruption, and Entrepreneurship: TIDE. He says, “The iPhone is probably the most commonly used example of a disruptive technology. Steve Jobs and his teams at Apple were able to leverage the explosive growth of technology to put the world’s most powerful portable computer into the pockets of millions of consumers.”
“If there is one great truth to take from the continuum of time,” he continued, “is that nothing lasts forever. The same is true about disruption. Within a few short years, the iPhone was being challenged by similarly capable mobile phones from Samsung and others. So, whether we have experienced a great win or great loss, we should all be watching the innovation landscape with an eye for disruption. We can’t expect markets to stand still while we slowly, surgically tweak our product or services to improve quality or price.”
Large businesses, which are slow to change due to their size, must either disrupt their industry or see theirs disrupted, forcing them to change. They will either be the leader or a follower. Some followers will fail to survive the change. From the perspective of a company that can’t respond quickly enough to disruption in their industry, disruption is an event which causes an unplanned deviation from the expected outcome – the ways things have always been.
The examples mentioned in “Innovation and Its Role in TIDE” disrupted their industries and affected other industries aligned with their own. The supply chain security company’s innovation gave them an unfair advantage over their competition, forcing the competitors to improve their processes to keep pace, or lose market share. The oilfield construction innovation caused all those professionals, consultants, contractors, vendors, and suppliers to get mobile to keep pace. The ride sharing app caused all those ground transportation entities to update their processes so they didn’t get left out. Luscious Garage changed tedious car servicing by creating an app that let the car owner select the services they want, and schedule their visits to fit their busy schedules.
In the second annual Disruptor 50 list, CNBC featured private companies whose innovations are having a dramatic impact across their industries and society. These so-called “disruptors” are remarkable in that they have identified an unexploited niche in the market and rushed to fill it, all the while pushing the boundaries of the status quo. In the process, they have built ecosystems for new products and services and turned traditional sectors upside down.
This year CNBC says the software market was the sector that was in the midst of the most change. Fifteen companies in this field made the ranking. It was followed by enterprise technology, online investing, telecom, personal finance, retail, banking, hardware, media, mobile, and social media.
Disruption is the New Normal
We talked in an earlier post that Larry Downes, an Internet analyst , and Paul Nunes, Global Managing Director of Research at the Accenture Institute of High Performance, insist we are experiencing a scary stage of “Big Bang Disruption” in their book by the same name. “This isn’t disruptive innovation,” they warn. “It’s devastating innovation,” because disruptors can come out of nowhere. Entire product lines or whole markets can be obliterated as customers flock to products and services that deliver a better and more personalized experience.
Yet just as makers of stand-alone vehicle GPS navigation devices were suddenly, and seemingly out of nowhere, supplanted by smartphone maps-app software such as Google Maps, so too do iconic industries and services face a very real and immediate threat of big bang disruption this year.
Glenn Manishin wrote earlier this year, that Disruptors can come out of nowhere and happen so quickly and on such a large scale that it is hard to predict or defend against. “Sustainable advantage” is a concept alien to today’s technology markets. The reputation of the enterprise, aggregated customer bases, low-cost supply chains, access to capital and the like — all things that once gave an edge to incumbents — largely no longer exist or are equally available to far smaller upstarts. That’s extremely unsettling for business leaders because their function is no longer managing the present but inventing the future. . . all the time.
Chain Stores Brick-and-mortar merchants may be fighting back against online sellers with technology, but the retail customer experience itself is under attack. Mobile devices, social media, 24/7 connectivity and a blurring of lines between historically separate customer service “channels” have upended the rules of retail, forever disrupting the notion of business as usual. So much so that venerable trade magazine Chain Store Age is sponsoring its first Customer Disruption conference in Redwood Shores next May.
Hard Drives Just ten years ago a 500 MB hard drive was big, slow and unaffordable. Today solid state memory (think iPhones and Chromebooks) is the flavor of the day. Yet with the growth of cloud-based digital storage — and an anticipated 2014 IPO by segment-leading DropBox — the wheels may come off the hard drive industry. Consumers have increasingly little need for local storage, let alone external drives, and the cost of hardware continues Moore’s Law inexorably down. Oracle’s Larry Ellison called them “network computers” at the turn of the century. He was right, just too early. The impact of cloud computing on digital storage will continue unabated, likely putting both the traditional PC and hard drive in the same category as the archaic 3.5″ floppy disk.
Linear Television “Linear” is the term for old-fashioned television, in which content is channelized and available to all viewers in a single, common time slot. While some politicians would like to outlaw channel packaging in favor of a la carte television, the bigger threat in 2014 is that IP-based video will overcome its cord-cutting connotations to become an integral part of every household. From smart TVs to binge-viewing and Chromecast, from ubiquitous DVRs and screen sharing apps to over-the-top only series like Netflix’s House of Cards, the stars seem aligned for streaming television to really go mainstream. This won’t put the cable and fiber television distributors out of business, but it will surely force them to react in pricing, marketing and the ever-absent customer service. This was a huge topic at CES in Las Vegas, and understandably so.
Conference Calls The conference call is a value-added telecom service that has changed very little in the past two decades. Few things in business are more frustrating. First off, we can’t tell who’s talking, so we pretend; we inevitably talk over each other, then stop and apologize over each other; and when we want to say something privately to an associate, we can’t without other people hearing it. Yes, free conference services have changed the dynamics of payment, but with more mobile devices than people in the world, the scale exists today to do for conference calling what GoToMeeting and WebEx have done to presentations. Yahoo’s purchase of Rondee in June was a harbinger. UberConference, hot off winning the top prize at TechCrunch Disrupt NYC, aims boldly to revolutionize conference calling — its tag line is “We’re the stress-free conference call. Never need a PIN. Never ask ‘who joined’ or ‘who said that?’” — and may just succeed. (Have you heard their “On Hold” background tune? It’s indicative of how they are changing their ecosystem. Watch it here.)
Realtors It happened to travel agents and retail stock brokers and is now hitting taxi drivers: disintermediation and crowdsourcing (from Travelocity to Zipcar and Uber) render old occupations either unprofitable or irrelevant. LegalZoom, for instance, has brought quality legal products to the mass market, leading to a massive paradigm shift in the profession. With the advent of home stagers and the revival of residential real estate sales in the U.S., will 2014 be the year in which Zillow, Trulia and the like make FSBO real estate transactions a reality? The days of 6% “standard” commissions seem doomed, and as Downes incisively notes in Big Bang Disruption, regulated industries like real estate are especially vulnerable to information-driven disruption — if the law stays neutral and out of the way.
We invite your comments. How do you see Disruption affecting your industry, or those that support your industry?