Full transcript
Hello and welcome to LEAD — Leadership Enablement and Development, an initiative from Nirvedha. This is the show for leaders, all about leadership and its impact. And on this episode: have you ever wondered about the impact of disruptive innovation on your industry? That's exactly what we are going to help you with on this week's show, where I will walk you through my study on disruption and its various facets. I'm your host Sudhakar, a certified executive cum business coach.
In first-century Rome, an innovative glassmaker created vitrum flexile — a flexible glass. Proud of his invention, he requested an audience with Emperor Tiberius. The emperor threw the drinking vessel down on the ground, but much to his surprise it did not shatter. At the time all drinking vessels were made of gold and silver, which tainted wine with a metallic taste. Considering the glassmaker's creation, Tiberius realised it would completely disrupt the Roman economy: if goblets were no longer made of gold and silver, the value of the precious metals would diminish immeasurably. Tiberius asked the glassmaker if anyone else knew the secret formula. When the inventor took a solemn oath that he alone knew how to create vitrum flexile, the emperor had the man beheaded.
Today it is not so easy to thwart disruption.
Over the last year I've been working closely with entrepreneurs and MSMEs — micro, small and medium enterprises — on mentoring and coaching. One of the primary areas where I feel they are not well prepared is the way they look at disruption. Disruption is the order of the day. Every industry is going through this, and will go through this, if not today then tomorrow.
I was reading The Innovator's Dilemma by Clayton Christensen, who coined the phrase disruptive innovation. Since then scores of academics and management consultants have studied a range of industries and companies to identify and classify various forms of disruption. Christensen asserts that there is a firm distinction between sustaining technologies and disruptive ones.
Let us look at some examples to understand what sustaining technology is and what disruptive technology is. Improving the mileage of cars over the past thirty years is a series of sustaining technologies. However, an electric car that doesn't require petrol or diesel — that would be a disruptive technology. At first, disruptive technologies pose no threat to the entrenched technology because of poor performance. The same is the case with the first generation of electric cars: the mileage may be high, but the battery can't get the vehicle from Delhi to Kolkata. If Tesla or another car manufacturer were to launch a car with a fifteen-hundred-kilometre range, then it would be game over for the combustion engine.
The seven-hundred-crore-plus Indian music industry was born on one invention, the gramophone, and comfortably relied on one business model for more than a century of profits. Then disruption came from another technology: the internet. Disruptive digital services such as Napster, iTunes and Spotify killed the mighty album, created a market for single downloads, deprived the music labels of their revenue model, and shot the industry dead.
One can argue about the inherent value of each incremental innovation in business, but the impact of disruption is undeniable and unmistakable. We have all witnessed disruptive innovations in one way or the other in our life — more precisely, for those who were born during the 1980s and before. One such example which comes to my mind is the typewriter. In the wake of PC disruption, the more-than-hundred-year-old typewriter simply ceased to exist. How many of us anticipated this? So: are we prepared for the future?
In the movie Back to the Future, which came out in 1985, the past took place in 1955. In the film, when Michael J. Fox went back into 1955, he was caught off guard by the newness of TVs, the prices of soda, the lack of love for the loud electric guitar, and the variation in slang. It was a different world. But if the movie were to be made today and the past took place in 1985, the film could have had much more fun with much more significant differences. The character would be in a time before personal computers, the internet or cell phones.
Having said so, the average rate of advancement between 1985 and 2018 was higher than the rate between 1955 and 1985, because the former was a more advanced world — so much more change happened in the most recent thirty years than in the prior thirty years. I would like to term this a period of shock. People from a past period, if brought alive in the present period, would get the shock of their life looking at the advances the new period had made. Every passing year, advances are getting bigger and bigger and happening more and more quickly. It suggests some pretty intense things about our future.
In the twenty-first century, billion-dollar industries can be disrupted and waylaid virtually overnight. No sector of commerce or government is immune to that threat. However, the truth is that wherever a business has been disrupted, value is released, massive opportunity is created, and significant shifts in economic wealth follow.
Disruption creates opportunity. The automobile created oil tycoons. Silicon Valley has created thousands of dot-com millionaires. For the one who identifies the right trend by creating an appropriate start-up, billions of dollars could be theirs. These days anyone has the power to disrupt, and everyone can benefit from disruption.
Yes, the pace of disruption has increased exponentially, thanks to the confluence of disruptive technologies that change how we work, communicate, travel, learn and age. A century ago, acquiring a few thousand customers for a product was a daunting task. Now, over six billion potential consumers are just one click away from becoming customers. Cloud computing, wearable technology, 3D printing and the Internet of Things may be abstract concepts to you today, but the impact they will have on your career and fortune is inevitable. There are fortunes to be made by identifying and exploiting the smallest aspects of these seismic shifts in technology and business organisations. Disruption causes vast sums of money to flow from existing businesses and business models to new entrants.
While technological developments create the opportunity for disruption, one doesn't have to be a master of the latest technology to reap the benefits. I believe that to be successful in this era of disruption, one needn't invent anything new. Nor do I see any need to discover something the world has never seen before. Instead, there are fortunes to be found by merely capturing the value released through others' disruptive breakthroughs. While email disrupted the distribution link in the value chain of postal mail, countless businesses have seen tremendous growth and profitability by using email to market, sell, design and even produce other products. To put it differently: a disruption in one link in the value chain creates opportunity in other links.
I consider the following to be disruptors. The entrepreneur who takes advantage of the opportunities created by disruption. The one who refuses to be intimidated by technological innovation. The one who finds ways to continually reinvent themselves so that their unique assets will never become obsolete. Success as a disruptor is about capturing the value that is released through disruption.
Every business will be disrupted sooner or later by technology — from the family restaurant that doesn't know how to interact with Swiggy or Zomato, to the loan broker made redundant by online loan aggregators. You can either embrace the disruptor's journey, or become a victim of it. In today's business world, if you are not moving forward, you are falling behind.
As a concluding note, I firmly believe that all disruption starts with introspection. You, as an entrepreneur, have a choice: to pursue your dreams, or be hired by someone else to help them fulfil theirs. I learned then that there is a difference between failing and failure. Failing is trying something that you learn doesn't work. Failure is not attempting at all. One can fail in an attempt, but failing to attempt is the biggest blunder.
If there is one constant in our lives, it's change. Those who anticipate it effectively do well. Others who misread it end up harming not only themselves but also their respective organisations. True disruption alters a market or a system forever. I would welcome you to be that disruptor.
Thank you all for tuning in.