This is the third post in this short series on disruption. This post was updated on 15 September 2020.
In simple terms, technological disruption implies at least two actor groups: those that are being disrupted, and those that are doing the disruption. However, to assist societies, institutions, governments and businesses to be better able to adjust to, mitigate or even lead technological disruption this simple description is not useful.
Everything should be made as simple as possible, but no simplerAlbert Einstein
Closer scrutiny of any technological disruption reveals many more actor groups that are both directly and indirectly involved in technological disruption. The more you dig, the messier the picture becomes. There are four groups that quickly spring to mind: you will probably be able to think of more if you focus on a technological disruption about which you have more detail.
- On the technology supply side, there are many concurrent contests where promoters and early adopters of new technologies are trying to gain a foothold in technology markets by achieving a viable scale. If an existing technology market is too firmly established (or protected), then an alternative technology market may emerge. Over time, this new technology market may disrupt the incumbent technology market, leading to further disruptions in many other related markets downstream. However, Clayton Christensen made us aware that in many cases incumbents are able to quickly learn from new disrupters, and they are often able to use their scale and operations to adapt quickly to their operations, and so beating the new challengers. It is only in rare instances that a new technology disrupter manages to unseat an incumbent, but there are many celebrated examples where this has happened.
- On the demand side, there are those who are disrupted when their suppliers, clients, employers or regulators select one technology over another. Markets and actors are disrupted by other markets and actors that they are dependent on. Users of technologies may have to master new skills to continue performing certain functions. To replace an older technology with newer technology may also involve investing in and mastering a whole range of other technologies. Occasionally an incumbent could even be disrupted by its own technology development. Remember the story of Kodak and the development of digital camera technology? Another more recent example is Apple’s iPad technology that disrupted its own computer technologies, but at least Apple has since adapted and even thrived. There are many examples out there with happy and sad endings.
- Occasionally, an incumbent could even be disrupted by its own technology development. Remember the story of Kodak and the development of digital camera technology? Another more recent example is Apple and the iPad technology that disrupted its own computer technologies, but at least they have since adapted and even thrived. There are many examples out there with happy and sad endings…
- Wherever markets are forming, changing and disappearing, a range of market-enabling and market-supporting institutions are affected. These institutions could be in either the public or the private sector, or in some hybrid form. An institution could be in the form of a combination of formal rules and informal norms as well as regulations, or it could be in the form of organisations. Whenever a new technology market emerges, it challenges the incumbent market and supporting institutional arrangements. Think of how the formal hospitality market is challenged by the emergence of homestay holidays and the ease with which a property owner can now rent out a property online. This has consequences for existing providers of hospitality, for regulators, for local authorities, other property owners affected by these transactions, and also for buyers of the new hospitality services. The implication is that the speed with which a country can create, adjust and adapt its market-supporting institutions will have a direct bearing on the pace and the effect of how disruptive the new technology may be, and how equal and fair the uptake of the new technology will be. It is very hard to add new market regulations and rules after technology has already become widely adopted.
When considering disruption, it is useful to think a bit further than the disrupted and the disruptor. We have to consider the networks that these two groups form part of, but we must also think of the social institutions and market-supporting organisations that enable these technology markets to exist in the first place.
Society bears the costs of late disruption
Attempting to mitigate the risks of any possible disruption may be a nuisance for many businesses that are just trying to cope. However, when many companies or whole industries do not adequately consider potential disruptions, the costs of disruption spread from the shareholders to the broader society. It is therefore important that policy makers, government departments, local governments, industry-representative organisations and labour representatives should also take into consideration technological change and the interdependence between different systems.
In markets where competition is too low, or where the markets are dominated by just a few thought leaders, incumbents may be able to avoid being disrupted in the shorter to the medium-term through their defensive innovation strategies. However, in the longer term, these champions may become more vulnerable to technological disruption. This means that all the other systems are at risk whose success is highly dependent on the success of the leading firms.
It is a bit difficult for policy makers and industry bodies to imagine how disruption can be managed. It may even be necessary for countries and regions to intentionally disrupt their own industries and local social arrangements, as I heard they do in Singapore. I was told that the logic of purposefully introducing disruptions is that having more frequent small disruptions is better than losing big battles against global competitors already operating at scale.
Over my 25 years of working experience, I have worked with disruptions in many different forms and contexts. To me, disruption is not an abstract term. Sometimes it is about being optimistic, trying to introduce a change. Other times it was about pain, trying to find a way out of a mess. I have worked with governments and industry bodies that were trying to find ways to resist disruption, or that were desperate to figure out how to catch up after being left behind. I supported innovative teams to use the logic of disruption to explore how they could break into or gain a foothold in an established market. I have experienced the desperation of stakeholders in regions where key industries have been disrupted, where those that have remained behind are struggling to reignite a depressed economy. I have also worked with technology extension programmes that were trying to introduce (disrupt) new technologies into existing markets. These experiences all exposed me to different practical challenges of disruption, being disrupted, disrupting others and trying to resist disruption. I am sharing these experiences because disruption is a very different experience based on who you are and what you are trying to achieve.