Disruption

The Social Age is the term I use to describe our ecosystem and reality: it relates to a broad swathe of changes - some technological, some social - that together provide a new context to which we must adapt.

Our Organisations (as well as our broader systems of government, governance, security, and eduction) inhabit this landscape, and hence as it changes, they come under an environmental pressure to change.

But not in one direction or dimension.

The Social Age is a collective term for a broad array of features, from our Radical Connectivity and rebalancing of power, through to the rise of Social Authority and prevalence of Community and hence requires a broad pattern of adaptation if we wish to avoid disruption.

But what, exactly, is disruption?

In legacy terms we built Organisations that were optimised to compete within clear domains: bank against bank, car maker against car maker, university against university. The weapons in this war were innovation (to create new products or services), talent (to set strategy and execute every aspect of our operations effectively), and optimisation (to streamline for speed and cost, to hollow out and optimise, to make maximally efficient). If you had the best people, created compelling new products, and were able to extract ever more profit, whilst maintaining quality and speed, you would win.

But has the nature of disruption changed?

Asymmetric disruption occurs when a large incumbent is disrupted by a much smaller entity, but it may not be the whole of their business model that is disturbed.

We’ve seen this in financial services, where startups like Revolut or Zepz have focussed on helping migrants to move money - a narrow use case - or with payment processing - where the value chain of the legacy banks is stretched out, and the competitor takes a small bite out of it. The question may be, is it the tasty bite?

Whilst our larger and legacy Organisations may carry out a wide range of activities, or have broad portfolios, most likely only parts of that portfolio generate the most profit. Some things they need to do for credibility, or for regulatory reasons, or simply they do because they have always done so. Emergent competitors may not be constrained in the same way. And indeed, may not come from the same industry. It may be a technology startup challenging an established bank, not simply a small new bank.

And to disrupt, we may not need to offer a fully developed product or service: we may simply fracture the legacy belief in the older entity, or we may offer something more experiential than utilitarian.

The people selling wonky vegetables delivered to your door in straw packed boxes, for far more money than it would cost at the Supermarket, are winning because your subscription buys you an aspect of identity as well as the ingredients for a warming soup.

Distributed infrastructure on demand, ease of raising finance as well as crowdsourcing models, the social media led brand power, and the offer of experience, optimised by AI, mean that they can replicate the dream of the farm shop at industrial scale, and in doing so - and by using vegetables rejected by the supermarkets - they disrupt.

Incumbency proclaims certain benefits: it can be just too difficult for start ups to compete. Even very very clever and wealthy ones. Apple spent ten years attempting to build an electric car, and Dyson spent billions trying to do the same thing, neither with any apparent success. Not that they could not build a vehicle - I bet they had some spectacular vehicles - but rather because to become a whole new car maker is a phenomenally complicated process, with supply chains build and reinforced over generations, and with politics and loyalty working against you.

So if you want to disrupt, you may need to create a new paradigm, like the smart phone, or to find a value chain that can be stretched and bitten into, by offering something more immediate, personal, experiential, convenient, trusted, or believed. In the Social Age, our decisions may relate more to identity and belief than direct utility and convenience. Indeed: we may be willing, keen even, to accept less utility at greater cost, if it reinforces our desired identity. Just ask everyone buying vinyl records.

You can find my daily writing on the blog at julianstodd.wordpress.com