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Don’t Get Too Carried Away With Disruption

Beware of false equivalence

1Jun

When an idea is repeated so much that it becomes a buzzword, people often stop thinking about what it actually means. When the notion of ‘disruptive innovation’ hit the scene in the late 1990s, coined as such by professor Clayton Christensen, then of the Harvard Business School, it meant just that. Large, entrenched incumbents could have their position as leaders disturbed by smaller companies offering a better, or cheaper, solution.

Then, when digital development brought about opportunities for companies like Uber and Netflix, the word became can unavoidable part of the startup culture’s lexicon, and a central pillar of its ethos. Movie rental did lose out to subscription packages, location services and mass driver on-boarding did make taxicab travel more affordable and more convenient, and some high street shops have closed because Amazon can deliver the same products on the same day as the order.

It’s these examples that you see flying around LinkedIn packaged as a tidy meme, shared by hundreds of would-be innovators trying to appear as though they are right on the button. They will list the ‘dead’ companies in the taxi cab, hotel, retail, and rental industries, while holding up the current incumbents as icons of disruption.

The problem with all this is that to focus on disruption too heavily is to ignore the other fundamental reasons for the successes and failures of certain businesses. Take Blockbuster, for example. You can just as easily argue that its commitment to costly real estate options was just as damaging as the late fees (which Netflix so famously exploited). There is a certain amount of false equivalency present in far too many conversations around disruptive innovations and the subsequent toppling of giants.

They also greatly exaggerate the effect of innovative challengers on the industries they enter. When Airbnb burst onto the scene, the idea that the plucky startup was beating the hotel industry at its own game was a popular narrative. But the hotel industry is in no immediate danger at all; Marriott/Starwood announced an incredibly strong first quarter revenue while adding some 17,183 rooms to its portfolio. The growth of Airbnb has very little bearing on the success of the hotel industry’s major incumbents. Simply, booking a listing from Airbnb is a different experience altogether from renting a hotel room, and in terms of active listings that actually compare with hotels - private accommodation available year-round - Airbnb is somewhere between Marriott/Starwood and Hilton in terms of overall rooms available.

The same level of scrutiny should be applied to all claims that disruption has slain an industry giant. The music industry is in far less a position of peril as many may think. Physical records and CDs were always just a conveyance rather than a product and, though album sales are down, revenue from touring is alive and well thanks to the reach offered by digital sales and streaming. Yes, new entries into these markets are wildly successful and will continue to be so, but they more often than not sit alongside major incumbents, rather than in their place.

Not only this, but disruption as a business model isn’t perhaps as healthy as some might think. Take Uber, for example. For all of the ride hailing app’s cutthroat success, the company’s problems are beginning to catch up with it. Low wages are upsetting workers, aggressive expansion is alienating various governmental bodies, it’s hemorrhaging cash as a result of its low fares, and its internal culture is being widely lambasted. Most, if not all, of these problems can be traced back to a culture that overvalues growth and getting ahead at all costs.

The Washington Post’s Christian Caryl referred to disruption as the ‘linguistic equivalent of a real estate bubble.’ The obsession with, and perceived infallibility of, ‘disruptive’ young companies may actually be damaging progress and creating rocky, unstable giants like Uber. As put by the Guardian, ‘this [buzzword] has little other than chest-thumping left’. Perhaps we should look more at the young tech workers left jobless when a company folds after an unsuccessful attempt at ‘disruption,’ or the taxi drivers struggling to make money up against Uber’s similarly profitless bargain fares. Disruption has been wildly overblown - let’s not get carried away. 

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