Welcome to the Age of Digital Disruption

Disruption” consists in introducing a new way of doing something that has not been done before. If a “disruption” is successful, not only does it change the way something is done, but its secondary effects can also cause changes in other related activities and even give rise to new activities that were not previously possible.

“Disruption” literally means: “To prevent something, especially a system, process, or event, from continuing as usual or as expected”.

But there is nothing new about disruptions. An historical disruption was…the wheel. People carried things before it appeared, but there is obviously a before and after. What makes this era different is that the disruption is digital.

Let’s look at a practical example: Uber and Cabify. We all know how they are directly affecting the taxi business. However, it is not so easy to perceive how their different way of doing something affects other activities. Let’s look at the case of the San Francisco Airport.

The people in charge of the Airport needed to control taxis for security reasons, as well as to charge them for entering their property. So, they installed transponders in all “official” taxis that “notified” them when the taxi was on Airport property.

When Uber came on the scene, the story changed. They couldn’t carry a transponder, because they are private vehicles. The Airport had to think of something else or their security/business would be in jeopardy. A disruption (Uber) resulted in the need for another disruption (Airport). How? With an ingenious idea. Knowing that all Uber users must have a GPS connection to be located by potential clients, the Airport authorities created a system called “geo-fence” or a digital border around the airport and Ubers were reported by their GPS  every time they crossed the fence. This “geo-fence” technology, in one way or another, is what social networks like Twitter use to show “trending topics” in a chosen geographical area, or by Google when it reports on traffic in a specific place in real time.

As you can see, a disruption not only changes an industry, but also creates waves, just like a stone thrown into a lake, that can change other industries even though they are not directly related. The greater the disruption, the further the waves of change will travel.

The concept of digital disruption conceals two weapons with the greatest power of disruption ever seen by mankind: the speed of change and the capacity of growth or scalability.

Speed of change. One way of viewing the speed of change is through its effects. If we open the Forbes page, we can read the typical quote of the day: “Be disruptive and think big. If you don’t, you will fail”. Let’s think about how long it takes to become big. Today, we call companies that exceed a value of 1,000 million dollars (“1 billion dollars”) Unicorns. It used to take decades, but today, companies can rapidly become Unicorns in only months. Jet.com did it in four months, back in 2015. Rapid is understood as less than two years. Xiaomi did it, Snapchat took a bit longer, as did Facebook and WhatsApp.

Companies 2

Scalability. Digital disruption is global. You only have to look at the worldwide distribution of Unicorns. By the way, Europe looks like a wasteland. We live in an era of digital disruption. That’s obvious. The recent Barcelona WMC confirmed it in the world of communications technology, there is nothing essentially new, other than disruptive ideas. We have already been witness to the first 5G calls. What does this mean? Speed and the absence of latencies. Speed in how long it takes to download a 1 GB file (e.g. a movie in HD). One second! Latency is how long it takes for a data package to travel from one place to another, in network terms, how long information takes to travel from the sender to the receiver and back. If this time is minimal, we could have surgical operations from thousands of kilometers away or see the arrival of autonomous cars.

Recognition of a digital disruption is essential. Separating the wheat from the chaff is an art. It means differentiating between a “disruption” and a “fad”. Google Glass and Pokemon Go would be “fads”. The famous tablets, either in an iPad or Android version, would be disruptions. They changed their own market, as well as others (desktop PCs, laptop computers, development of applications, etc.) and, especially, the way people interact with technology, creating an entire ecosystem that did not previously exist.

This is precisely the difference between a “disruption” and a “fad”. While a disruption completely changes its market and even others at a given time, a fad does not. Another example would be Netflix, which is to the audiovisual industry what digital television meant to analogical TV. And there is another one on the way in the world of betting. On-line betting did away with the pools. Now we have the so-called “super-live-bets” which will apparently do away with on-line betting. Super-live-bets are bets (of money or not) in real time on what is happening in a football match, for example. Imagine a corner kick. Will it result in a goal or not? A set piece. Will it be a goal or not?; an offensive move, a shot at goal or not?, etc. Although it is difficult to see the relationship, some of the algorithms behind “super-live-bets” come from detecting where a launched missile is going to land. The wonders of disruptive synergies.

Unicorns

In this new era, we will have two groups: the creators and the implementers. Not everyone will be able to create a disruption, but wherever creators are promoted, there will be direct sources of wealth, as we are witnessing with the distribution of Unicorns on a global level. The implementers will also be important. Jumping on the bandwagon as quickly as possible and picking the winner, in other words, separating “disruptions” from “fads”, is almost as important as creating the disruption itself. The applications developed thanks to digital disruptions generate healthy profits for those that are able to observe and apply them.

And one last thought. There will be no room for those that stand back thinking that it has nothing to do with them and is just a passing trend. According to a certain McKinsey report, “grow quickly or die slowly”. Those that look back will be turned into salt. Instantly.

Francisco Canos

English version of original Article in Spanish, translated by Jeff Callow.

Article published on March 4, 2018 in:

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