Combatting the gentrification of disruption

April 6, 2016 Christian Lanng

Disruption

The “D”-word is on everyone’s mind–from Fortune 1000 CEOs to Silicon Valley VCs. Some are scared of it. Some want more of it. But we all know it’s out there. I’m talking of course about disruption.

I’m not here to banter about its origins or who fits neatly into the box (if you don’t think Uber is genuinely disruptive, try going back to hailing cabs from the corner). Instead, let’s talk about an issue that threatens every market leader – the rising gentrification of disruption.

The Danger of Co-opting the Disruption Story

If you follow companies like SAP or IBM, you’ll see them co-opting the disruption story and applying it to their own products. This is not genuine. It’s lip service, safe packaging to gloss over the uncomfortable fact that aging technology companies are losing market share to a rising generation of cloud-born, future-ready technology start-ups.

Older, established companies can innovate–and many do, otherwise they’d cease to exist–but most struggle to harness the power of Moore’s Law and the resulting exponential opportunities. Despite slick advertising, it’s more likely they’ll be victims of disruption than administrators of it.

It’s not a matter of chalking it up to marketing spin. It’s dangerous, plain and simple.

Big companies are saying: “Have disruption problems? Just buy our rebranded, legacy software and you’ll be safe.” There is a perfect storm of change happening and they’re sitting here tweaking things 5%. It’s like rearranging the deck chairs on the Titanic minutes before it sunk.

Rehashing What’s Old to “Invent” What’s New

Modern companies need to move from efficiency to responsiveness and agility to survive. Command-and-control will have a very hard time fighting against someone who can make decisions in real time. Fortune 1000 companies are setting themselves up for rapid decline if they take this bait.

IBM’s Watson is not disruptive AI, it’s a rehash of simple algorithms known since the eighties -– and stuff like Deep Mind from Google, Scaled Inference, and Vicarious are leaving it in the dust. SAP HANA is not a breath-taking leap forward, it’s simply recycled database concepts lifted from previous players.

By continuing to operate under the assumption the biggest multi-national corporations are on the cutting edge of disruption, we’re playing chicken with real opportunity and we risk missing out on not acting on the innovative technologies smaller players are bringing to the table.

Startups Will Phase Out Incumbents

Business continues to move faster and faster and incumbent players need to invest in agility before all else. Rooting that agility into global supply chains and corporate buying may not come to mind first, but this is exactly the focal point for rapid change and market response.

A good example is Dollar Shave Club, a disruptor that’s gone from non-existent to the foremost online seller – and second overall seller – of razor blades in the US. They accomplished this with a launch they produced in one day for $4,500. The industry leader took 24 months to respond to this emerging competitive threat.

This wasn’t as much a business intelligence blunder as it was one of production and strategy. Incumbents like Gillette and Schick simply weren’t agile enough to respond in time. Their supply chains weren’t geared to bringing a new product to market quickly in response to a threat or liberating suppliers to scale rapidly.

Consider that Silicon Valley funded $50 billion in startups last year. That’s $50 billion in new competition. It simply isn’t an option for incumbents to be static. How will these new players impact your industry? What have you done to enable your employees to be agile?

The turnover at the top echelons of business has been remarkable over the past decade. In another ten years, I wouldn’t be surprised if many of the biggest market caps in the world belonged to companies considered flash-in-the-pans or nagging threats today–the disruptors.

How much money will be wasted on outdated technologies before everyone recognizes their futility?

It isn’t only business that will suffer. There’s a dramatic cost to not getting the right technologies to areas ripe for improvement–education, government, the corporate work environment, the list goes on. Now is the moment for truly disruptive start-ups. There is a tidal wave of change coming and no amount of antiquated rhetoric can stop it. I encourage you to join me in embracing and shaping this future.

About the Author

Christian Lanng

Christian is the CEO and Co-founder of Tradeshift. Christian started his first technology company at age 19 and was the youngest Head of Division in the Danish Government, National IT and Telecom Agency. Christian is a recognized thought leader and Fortune 500 advisor, as well as a member of the Global Agenda Council on the Future of IT Software and Services, World Economic Forum. He frequently keynotes conferences on topics such as digital disruption and business agility, and supply chain sustainability.

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