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L4: Disruptive Innovation (Powershift from centralised to distributed…
L4: Disruptive Innovation
Technology as accelerator
Internet has removed customer barriers such as finding alternative suppliers
Oligopolies have not focused on delighting their customers
Expensive intermediaries have been undermined by digital alternatives
Greater risk-taking of investors in a low growth global economy
Disruption is not a recent phenomenon, remember first world war (1914), telephone, motor car, commercial air travel, nuclear weapons, computer...
Powershift from centralised to distributed
Print Encyclopedia vs. Wikipedia
Terrestrial Television vs. Youtube
Cinema vs. Netflix
Hotels vs. Peer-Hosted (Airbnb)
Car ownership vs. car sharing
VC (?) funding vs. crowdfunding
Leading authority on defining disruption is Clayton Christensen
Christensen's findings
Rather focus on 'higher end' consumer and miss out on 'bottom of the pyramid'
Disruptive businesses often target 'BoP' segment and accept first lower margins
Large firms often innovate ahead of customer's needs
Today
Disruption occurs faster than ever before
Disruptors often acquired by larger firms
Many such acquisitions fail due to misalignment of goals, working culture, personal clashes etc.
Important considerations
Difficult to distinguish potential startups from hype
Most start-ups do not achieve critical mass
Real risk to incumbents is when customer pain point is addressed
Case Study: Disruption of the property market
Customer journey mapping
Rentify, landlords, renters,foxton (high-end letting agent)
Needs reading!
Classifying disruptive innovators
Visionary Sustainers
Tesla, McDonalds, Google
P&G responding to Harry's and Dollar Shave Club by founding Gillette Shave Club
Facebook: Acquired 65 companies for 23.1 billion dollars between 2005 and 2016.
Fast Followers
Unilever is fast follower by acquiring Dollarshaveclub.com
Zara brings the lates fashions to market rapidly. Total sales increased to 23 billion euros in 2016
Niche Players
Typically 'lifestyle businesses', complementary to existing consumer propositions
Oftentimes bought out by competitors
Most sharing economy ideas such as walkmydog.co.uk
Disruptive Challengers
Thermondo: reducing the cost of installation
Revolutionising end-to-end home heating services
Algorithm provides superb rates in real time for gas, oil, solar heating
90% of customers benefit from incentives and grants
Average savings 2000 euros for installation and 30% on gas bills
Failed disruptors
Theranos (biotech) under investigation of FDA
Clinkle (mobile payments)
Avoiders: E.g. Blackberry