The siren song of disruptive innovation
Musings about the dark side of disruptive innovation
A few days ago we had a spirited discussion how a particular organisation is heralding disruptive innovation and will change the lives of all the citizens. The discussion was about the percevied benefits of a disruptive innovation. The product in play was a high tech product in the internet age. The idea that any disruptive innovation was “cool” and that in effect resulted in “greater benefit to mankind” was an ideology that I couldn't accept so easily. Life, as everything else, is a balance and having disruptive innovation be beneficial is an ideology fraught with cynicism on my part. So I decided to explore the dark side of disruptive innovation and some of the ‘what-ifs’ that are possible.
The first argument that everyone who hears about the next successful internet giant is the fact that they enabled “Ease of use” and increased the consumption of a particular product / service.
Ease of use / increased consumption
The first benefits that was identified were ease of use and ability to get access to large quantities of a product thereby making everyone a strong consumer of the product. The ease of access+ mega consumer is an easy fallacy to understand. In fact ease of access and consumerism go hand in hand and not necessarily a good thing.
This concept is easy to understand in the case of physical products. The manufacture of physical product requires resources. The cost of production is both in terms of raw materials and also in terms of ecological and other factors. To build a large quantity of something so that we can flood one city / state / country to prove the ease of access, the cost of the production should be borne by another city / state /country. We see this pattern being repeated time and again in the manufacturing industry where low cost locations bear the brunt in the form of environmental impact and unfair labour for producing large quantities of the product. These are long term impacts though and typically in the short term the siren call would be job creation, boost in economy, boost in foriegn exchange reserves and so on.
Now in the case of non-physical products such as services, digital products, the challenge are a bit different. Here the impacted party tends to be the recipient of the services. As the famous adage goes, ‘if you are not paying for the product, you are the product’. This quote surprisingly is from the 1970s and not the modern mantra as it is quoted by the neo-strategiests. By offering more for less (or mostly free), we end up paying for it in other ways — a prime example being data about ourselves that can then be leveraged to create and service more free services in abundance thereby triggering a powerful vicious cycle.
The counter argument that such consumption lifestyle leads to is that “they all start out bad but end up self correcting themselves”. That is heavy consumers who end up developing poor lifestyle habits due to the new found joys in consumption end up eventually self correcting. Unfortunately this adage is always not true and some new challenges exist.
The self correcting fallacy
There is a new word called killfie a concept that never existed over 10 years ago. The question on my mind is
Has the idea become so common place that we now have a term for it?” So what is the next step in the process? make it to the dictionary?
Killfies are a way of life now (pun intended) because another disruptive innovator created a smart phone. One could argue that there could have been other products that could have started this behaviour but that is just substituting one innovation for another. The fact that killfies are here to stay flies right in the face of the self correcting fallacy. Humans will never stop falling off cliffs and ledges anytime soon. There is enough statistical distribution of people who meet the killfie end. So instead of trying to wish for a problem to “go away” we are better off trying to understand how they will change and evolve with time. Our best tool for the job would be data on what has happened to far.
Consider another example. Internet has always been synonymous with ease of access of porn. In the chart below we get a good indication of how each disruptive innovation has changed the porn consumption patterns. Search engines bumped the number to 13% while mobile + search made it 20%. So the proclivity of watching has increased with each disruptive innovation rather than reduced it!
So not all disruptive innovations introduced changes are going to “go away” and there are no self correcting enterprsies. Every disruptive innovation brings in a “new normal” and our ability to understand it and live with it will be the future that we will be subjected.
The great equaliser
The third and powerful argument is that disuptive innovators are great social equalizers. They bring access to the “bottom of the pyramid” who never had access to that product/service are now suddenly empowered by it. So by very definition of this principle, adisruptive innovation is a direct violation of the prime directive.
For the sake of this argument, We will not focus on that fun idea. Rather we will work on a more subtle principle. A disruptive innovation in itself does not create value for all the strata of society. There is definitely one strata of society that will utilise the idea to better / destroy themselves as the case may be but a different strata of society will simply go on with their merry lives as if this innovation never existed! Surprised? Let us think about some practical examples in a few minutes.
Hotmail came up with the idea of free and powerful email client on the web in 1996. This was during a time when email meant logging into a unix system or a desktop email client such as pegasus and it cost a LOT of money. They completely disrupted email users. But the average middle class American citizen was using dail-up modems to connect to the internet was using the internet to access AOL or CompuServe and didnt quite care about email via hotmail. Thus the whole principle that it reached and offered a solution to the larger masses was a bit bogus.
The real kick came about when the larger masses realized that their need to communicate can go beyond @aol.com email addresses and looked for alternatives. So in essence Hotmail did not usher the email revolution but it rather was at the right place at the right time. While one example may not serve as a definitive way of looking at the problem the fact remains that the hotmail, a definite disruptive innovation, did not really reach to bottom of the pyramid. The pyramid rather found a problem they wanted addresses and landed on hotmail.
Going back to the risqué example from earlier argument, watching porn using an internet connection is the last concern for someone who is trying to live on the streets and eke a living out of it. Their concern is survival first before entertainment, that too of a dubious kind.
Bottom of the pyramids have their own real world pressing problems that they need solutions. It is hubris as part of an innovator to think that their new idea will somehow transform the life these people by giving them new form of entertainment or communication or some other such feature.
Unless the disruption is of a ‘horizonal kind’ for example communication that serves a purpose in everyone’s life exists, a disruptive innovation typically serves a certain slice of a pyramid best.
Other parts of the pyramid might find use cases for it that the original disruptor didnt think about and is seredepetiously happy that there is revenue being made at the bottom through a use case that they didn't conceive. This may happen at some point in the future. The product / service was not “designed” with that use case in mind.
But every person deserves the exposure
The other argument offered is that every person deserves an exposure to the disruption and it is up to them to determine if the idea is good or bad for them. This is a argument to make if you are the creator of the disruption (and now a P&L owner) but is this really what the common man needs?
Every modern application today spends a large portion of their budget to make their product have sufficient “hooks” to ensure the user base that they capture are retained for the highest LTV.
Building an application of this nature and then arguing for “let them try and figure it out” is like trying to play a game of chance with a loaded die.
As I mentioned earlier, this is perfectly fine when you own the P&L for the product but this is not ethically the right argument to make when the very products are designed with hooks in place.
If you are truly altrustic in nature about the idea, have some skin in the game! Explain all the places where the hooks exist clearly and tell the users as part of the “exposure” what are the risks associated with it. If they still still around, you have earned both their respect and mine. If they leave you still have my respect.
Conclusion
Before you lay down a boolean fallacy on this article, (if you are not ‘for’ disruptive innovation you should be against it!) This purpose of this article was to explain that there are two sides to a coin. Given that disruptive innovations are “cool” I have not attempted to explore the positive side. There are some amazing treatise on that subject. This is the other side of the coin, that I hope will make the reader see it in a balanced way.
