No business – no matter how large or seemingly entrenched – is immune to disruption. In fact, your company is probably already being disrupted, though you may not realize it. And a parallel thought is rightly becoming pervasive: “If you don’t disrupt yourself, someone else will do it for you!”
The reality of “adapt or die” is constantly front-and-center, as waves of new technologies, business models and services impact our lives in ever greater dimensions.
While awareness of this reality is increasing, the fact is that very few companies ever truly disrupt themselves. And the relative few that do normally target adjacent markets – not their own. Some recent high profile examples of such “adjacent disruption” include Tesla with its acquisition of Solar City and its ambitions in energy storage; Netflix and its move towards original content production; Uber taking on food delivery; and, of course, Google expanding from a search engine to driverless cars (among many other potential new businesses it is exploring). As significant as these efforts might be, you could perhaps classify them as lower-risk disruption, as they are not replacements to a core business. They are instead generally product extensions built on the back of established credibility.
Disruption, of course, is hardly a new phenomenon. Today it is too often associated with any innovation, no matter how small, but it is real. Many fundamental changes in our world can be traced back to truly disruptive ‘leap’ inventions that make the aforementioned ‘adjacents’ look relatively modest. These include, among others, the telegraph and telephone, antibiotics, the light bulb and electricity. Such fundamental inventions created massive dislocations of existing approaches and industries and, in many cases, gave rise to new industries with entirely new business models.
Today, this pattern of a technology innovation disrupting an industry and then enabling a new business model is gathering momentum. Typically, the headline technological advancement itself, or its initial manifestation, receives much of the attention. However, it is the application of the technology and the resulting business model disruption that is generally in the end the most impactful.
The convergence of the internet with the virtualization of computing power and storage, plus open source software, is creating a “utility platform” that can facilitate rapid disruption of a wide range of established business models. The emerging terminology for this is ‘platform disruption,’ and it is enabled by the hyper-connected, app-driven, data analytic, always-on world in which we operate. The underpinning of this platform is connectivity – essentially now the mobile internet, which provides a close to zero-marginal-cost model, where virtually unlimited content can be delivered to mass users without significant incremental cost to the content originator.
This platform disruption considerably lowers barriers to entry in industry after industry, and enables software-driven, ultra-efficient supply and demand synchronization. Because of that, many recent business model disruptions have been accomplished on top of these platforms. The result is a paradigm of rapid innovation and hybrid business models that enables powerful new trends such as the sharing economy, collaborative consumption, and what in many cases can be called “pay to access,” where the value chain is effectively collapsed into a thin layer that essentially matches sellers to buyers.
There are many companies leveraging this platform approach to create new business models. Uber, for instance, combined openly-available GPS technologies with several open source software APIs from Google to develop a mobile app that changed the model for personal transport. Other similar disruptors include Airbnb for lodging, Apple and Spotify in music, Amazon for books, E-Bay and Alibaba for retail, and LinkedIn for recruiting.
These businesses were born by harnessing the power of connectivity, open source software and the virtualization of computing. The combination of those things greatly increases the velocity of disruption by enabling non-linear attacks on markets and highly efficient access to communities of buyers and sellers.
My company, Ciena, provides much of the infrastructure technology to build the networks for the internet and mobile connectivity. We originally came to market by disrupting how fiber optic network circuits were provisioned. We designed technology that could in effect deliver multiple virtual fibers down a single circuit. Since then, we have further disrupted ourselves in how we deliver this capability, as value shifts from hardware to software, reducing costs faster than Moore’s law has done in computing. All of this has helped enable the digital revolution, and put us fimly into the next wave of networking industry evolution.
In the next phase of the digital revolution, the concept of the platform will be even further accelerated and expanded. Among the emerging forces: a mobile connected planet, the Internet of Sensors, cloud as a service, artificial intelligence, 3D printing, energy storage, Next Generation Genomics (which weds sequencing with advanced computation and analytics), renewable energy, and robotics, among others. Together, these have the potential to enhance existing platform capabilities exponentially and generate even more fundamentally impactful and dislocating business model opportunities across industries.
So embrace disruption. The velocity of change is about to go to hyper speed. As a result the dynamic of winners and losers will be in constant flux. Even the disrupters will be disrupted!
Gary Smith has served as CEO of networking company Ciena for over fifteen years. He is a member of President Obama’s National Security Telecommunications Advisory Committee, and serves on the board of directors for Avaya Inc. and CommVault Systems, Inc.
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