Digital Transformation using Disruptive Technologies: Business Models with Short-Term Big Bangs or Here to Stay?
Katina Michael and Shahriar Akter
Disruptive technology is restructuring business models across the world. Where once creative instincts drove content creation in the television industry, streaming services like Netflix use data instead. Amazon uses recommendation systems to suggest a customer’s next purchase. Social media connects us globally in ways that were unthought of at the dawn of the century.
But what makes technology “disruptive”? Is it because it is so different to what came before? Is it because it signals the death of previous technology? Or is the socio-economic impact on business, workers and consumers?
Ultimately, all disruption means change. Those who can harness change quickly can reap significant benefits.
In recent years, the internet and mobile solutions have been drivers of change but the new gig economy shakes up and displaces traditional services using regulation and advanced solutions in “ABCD technologies” - artificial intelligence, blockchain, cloud and data analytics. While new product innovations, form factors and materials are still being conceived, the real impacts have been through platform revolutions using disruptive ABCD technologies.
Tom Goodwin (2015) describes this as an ecosystem of platform innovations, in which “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
When Frederick Emery and Eric Trist (1965) introduced “turbulent environment”, Clayton Christensen (1995) conceptualised disruptive innovation, Michael Tushman and Charles O’Reilly (1996) presented organisational ambidexterity and David Teece and his colleagues (1997) identified dynamic capability in organisational theory, even they could not have envisioned the turbulence of business in the 21st Century.
Businesses, even those thriving in the mega ICT economy, cannot determine with certainty how markets may respond to the latest innovations and where they might be in 10 years’ time.
Anything classified as a disruptive technology must have a significant impact on either consumer or business processes that is measurable, whether it is in units sold, the impact on existing businesses, or the complete replacement of products. In this context, management guru Peter Drucker rightly commented: “You can't manage what you can't measure.”
Digital transformation paves the path for digital disruption which endeavours to transform established manual processes to a semi-automated or fully-automated process. It is the classic “self-service” model with an emphasis on data availability at the point of transaction. This is the ideology that has fueled emerging services and new business models. Why pay for a human to read a written document when a computer can do that and with greater competence? Why pay guards to watch closed circuit television (CCTV) when a machine algorithm and high resolution camera, can do the watching and raise alerts for almost nothing?
Today we are simply not taking for granted that a driver will fill their car with petrol, a job once done by an attendant. Instead, we know the driver themselves is likely to be displaced by driverless technology in a world where few people own cars and many never learn to drive.
Future discussions may revolve around phrases like “human in the loop” or “human out of the loop”. Data and communications play an enormous role in these conversations, as it is data that is crowdsourced from citizens, or scraped from the web, or shared between third parties that is the real game-changer of future customisation.
Disruption is ground-breaking, responsible for creating new industries whether it’s a financial service that foregoes the title of “bank” but maintains some stored value on the internet; or new approaches to machine learning that allow real-time feedback to humans; or even more personal approaches to smart ordering at fast food chains.
But is all disruption positive? Does one advocate for continual disruption or should disruptive technology be an unexpected desirable outcome but not a philosophical strategic approach to business? If everyone sought disruption as a means to success we could say there would be some big winners and a lot of unhappy major losers. How much change can an end-user sustain before the change becomes counterproductive? In essence perhaps we are asking if the steady stream of disruptive technologies as a business model are sustainable and how might this affect consumer loyalty and even financial investment in new technologies?
The dot.com crash of the late 90s seems to have been largely forgotten but some of the world’s largest brands have begun to diversify in anticipation of unforeseen offerings and indirect competitive advantage. Is it possible that disruptive technologies can be too disruptive? That too much change, in too short a time, can cause chaos and have unintended consequences on a range of stakeholders? Some have described this effect as a series of short-term big bangs.
The innovation process itself may well require a major overhaul as regulators try to keep pace with change they cannot control. Yet it may be this undocumented process which allows certain economies of scale to affect change in developing nations, ensuring the achievement of sustainable development goals.
Rapid prototyping and agile organisational structures may also be the very reason smaller players located in remote geographic regions can have a global impact. For example, Grameen Shakti a renewable energy company in Bangladesh has established 100,000 solar panel systems for poor communities since 2006. Most villages in Bangladesh cannot access the national energy grid and the traditional sources of electrical power contribute significantly to climate change with terrible consequences Bangladesh is already facing.
Using solar technology and employing the local people in each community, the firm is now offering renewable electricity to millions of homes. Grameen Shakti is an example of a remarkable disruptive social business model of the three zeros: zero poverty, zero unemployment and zero carbon.
What is important in this process of digital transformation using disruptive technologies is that we reap the benefits of very smart ways of working and living and being, without the commensurate risks, that may eventuate in the customer being productised or commoditised. How can we continue to disrupt in healthy ways that emphasise the importance of focusing on the public interest, and without losing sight of our original intent. There is a lot of money to be made, no doubt, but it should not be at the expense of our humanity.
Digital transformation is essential today for any economy to thrive. Governments are taking the challenge to transform with mixed results. Essential to this practice is meeting sustainable development goals, ensuring privacy and security by design, to grant citizenry enough trust in business and government, in that technology will be used in a way that will be beneficial to society at large.
Citation: Katina Michael and Shahriar Akter, 11 December 2018, “Digital Transformation using Disruptive Technologies: Business Models with Short-Term Big Bangs or Here to Stay?”, UOW Alumni.