Innovating in all the wrong places? Look for social disruption

David Nichols
David Nichols,
EY Americas Advisory Innovation & Alliances Leader

In today’s world, it’s easy to become distracted by the “shiny new thing” — chasing the newest emerging technology. We do not believe this is the source of the innovative disruption that our businesses desperately need. A “me too” strategy, and the overwhelming desire to “do something soon,” often leads to limited competitive advantage. While technology trends may catch our attention, the probability of creating true business disruption with this focus alone is very low.

There is a better way to focus innovation attention in order to increase this probability. There is a better way to improve the likelihood of arriving at the right place, at the right time, and capitalizing on highly-innovatively, disruptive ideas.

Enter … social disruption

Enterprises look at innovation to grow, protect and optimize their business. Some pursue innovation as a competitive advantage, while others are innovating to stave off their own demise. The challenging questions are — what really drives disruption, and where should businesses focus?

There are some universally recognized trends that leverage technology to disrupt. These include an aging population, a millennial-dominated workforce, urbanization, migration and immigration. However, these trends are not a direct result of disruptive technology. Alternatively, the most disruptive changes we have experienced of late were enabled by older and sometimes mature technologies. Businesses looking to drive disruption are best served not by focusing on technology alone, but rather looking for opportunities at the intersection of social change and technology.

We call this social disruption. From a business innovation standpoint, social disruption can be defined as the broad displacement of traditional business models with new ones, driven by societal change and enabled by technological capabilities.

The dot connectors: 3+1

For social disruption to occur, three fundamental components must converge: societal trends, new business models and enabling technology, prioritized in that order. However, having these three items come together alone is not enough to drive social disruption. The catalyst that enables it all is timing. The challenge is connecting these disparate dots at the right time.

Through examining recent disruption, this concept becomes clear — take for example cloud computing. Cloud technology has been around for decades, but for most, “the cloud” has only become mainstream in the last seven to eight years. Many 90s email providers were cloud based; so why didn’t adoption take off until the late 2000s? By applying the 3+1 filter to the cloud, it’s easily understood:

  1. Societal trends (check): In the 90s, the internet was new. The portal to the internet was web browsers. The PC market exploded and getting connected to the internet was the societal trend.
  2. New business models (check): E-commerce was surging and new business models were prevalent. Online retailing was driving the dot-com explosion.
  3. Enabling technology (red ex): Broadband in the 90s was slow. Internet access required a wired connection for any reasonably performing connection. Combine this with expensive and non-intuitive mobile devices.

In the mid-2000s, internet became fast enough for mobile connection to the internet. This prompted emergence of new cloud business models enabled by mobile computing at a price point for mainstream consumption.

A more recent example is in the rise of chatbots. While SMS technology has been around for decades, the messaging age — where consumers demand to interact, transact and acquire service via messaging — has provided fertile ground for chatbots to emerge.

Social disruption is reshaping the world all around us. See below how a few notable industries are transforming as we speak:

 

And the winner is: social disruption

While the above examples are recent, social disruption is not a new concept. Disruption has a long history of being closely linked to human progress and societal patterns. Apply the 3+1 filter to the telephone, automobiles, air travel or tablets. The technology existed long before their respective markets were disrupted. Society determines disruption, not technology.

Visionaries like Henry Ford or Steve Jobs may be the rare innovation geniuses — but at their core they were very good businessmen. They knew that technology alone would not be enough to disrupt. They did not think like yesterday’s consumer, they thought like tomorrow’s. They harnessed a deep understanding of the connectedness between marketplace trends, evolving social needs and wants of their customer base and developed new business models and products supported by technology.

As we look to the future, there is little doubt that emerging technologies such as AI, 3-D printing, blockchain and IoT will enable disruption in the years to come. However, consumer preferences are constantly evolving and shaping the world around us. Businesses looking for the best probability of innovation success should focus on connecting the dots of social trends, new business models and enabling technology — because companies focused on the wrong places will be challenged to find the disruption they need to solidify their future relevance.

Legal disclaimer: The views expressed are those of the author only and do not represent the views of any of the member firms of Ernst & Young Global Limited.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s