“Real disruption” vs. alibi upheaval

In many conversations with people who bring new technologies into business and people who make decisions in traditional businesses, I often hear that disruption in markets is taking business away from existing players. That sounds so simple. But it’s not.

(Reading time: 4 minutes)

Real disruption vs. token disruption

If we take a closer look at industries that have recently come under pressure from new players, we can see that the rapid upheaval often has various causes. I differentiate between genuine, technology-driven upheaval and so-called alibi upheaval.

The alibi upheaval: lethargy through saturation

In my view, tokenism is by far the most widespread process. It arises because existing conventional players are pursuing a course of saturation. In other words, they are sluggishly pushing ahead with the further development of their business. Quite simply because the companies are doing well and are therefore becoming careless. New players on the market see this as an opportunity. An opportunity to be faster on the market, to produce better and cheaper and – what is often easiest – to deal with customers faster and better.

You simply do something that is common practice in the market, better, cheaper or faster. This is threatening for the established companies, but not really a major challenge. The big challenge for these companies is to leave their comfort zone. However, they often lack the corporate culture to be able to move in this way.

A good example of token disruption is e-commerce. At the end of the day, e-commerce is still trade, brokerage and commission. The reason why we are seeing very successful new online providers is that the traditional players overslept the development and reacted too late. The upheaval is largely due to this circumstance.

Characteristic of such upheavals is that the market per se remains the same, but the channels, for example, change.

“Real disruption”: technologies are changing existing business models and markets

Real disruption, on the other hand, is due to the fact that a new (or existing) provider can completely change the rules of the existing business with the help of a new technology. The traditional market typically disappears completely and the problem that the market previously solved for customers is now solved in a completely different way.

A good example of this could be the market for individual mobility. While electromobility is simply replacing one technology with another as a token change, the market for passenger cars is likely to disappear almost completely as a result of autonomous driving technology. Another good example is the music industry. The introduction of legal digital music has not only changed the distribution channels, but also the entire market and the way music is consumed.

In the case of fundamental, technologically induced upheavals, the game is not won, but the rules of the game are changed in order to be able to play a pioneering role in the new game.