“Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors
As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market.
Companies pursue these “sustaining innovations” at the higher tiers of their markets because this is what has historically helped them succeed: by charging the highest prices to their most demanding and sophisticated customers at the top of the market, companies will achieve the greatest profitability.
However, by doing so, companies unwittingly open the door to “disruptive innovations” at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.
Characteristics of disruptive businesses, at least in their initial stages, can include lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge” (Key Concepts of Clayton Christensen’s theory of disruption, his hypothesis is set out in full in his, and Michael Raynors book \" The Innovator’s Dilemma\". He has other publications built on the same theme but focused on industries such as healthcare and education) http://www.claytonchristensen.com/key-concepts/
The question arises in my mind - how much scientific proof and academic research lies is behind Mr. Christianson’s theory? It is clear from evidence since he wrote the thesis and the book, that not all disrupters succeed and nor do entrants who come in at the lower end of the market, particularly in a saturated market where one option looks just like another and competition at the low end at low margins eventually proves too much of a hurdle.
Tribe mentality and bastardisation
Disruption theory took hold. Typical of those who want to be in the “business tribe” the word entered the lexicon. Instead of representing physical production, and profit, it leached into the technology world to the point that it is now synonymous almost wholly with technology and software trapped in a container called Digital Transformation.
Apart from companies engaged in the field, their employees, and external pundits, the ones who have greatly bastardized the theory without adding any scientific basis are the big management consultancies.
They saw the opportunity to create new divisions of their businesses. They underpinned their strategy using fear – disrupt your existing processes and change or you will die.
Then the politicians jumped on the bandwagon and they too began echoing the mantra-like parrots.
Instead of clarification and order, a cacophony of noise grew so that today it has become unbearable and annoying to many.
Ignoring the rules
The disrupters, largely single-purpose businesses, no longer obeyed the rules and nor did they care for the system.
The FAANGS rose up, straddling the world, and had such a pervasive effect and presence that they could move their IP anywhere to suit their financial goals, effectively avoiding the taxes that others had to pay and not rectifying the damage they cause.
Then came the blockchain Bitcoin fever. The unrealistic belief that a computer token generated by a ragtag bag of programmers and so-called miners could not only challenge the financial system but could eventually overthrow it.
Then others, consistent with Christianson’s proposition, entered the market with their initial coin offerings (ICO) and hundreds emerged. Often, they had no business structure and today many are nothing more than predators with a blog.
Payment system software creators popped up everywhere, all claiming a piece of the action. All are consumed with the belief that everything of the future will be done on a smartphone or a wearable watch or other trinket.
Undercapitalized like so many others start-ups believing that their product is better than any other and the world will embrace them.
The internet of things will not happen particularly in Australia
Simply because there are insufficient resources such as energy, bandwidth, and infrastructure to support it. This is in addition to the risks that connecting everything generates.
Excitement mixed with delusion and ignorance captured people in every sector of the economy and society. Billions poured in from venture capitalists and it spread down the chain until everyday people are betting their savings on speculation, such as Bitcoin or another flavor of the month.
Almost all of the big tech companies and others are massively overvalued and not worth it.
Blockchain will not deliver what the pundits and investors believe
I wonder at the capacity of the people making decisions in banks and stock exchanges to embrace bitcoin, crypto, and finally blockchain.
IBM has a focus on logistics and supply chain for blockchain, it does not appear to believe that there is much more on offer. Cisco will abandon its blockchain laboratory because they probably see no return in the immediate or near future. Blockchain cannot do (at a reasonable price or with any speed) the things that many are predicting
The system adapts, adjust to accommodate or it destroys
Whilst the world stock markets are driven by euphoria, ignorance, and blindness, in many respects, the system that houses the rules and the regulations was slow to react and still is.
The first big entity to feel the teeth of the rules system is Uber. Banned in London and other places its board and managers belatedly realized that they would have to adjust and accommodate their operations within the rules or they would simply be destroyed. Airbnb faces the same lessons.
Now the FAANGS are coming to realise a similar fate and dilemma as they are prosecuted and fined by regulators in multiple countries. Monopolies are only tolerated for so long. They are facing examination by competition regulators across the world.
Crypto is being studied with a glacier-like slowness but the central banks and the world’s banks and financial systems will adapt to it, adjust, acquire perhaps, absorb maybe, or simply kill it
Slogans created in isolation and the cacophony of the internet of things
This is another adoption into the tribal lexicon. Assumptions made without scientific evidence or regard for any external barriers or physical limitations. No realisation that “a vision of all things connected faces far more systemic hurdles than just from the rules system and regulators.
Connectivity crashes headlong into national security. Chinese companies will be barred from participation in technological development in the five eye nations. Yet despite this obvious outcome, I note that Australian companies such as Vodaphone, Optus, and some state government agencies in the transport and energy sectors go ahead as if they are able to override security agency warnings and lobby politicians to allow them to go their merry ways. They will lose their investments in Huawei technology in Australia. The company will be barred from participating in 5G
A perspective of different dimensions and meaning to different countries.
The most powerful of which are the five eyes. USA, Canada, UK, Australia and New Zealand. The nine and fifteen eyes follow along behind.
China’s disrupters and technology companies will not be accommodated as we see in relation to Huawei’s business statement “Building a Better Connected World”, http://www.huawei.com/au/
It is not just Huawei who are pursuing assumptions down a high risk pathway many other big companies are similarly engaged. Those that are domiciled within the five eye nations such as IBM, and in allied nations such as Japan’s Fuitsu, among others will find it an easier and less obstructive path under national security. Though the rules and other issues of security and resource availability will challenge them.
The internet is fragmenting
There is more than one Internet. There are country internets such as China and there are corporate internets. China will not allow connection just as other countries control interconnection.
North Korea, all of the sites and web are under government control.
Burma. Authorities filter e-mails and block access to sites of groups that expose human rights violations or disagree with the government. ...
Cuba. Internet available only at government controlled \"access points.\" ...
Saudi Arabia. ...
The post \"AI AND A CONNECTED WORLD WILL NOT HAPPEN\" was first published by Kevin Roy Beck here https://www.linkedin.com/pulse/connected-world-happen-kevin-r-beck/
About Kevin Roy Beck
Research, intelligence gathering, communication, and interaction with executives in corporations and public service agencies in Australia and internationally, predicting social and economic impacts of human behaviour,