Defining the Word “Disruptive” in Digital Tech Ecosystem

Defining the Word “Disruptive” in Digital Tech Ecosystem

Tuesday, Jul 25, 2017

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Disclaimer: The essay is based on writer’s opinion

I would like to start this post by disclosing my purpose of this essay.

I ruminate that the word “disruptive” has been highly overused—at least in Indonesia’s tech ecosystem—reaching a level that I personally despise it as more and more people treat it like a raunchy catchphrase. I used to mistakenly take that being disruptive is about bringing new age technology—which I think is how most startup founders and business stakeholders in Indonesia still perceive it. Most of the people in the scene trying to claim that they’re doing something disruptive by “redefining x”, “adopting the most advanced technology of y”, or combining it with other jargons (“machine intelligence”, “predictive learnings”, etc).

I met a startup about 2 years ago that is trying to create beacon/BLE-based solutions for retailers and advertisers. I thought that they have some potentials, until they’re calling themselves a disruptive IoT company (duh~). Good vernaculars for corporate pitches, until when it comes down to result, they’re dull as dishwater.

I would like to convey my thoughts on at least 3 things that make a technology products or services should be categorized as “disruptive”.

1. When it democratizes the economics’ supply chain

This type of disruptive technology is imminent in sharing economy startups, such as Uber and Airbnb.

What makes Uber and Airbnb great is that it brings liquidity into markets with an inelastic supply. In simple economics term, they democratize the supply side of the market by making it more skewed into perfect competition market structure. Today, everyone can be a cab driver and hotel host. Supply of cabs on hotel rooms that used to be inelastic (the number of cabs and hotel rooms are limited to the capacity of cab companies and hotel chains) becoming more elastic, and hence, with all things equal (ceteris paribus), reducing the price down, as it brings more quantity to the market.

A platform expert Sangeet Paul Choudary in his book “Platform Scale” manifested the concept of “changing business channels from pipes to platforms”. Platform companies are in the business of enabling interactions between supply and demand side of the market. The power that enable this kind of interactions and at the same time bringing more value for both sides of the market (higher availability in supply side, more affordable prices in demand side) is very powerful, and bringing a disruptive force to the incumbent players?—?all of whom are still struggling with their inelastic supply chain. 1 e0rcQAiYjrGnkgkfRy19qA.png

2. When it changes businesses’ cost structures

Cloud computing has definitely disrupted the whole enterprise software market. Products like Amazon Web Services (AWS) and Dropbox are changing the landscape of how enterprises pay for their hosting and storage services, respectively. Instead of compiling a bulk of upfront costs for the initial outlays, using these cloud technologies, companies can pay for those same services in a monthly/yearly subscription basis.