Please, I beg you. No more Candy Crush apps. And no more Angry Birds or anything that remotely resembles a game that requires rapid finger movements on a smartphone to shoot, maim, destroy or eliminate cute animals with pained expressions on their faces. That is not disruption. That is not entrepreneurship. If you think that being a disruptive entrepreneur is simply to start another online food-delivery company or another travel website that caters to the preferences of a subset of a subset of a demographic group of globetrotters, then think again. What is disruption? Disruption is not about doing something…
Please, I beg you. No more Candy Crush apps.
And no more Angry Birds or anything that remotely resembles a game that requires rapid finger movements on a smartphone to shoot, maim, destroy or eliminate cute animals with pained expressions on their faces.
That is not disruption. That is not entrepreneurship.
If you think that being a disruptive entrepreneur is simply to start another online food-delivery company or another travel website that caters to the preferences of a subset of a subset of a demographic group of globetrotters, then think again.
What is disruption?
Disruption is not about doing something that somebody else is already doing. The more that people says they are disruptive entrepreneurs the less they look like one.
Disruption is not about hitching a ride on the latest bandwagon just because it is the easiest thing to do. It is not about coming up with the next blockchain crypto-currency, simply because someone has said that it could be a major game-changer.
It is not about creating another ride-hailing app or opening another frozen-yoghurt joint. We have enough of those already.
It is, instead, about solving some of biggest problems that the world is facing.
Unfortunately disruption could result in wrecking existing value that is not being very efficiently employed. The consequence is new industries emerge that use capital more effectively.
Along the way, though, billions of dollars of existing enterprise value could be destroyed. As investors we should be aware of what could happen and also be receptive to the opportunities that become available.
Chances are that a dominant incumbent whose position might seem unassailable could be razed to the ground before our very eyes by an upstart.
We could end up with a considerably smaller industry that employs fewer people. Thousands of jobs could be lost and billions of dollars could evaporate in the process…..
….But a new industry could emerge that is run more efficiently; operates more economically and serves people more effectively.
Uber has done that. It has challenged existing taxi operators such as ComfortDelGro (SGX: C52) in Singapore and also in other parts of the world. Uber didn’t kill the taxi industry. The taxi industry did it all by themselves.
But Uber has, undoubtedly, shaken up the transportation industry and unsettled some governments in the process. Some authorities don’t even know how to handle the new entrant.
Should they embrace the new technology and risk the wrath of established cabbies whose livelihoods could be eroded over time?
Some have adopted the ostrich solution by burying their heads in the sand. They have banned the service outright, in the hope that the problem might disappear.
But the downside is that their own people could end up paying unnecessarily higher fares. Is that fair?
Shale oil has shaken up the cosy arrangements that have existed for years between the members of the oil cartel, OPEC. In the past, energy users around the world were at the mercy of the members of the Organisation of Petroleum Exporting Countries (OPEC).
The cartel could dictate the price of “black gold” based on its own requirements rather than the needs of the many. So the downfall of OPEC is OPEC itself.
By collectively raising or lowering the amount of oil produced, OPEC could drop or hike the price of oil at will. But all that has changed with shale.
The oil majors are now actively involved in shale too. So, gone will be days when explorers drilled for oil in the middle of nowhere that cost a packet to set up and years to build.
These days, they can produce oil at a fraction of the cost. So, oil companies will need to reinvent themselves. Support services companies such as Keppel Corporation (SGX: BN4) and Sembcorp Industries (SGX: U96) will need to adapt or face irrelevance.
Much has been made of the disruption caused by internet shopping on traditional bricks-and-mortar retailing. But it is not Amazon (NASDAQ: AMZN) and the likes that have caused the demise of shops. Retailers have done it to themselves, by themselves.
But there is hope yet, if you have chanced upon the new Apple (NASDAQ: AAPL) store on Orchard Road. It is heaving with people who are keen to experience a new way to shop….
…. Gone are the tills. Gone is the hard sell. Proper customer service is back.
Everywhere we look we could find disruption. But there is a common thread that runs through disruptive industries, whether it is streaming movies, hotel bookings, food delivery outfits or online music.
Disruptive companies tend to target industries that provide poor or unsatisfactory service. But it is not technology that is causing the disruption. Instead, technology merely facilitates the disruption that could make our lives better.
So the industries that are most vulnerable are those that fail to provide customers with the one thing they demand most – service.
A version of this article first appeared in the Straits Times.
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