How digital innovation and disruption works?

After carefully analyzing the disruption of various industries, you can see a consistent theme. Let's review how digital innovation and disruption works?

One can endlessly debate and agree that there is no preset playbook for how digital innovation and disruption works. If you carefully look at the decade of digital business disruption (2009-2019), we will notice a consistent theme.

Disaggregating existing value chain

A value chain refers to the set of processes and workflows by which a company builds product or service, brings it to the market, and generates value. Simply stated, this is how companies do business. Over a period of time, consumers get trained to be on the receiving end of this value chain.

In the post World War II era, companies focused on creating processes to bring affordable and safe products to the market at scale. We as a community started seeing Retail Stores in every locality and trained ourselves to shop at these stores. Amazon fundamentally challenged that notion. With its prime delivery service, you can simply go online and select products you need and they show up home.

Instacart does that for grocery and companies like GrubHub and DoorDash do that for restaurant food. Uber changed the value chain of taxi industry. AirBnB challenged the hotel industry. Rent the Runway is rethinking that for fashion industry, and Stitch Fix for personalized clothing.

Tech enabled discovery and connection of demand and supply

Social Media and Data and Analytics activated discovery and connection between demand and supply. The most early successes of this trend is the hospitality industry. Today, companies like Expedia and Travelocity enable an estimated 65% of hotel reservations. Companies like Marriott rely on these websites to generate approximately 20-30% of their revenue.

The face of beauty industry (pun intended) has been changed by onslaught of such influencers. Influencers are people on social media who build large online followers. Michelle Phan turned her beauty tips into a large business called Ipsy – a sample beauty box service where consumers get access to a variety of beauty product samples for a fee. The data and analytics generated from this ends up informing trends and business strategy for brands. Revolve, a little known company identifies niche designers that you cannot find in big box retailers and connects them to consumers and manufacturers. It uses data and analytics to inform fashion designers what’s trending. Today, this connection between demand and supply is spreading to Fitness, Food, Publishing, News, and other industries.

Hyper segmentation and personalization

As companies begin to amass data about us and our interactions, they are able to hyper personalize solutions for us.

Consumer Packaged Goods is one of the most disrupted industries by this trend. Today you can discover 65+ different diets, people with cult like following and companies that make products for them.

Even as early 5 years ago, the best way to discover food was in a retail store or travel and explore it yourself. Just google for Sauces Club, you will find Fuego and a few of these services that uniquely cater to people who are into sauces. Butcher Box does this for meat lovers. Primal Kitchen does it for people who pursue Primal diet and Thrive Market provides you with the ability to filter and shop for products for diet. If the trend holds, we may even see Grocery stores reorganizing their aisles.

Convergence and creation of new ecosystems

After Apple launched iPhones with embedded cameras and made Kodak obsolete an entire industry got built around digital photography. Instagram connected people around photos and is now beginning to make those photos shoppable. Technology, Marketing, Media, and eCommerce all converged to create a new ecosystem.

As it relates to food, Health and Fitness Influencers expanded their scope to Food creating an ecosystem where Food is viewed as Medicine. Beauty Influencers began talking about food and its implication on beauty giving rise to Beauty Foods. Companies with vast amount of data about weather began to think about its application for Farmers to jump start AgTech.

The advances in Wearable devices led to creation of Fitbit, Apple Watch, and several others that focus extensively on how to make these devices work for health. Apple Watch can do real time Electrocardiogram (ECG). Abbott’s free style glucose monitoring device makes it extremely easy for us to monitor glucose. Withings has range of products that brings consumer friendliness and modern technology to products that were otherwise available in hospitals.

Revisiting Tech of X

In our post, we discuss Tech of X which is a shining example of how the convergence and creation of such new ecosystems begins to reshape scores of industries at one go!

Digital Innovation and Disruption for a given industry can start in any one or all of the above places and steadily eat into a big business and drive it to oblivion.


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