Section 2: Disruption in Process
In this section, entrepreneurs provide views on disrupting an industry. The group of start-ups included is representative neither of all industries currently being transformed, nor of all modes in which disruption operates. Instead, a cross-section of perspectives on disruption from a particular vantage point in the process has been assembled – of entrepreneurs that have found traction and are on the cusp of having significant impact on an industry, but are still at risk of failing or falling short of their transformative ambitions. These perspectives provide a distinctive view of the mindset of disruptors and the particular challenges they face, free from potential ex post rationalization that successful disruptors might suffer from.
The interviews confirm that the internet’s wave of disruption is still playing out. Sectors protected by high levels of inertia and regulation might not feel the full force of this yet, but the trend is inevitable. The interviews provide a spotlight on four of those sectors: financial services, education, scientific research and government. Each has its own challenges, but the business models and themes are very similar. Four entrepreneurs are employing technology to democratize the industry and reshape the relationship between businesses and customers. Two of those start-ups do so in partnership with “incumbents” – OpenGov with local and state governments, and Coursera with universities. The two others, Tilt and ResearchGate, seek to disintermediate incumbents completely. In all cases, consumers are involved to a much deeper degree in co-designing and delivering services; they either have significantly greater access to information and data on which they can act, or become an integral part of the value chain on the disruptors’ platform.
Meanwhile, the technological foundations for the next waves of disruption are being built. Six start-ups at the frontier of entirely new technologies that could disrupt industries provide a glimpse into possible novel platforms, such as drones, 3D printing and cryptocurrencies, though their large-scale impact in the economy is still several years or decades away. While they may be perceived as pioneers with an uncertain future – they might be designing the next iPhone or another Segway – they are all building products and services as much as they are defining the infrastructure through which those will be delivered. Moreover, the business models for this are still emerging. Airware, for example, sees itself as the operating system for all drones, much like Microsoft’s role in personal computers. Shapeways is building a marketplace and community around 3D printing. Planet Labs developed, launched and is operating a fleet of ultra-small satellites, and is monetizing the data they collect. While the internet has emerged from its early days to provide a set of business models replicable across industries, both the technologies and the business models are still very much experimental for the entrepreneurs exploring space or building the Internet of Things.
Lastly, disruptive founders have big ambitions. Each of the start-ups intends to have a significant impact on its industry, not by introducing incrementally better products and services, but by redefining well-established business models. 3D printing has the potential to change how we think about manufacturing; bitcoin or similar decentralized payment systems are an inspiration for reimagining financial services; and technology-enabled learning could become the basis of education systems in developing and developed countries. While all entrepreneurs are optimistic about their new technologies, none are blind to the inherent risks, and many see a critical role for governments to ensure security and help build trust in them. Another message was equally clear: as much as regulation can do good, it also has the potential to stifle the companies in this report. Finding the right balance between safety for society and freedom to innovate is a critical task for governments in the disruptive process – a theme that is revisited in Section 3.