[This is taken in large part from from an earlier blog, but I feel it needs updating to include more than just payments.]
‘Disruptive Innovation’ has become a common cry for anyone wanting to displace the existing players. It is defined as; “…an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.”
Unfortunately the original concept is now grossly misapplied. But like how ‘irony’ now has several meanings, I guess disruptive innovation will have different meaning based on its context.
However, I’ve never heard anyone using the phrase ‘Sustaining Innovation’, which; “…does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other’s sustaining improvements.”
So why is everyone so interesting in disrupting the existing ecosystems? And by “everyone” I of course mean those who are trying to either break into market, or those trying to wrest even more control for themselves. In payments – as my example -, non-cash payments work [mostly], and you have a large degree of faith in your bank’s ability to protect your monetary assets. Do you really want the whole thing to change? Do you even know what it is that you want that’s different?
But do things even need to change? Well yes actually, they do. And are there innovations available NOW that make the payments process easier, cheaper, and more secure for the consumer? Yes, there are. However, can we expect the entire payment industry to throw out everything they have spent billions on over the last few decades, are used BY billions, just to make room for every start-up with a good idea? No, we can’t, and that’s the real issue here.
In the last 10 years there have only been 2 true [potential] disruptors in the payments industry; the mobile phone, and block chains (Bitcoin et al), neither of which has achieved anywhere near its full potential. Yet. Not because the technologies are flawed [necessarily], but because the introduction OF the technologies was done poorly. For mobile devices, the payments challenges included the ‘fight’ between NFC and BlueTooth, the numerous options for security on the device (Secure Elements, Trusted Execution Environments and so on), and the presumed insecurity of the technology overall. For block chains is was, and still is, the almost complete lack of understanding of how they even work in the first place. I’ve looked into them and I still find the concept nearly incomprehensible.
But even these disruptors need current context, and they represent a fundamental shift from our overly complicated view of payments back to its basics; I go to work to earn value (money), the value gets stored somewhere (a bank), and I access the value when I want it regardless of time or location (mobile payment). This would suggest that the only disruption we really need is the disintermediation of some of the players. There are simply too many middle-men whose only input to the new world of payments will be value erosion. Thank God the Mobile Network Operators (MNOs) are too busy bickering amongst themselves or this would be even more complicated!
As a consumer who has a very good idea of what he want to see change, I know that only those who help the payments industry evolve will have a lasting positive impact, and this will only be through collaboration and fair competition.
I’ve used payments as an example, because that’s what I know the best, but the same can be said for almost every other industry sector. The drive to take away what others have, instead of providing a better service for the common good, is capitalism at its worst. And no, I’m not proposing some sort of socialism, it’s just logic; What’s easier? Completely replacing something, or improving what we have in collaboration with multiple players?
It’s not like there isn’t enough to go around.
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