Why Disruption Matters--Really

We talk so much about disruptive innovation, we sometimes can lose sight of what really matters. The most direct way to say it is:
A disruptive innovation really matters when it drives the marginal cost of a previously scarce resource to asymptotically approach zero.
Basically it makes it free, and that creates a vortex of demand to take advantage of this new state.
Let’s apply this notion to the five truly massive waves of disruption that are under way in our economy at present, working from the most mature—where the “practically free” value proposition is most realized—to the most nascent, where it is still more of a projection. And the question you want to ask with each disruption is, what impact is this having or going to have on my industry and on my company’s competitive strategy?

• Cloud Computing makes the marginal cost of computing free. You don’t add data centers, you don’t buy equipment, you don’t add staff. You just add compute power, and it is cheap. So, how will this impact your industry, and are you taking appropriate advantage of this situation?

• Smart Phones make the marginal cost of automating a personal transaction free. You don’t pay for the phone or the network time. You just connect and engage and zero marginal cost. So, how will this impact your industry, and are you taking appropriate advantage of this situation?

• Social networks make the marginal cost of adding a resource to a sharing economy free. Uber does not buy any new cars, nor does it hire any new drivers. They just sign them up and set them loose. So, how will this impact your industry, and are you taking appropriate advantage of this situation?

• Data science makes the marginal cost of dynamic decision-making free. You don’t have to hire staff to detect the opportunity, nor to prosecute it. You just set your algorithms loose on your log files and iterate to optimal outcomes. So, how will this impact your industry, and are you taking appropriate advantage of this situation?

• Internet of things makes the marginal cost of systemic optimization free. You don’t have to send out inspectors to detect issues and make adjustments. Again, you just set your algorithms loose on your log files and iterate to optimal outcomes. So, how will this impact your industry, and are you taking appropriate advantage of this situation?

Not every industry will be equally impacted by every disruption, and some may remain exempt from all five for a while to come. But for anyone who is thinking about how to grow their business in a relatively slow growth economy, here are five massively powerful accelerators to consider. At minimum, you ought to put them in priority order as they relate to your world, and then focus like crazy on priority number one to see what you could be doing differently that would move your needle. Article by Geofrey Moore