Platform disruption and the global power shift
I wonder if people who discuss disruption truly understand how it happens. I ask the question out of real curiosity. When I think of disruption I think: Platform Disruption, and...
But we discuss disruption in quite sweeping terms so I ask, is my understanding of disruption the same as yours? Are talking about the same thing? Remember that blue dress that became a big Internet meme a few months ago - was it blue or was it gold? There is quite a big difference between blue and gold but we are capable of having that kind of divergent perspective even when we are talking about the same thing.
So am I talking about blue disruption while you are hearing gold disruption? Are you talking old disruption or new? It is clearly not good enough any more to say it happens when cheaper, good enough products come along and fly under the radar into a new sector. But if we are to replace this Christensen model then what with and as we outline a new theory can we keep on the same page?
Here is my view, taken from Platform Disruption Wave.
Disruption happens in waves that encompass (a) the breakdown of vertical market structures into horizontal activities and (b) as a result, reward substantial innovation in the organization of wealth creating activity (this is analogous to the idea I mentioned in Shift that economic activity has escaped “enclosure”. By that I mean we have to innovate in how we organise and that’s exactly what the platform does). Because the primary advantage lies in how we organise wealth creating activity it will lean towards cultures that prioritise organizational learning and know how.
The wave is increasingly tied to a geopolitical transition, in this case from the US to China, and is often specific to its own era, so we are experiencing our wave of change, not the wave that swamped the world in 1973. The current wave is driven by scale, or our new capacity for infinite endpoint management. If disruption privileges scale then it will privilege China.
Disruption can originate in challenges to incumbent privileges and be triggered by industry concentration, but it is not necessarily just these factors. Incumbents are rarely undone by a new product. They are undone by the wave of change, the hidden currents and their inability to widen their social interaction or do “drop the franchise”.
The new killer organizing principles can also emerge in white spaces, such as emerging markets where economic structures have to be still to be established, or where there is a deep unfulfilled need, such as to make search a viable business. That is why Chinese entrepreneurs are better at platform organization.
Disruption is always nested in an experimental period where entrepreneurs test hypotheses through public dialogue; where they collectively sense the ability of their ideas to meet new needs; and where they search for a fit with emerging technology infrastructures. Look to finance for an experimental era right now.
The experimental period creates the ecosystems that break down industry barriers and establish the need for a new organizational form.
Platform disruption therefore consists of five significant elements:
- The new organizational model
- Scale and infinite endpoint management
- The transition in innovation models away from invention to improvement culture and organizational learning
- The platform as an indigenous organizational form in China
- The polarization of wealth (platforms contribute to polarization)
My conclusion to this, and you need to follow a couple of hundred pages of argument to agree or disagree is that at pivotal points in history, enterprises need to take the leap to a new organizational form and a new way of business. That time is now. A new wave is already appearing in P2P and autonomous organizations. This is what the West must embrace but is too fearful to try.
Haydn Shaughnessy’s Platform Disruption Wave launches May 25th