The Eruption of disruption
KIZITO OKECHUKWU | MARCH 11, 2019
Last week I attended a disruption symposium in Sandton hosted by Absa. The guest speaker was Salim Ismail, a Canadian entrepreneur, founding executive director of the Singularity University and the lead author of Exponential Organizations.
Just to set the scene, disruption is not only a new buzz word in the 21st century, it’s real, happening and rapidly gaining momentum. Its primary objective is to create a new market and value system using innovative methods that aim to derange or disrupt the status quo in an existing market.
The question now is why do some organizations fail? Research shows that 70% of small businesses or start-ups fail within 2 to 5 years of operation. Research also shows that many large businesses or corporations that were relevant in the 20th century will be redundant in the 21st century.
So why is this? More often than not, organisations fail not because of increased market competition and other external forces, but rather because they failed to innovate internally. Organisations love their comfort zones, are highly protective of their territory and find it difficult to change or adapt introspectively. When individuals become disruptive, their positions within the company are affected. Imagine if those that failed (or are failing) to exist tried to harness change? Maybe our world would be a better place. On the flipside, maybe it’s for the better that they do not, because then we’re almost forced to create new wealth, embrace new thinking and fresh technology to improve our lives.
We need to accelerate the use of disruptive technologies that can help improve our lives. Let’s take Elon Musk with his proactive, forward-thinking and anticipatory mind-set for example, which is all about where will the world be in ten years? This visionary approach saw Musk develop SpaceX, electric cars and even the Hyperloop. So where will banking, transportation, education and even energy be in ten years?
Coal is now regarded as a toxic pollutant, a climate-change foe and fast-becoming a redundant energy source. Yet here at home, we’re still pumping billions into financing coal-based solutions and plants because jobs will be lost if we don’t – and this is just not seeing the bigger picture at all. The truth is, that in 12 years from now, all energy will be solar-driven. Energy which has been scarce is about to become abundant and it will change everything. A quarter of the farms in California are now solar-powered. Chile, as poor as it is, generates so much power that it’s sharing it with its neighbours for free. Battery is also another invaluable source, as Musk proved with his Tesla range. Also waste to energy is gaining momentum and it’s another energy mix to consider.
To improve and accelerate the use of technologies we must do four things: digitize, disrupt, demonetize and democratize. There are many institutions that will face disruption, even including marriage – where predictions and technology will make it possible for people to live and stay married for longer with an injection or something. No one expects to be married for more than 50 years, so does that make marriage redundant from the get-go? Disruptive technology will change everything from the institution of religion, stock markets and democracy to the criminal justice system and voting systems.
Technology enables us to live in a world where everything is open, there are no boundaries and there is no bureaucracy. When a company moves digital, three things happen – marginal cost moves to zero, domain explodes and problem space shifts.
The existing policies we have now form an immune system. We cannot resist technology and cannot regulate it. In the automotive industry, ride-sharing and self-driving cars will take over in the next eight years. Any entrepreneur, even an inexperienced one, can enter an industry and disrupt it. Uber is ‘deliberately’ breaking the law and waiting for the policymakers to catch up. Even companies the size of Facebook, which get fined for data protection breaches know that the fine is a mere slap on the wrist and they’ll just keep pushing to conquer the world. According to the writer Lance Ng, Facebook’s new ambition is to be the biggest bank that ever existed by creating its own cryptocurrency to be used on WhatsApp (owned by Facebook) to facilitate transactions between users. Collectively, Messenger, WhatsApp and Instagram (all owned by Facebook) have 2.7 billion users.
If Facebook decides to back the value of its digital coin with a basket of foreign currencies, then it could potentially become the largest central bank in the world – because that’s what central banks do; print money backed by their country’s economy and foreign currency reserves. Not only will this become monumental in the world’s economic history, it is also going to become a serious and rapid threat for the existing giants in the financial sector.
Technology has even made it easier for us mere mortals to design our own cars and build them off the shelf, so no more need for engineering school. The education system will be heavily disrupted – spending five years at varsity will be a thing of the past, as a year learning critical market-relevant skills will be ample. We now have more unicorn companies than ever before, about 320 to be precise, worth over US$1billion dollars that never existed ten years ago.
Back to guest speaker Salim Ismail, who wrote in his book that “new organisations are ten times better, faster and cheaper than yours”.
His business advice to bring your company/organisation up to speed includes the following salient points:
- Transform leadership: ensure diversity, good skills and education, board management
- Inspire EXOs at edges: Disrupt but do this outside your firm by partnering with incubators, accelerators and hacker teams (more reason to partner with the likes of 22 on Sloane startup campus)
- Invest or partner with adjacent EXO
- Leverage or expose data
- Hire a Black Ops team
- Set up a Google X equivalent
So how did we fail or how are we going to fail? We are failing both gradually and suddenly. Company lifespans are reducing significantly. I think maybe it’s not just technology, it’s also about our inability to predict, plan and produce for the future. We need to build exponential organizations. Ask yourself, what would Elon Musk do?
The theme of the Global Entrepreneurship Week 2019 is centralized around the Fourth Industrial Revolution (4IR) which the globe is moving towards. Building capabilities may be a requirement for growing economic aggressiveness or effectively applying technologies to fulfil human development aims. Businesses are great platforms for change and each leader can have a direct role in creating economic opportunities for people by investing in education and training programmes for existing and potential 4IR talent
The Gen Africa Growth Challenge will be launched on the 14th November 2019 at 22 On Sloane. This Growth Challenge aims to cultivate; resiliency, a thoughtful long-term approach; mirror market challenges; lastly to acknowledge and celebrate positive performance.
Recently, I attended the second SA Investment Conference in Sandton, led by President Cyril Ramaphosa. I instantly felt a strong sense of positivity, hope and togetherness in the room and, although a few major CEO’s faces were missing, the gathering still had the bulk of the economic who’s-who in attendance.