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Technology disrupts, but it also creates new prospects

EDITORIAL
By Peter Opondo | April 28th 2021
A person's hands holding a smartphone and playing Candy Crush Saga .[Courtesy]

We used to live in a linear world where progress was incremental, sequential and straightforward. In this world, legacy companies would last a lifetime as they incrementally innovated to meet customers’ needs. Not anymore.

Thanks to technological progression, we now live in an exponential world where change is compounding rather than incremental.

Peter Diamandis, author and executive chairman of the Singularity University, argues that any firm that fails to grasp and exploit the forces shaping the current exponential world is likely to fall by the wayside. He defines the 6Ds of exponentials that can help executives understand and capitalize on the unfolding changes.

The first D is digitisation. Anything that can be digitised, that is, it can be represented in bits and bytes, can be spread at the speed of light and increasingly becomes free to reproduce and share. When storage of pictures moved from paper to digital, sharing of images grew exponentially, thus begun the woes of the defunct American photography behemoth, Kodak.

What follows digitisation is deception, a period during which exponential growth is barely noticeable because the change is initially miniscule. For Kodak, the legacy business of film and cameras remained strongly profitable despite initial growth in digital technology. At the deception stage, Kodak saw no reason to invest in digital despite the fact that it had the patents for the technology in-house. The cash cow that was films and cameras was equally still too lucrative for Kodak to even contemplate a different future.

But usually after deception comes disruption and this happens when a technological innovation creates a new viable market by upending the existing one. The launch of iPhone in 2007 by Steve Job’s Apple meant that anyone could take pictures via their phones, so who really needed films and cameras?

Which leads us to the fourth D, demonetisation; which is the removal of money from the equation. Kodak made money by selling films, but once consumers could take and share photos they didn’t need films anymore. A key revenue stream for Kodak was gone. Who would pay for long distance calls when they can use various options like Skype, Zoom, WhatsApp, etc, to make both video and audio calls? Technology is demonetizing voice calls, too.

Then comes dematerialisation where the goods and services completely disappear. Why do you need to carry around a flashlight when it exists as an app on your phone? Do you need a GPS when you can use Google maps on your phone? Who needed to buy a camera when it came free with a phone? In 1976 Kodak controlled 85 per cent of the camera business, but by 2008 after entry of the iPhone, that market no longer existed.

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The final D is democratisation, which is what happens when costs drop so low the products or services become available and affordable to nearly everyone.

The 6Ds are a real threat to legacy organizations around the world but they also represent immense opportunities to be exploited by agile companies as firms like Airbnb, Uber, Tesla and Google Ventures are doing.

 

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