Innovators like Uber can disrupt industries in an alarmingly short amount of time - they create exciting new services at such a pace that incumbent providers can't transform fast enough to keep up.
Incumbents have existing technology investments that can slow them down - and also have customers who they need to keep providing consistent services to.
In How NZ businesses can innovate faster and better, I talked about an approach that Gartner calls "Bi-Modal IT" to overcome this.
What disruptors manage to do is innovate fast enough to take full advantage of the rapid and exponential technology growth that Moore's Law accurately predicted around 1970. I call this “Exponential Innovation”.
Top 5 principles of exponential innovation:
Exponential Innovation comes from having a unique Perspective and vision for the future. Disruptors also don't try to do everything themselves - they use pre-existing Platforms and Products to get to market quickly.
They also Partner effectively to take advantage of others' scale - and follow agile Processes for development.
How Uber do it:
Perspective: While they look like a taxi company, Uber's vision much more than that. Not content with disrupting the taxi industry, they are now looking at how they can completely change the future of transport.
Uber is investing in self-drive cars, with a view that they will reduce traffic by up to 99% - and completely disrupt the automotive and transport industries, potentially costing 10 million jobs.
Platforms: Uber didn’t bother to build data centre infrastructure, instead they used existing hosting services to get the pace and scale that they needed. This freed up capital to spend on building what their customers would value - instead of commodity IT infrastructure.
Products: One of the key ways Uber's cost model is different is that they built their solution to use smartphones that drivers and passengers already had. The smartphones already had GPS, mapping software and data connectivity.
This meant Uber didn’t need to fit out vehicles the way taxi companies do, which saved money and made it much easier to get more drivers quickly.
Partners: Google was an early investor in Uber, offering mapping data and other resources that Uber couldn’t quickly create themselves. This left Uber free to focus on building the unique offering that it's customers value.
Of course, now that Uber is looking at driver-less cars as well as Google - the partnership might be souring somewhat.
Process: Uber's services were built with an agile model (quick prototyping, quick failing, and quick-fixing iteration) to get to market quickly and then quickly adapt and improve.
Development hasn't stood still - with Uber 2.0 coming with a more user-centric, design led approach and more flexibility for the future.
And going forward, we can all innovate like Uber, New Zealand businesses included.
Incumbent businesses can achieve a digital transformation to keep pace with disruptive innovators. Using Bi-Modal IT and the 5 Principles of Exponential Innovation, any business can get the most out of the rapidly changing technology environment.
It all starts with getting a compelling, unique perspective on how you can do something that will excite your customers.
Then figure out what platforms and products you could cleverly tie together, the partnerships you could form and the right agile processes to get you there.