disruptive innovation - the key drivers behind today's unprecedented rate of market disruption...
DESCRIPTION
A presentation I gave at the CPA Congress in Brisbane, Australia on 11 Oct 2012. The presentation covers the topic of disruptive innovation and in particular makes a case that industries today are being disrupted at faster rate than ever before in history. I analyse the macro trends driving this acceleration in disruption and also outline how businesses can turn these into opportunities rather than threats. The next tectonic shift is happening. A cost-effective and easily scalable workforce is now available to anyone in the world. Simultaneously, every industry is now digitised and there is a growing proliferation of cheap and scalable infrastructure - this signals disruption for many existing business models and an opportunity for those willing to act on the changes. Attend this session to discover: The shift occurring in the global labour market How changes in outsourcing and the digital economy will impact your business How your business can benefit from these changes rather than become a victim Case studies of businesses driving value through taking advantage of outsourcing and the digital economyTRANSCRIPT
Dino TalicSenior Product ManagerFreelancer.comemail: [email protected]: @freelancer, @dtalic
Disruptive Innovation – key drivers and how your business can benefit from a shft in the global workforce
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Overview
1) What is disruptive innovation
2) What are the trends driving disruptive innovation today
3) What does this mean for your business
“The Myth of Technology Innovation”(…or why established companies fail)
Misconceptions about Innovation
Company A releases an innovative product and dominates a particular market
Earns outsized profits
Becomes complacent
Misconceptions about Innovation
Competitors innovate more quickly and bring better products to market
Company A loses market share
Company A becomes insolvent
“Technology Mudslide Hypothesis” - Clayton Christensen
“Technology Mudslide Hypothesis” - Clayton Christensen
MYTH
Reality
Good management teams don’t turn bad overnight
Types of Innovation
Sustaining Innovation
Breakthrough Innovation
Disruptive Innovation
3 Main Types of Innovation
Disruptive Innovation
Disruptive Innovation
• Disruptive innovations are often worse than the incumbents when first introduced
• They create a new market and value network
• Market disruption is usually not a function of technology but a change in application
What happens to companies that don’t react to market disruption?
• 1975 Kodak introduces the world’s first digital camera
• 2012 Kodak files for bankruptcy
So what happened?
What happened?
• Early digital cameras were inferior to film
• Suitable for niche applications only (low volume, low profit)
• In 1978 Kodak had 90% market share of photographic film sales in the US
• Eventually digital cameras became “good enough” and disrupted the market
• The same is now happening to digital cameras
A current example of disruptive innovation
Harvey Norman Share Price
Many more examples
We are in an age of unprecedented rate of technological innovation and disruption of
incumbent companies
What are the driving forces behind these changes?
Trend 1
What does this all of this mean?
“Software is Eating the World”– Marc Andreessen
What does this all of this mean?
Advertising
Physical Software
What does this all of this mean?Telecommunications
Physical Software
What does this all of this mean?Retail
Physical Software
What does this all of this mean?Books
Physical Software
What does this all of this mean?Scrapbooking
Physical Software
What does this all of this mean?Notepad & Pen
Physical Software
What does this all of this mean?Maps
Physical Software
What does this all of this mean?Music
Physical Software
What does this all of this mean?Retail Estate
Physical Software
What does this all of this mean?Hang with Friends
Physical Software
What does this all of this mean?Photography
Physical Software
What does this all of this mean?Video
Physical Software
What does this all of this mean?Travel
Physical Software
What does this all of this mean?Education
Physical Software
What does this all of this mean?
Coupons
Physical Software
What does this all of this mean?
Drug Dealing
Physical Software
What does this all of this mean?
“The Reimagination of Everything”- Mary Meeker
What does this mean for your business?
Opportunities:• Switch to digital distribution channels• Integrate with mass platforms• Is there a cheaper and more efficient
way in which you can provide your product or service?
Trend 2
70% The other
of the world’s population areabout to join the Internet.
Source: Internet World Stats & United Nation
It’s 2012.
World Population
7,030,000,000
Number on the Internet
2,267,233,742 (32.3%)
North America266 million users77.4% penetration
Europe475 million users58.4% penetration
Latin America204m (of 592)34.5% penetration
Africa110m (of 1014m)10.9% penetration
Asia825m (of 3834m)21.5% penetration
Worldwide Internet Penetration 2011
146%
179%
352%
445%
621%
1033%
1825%
2357%
0% 500% 1000% 1500% 2000% 2500%
North America
Oceania / Australia
Europe
World, Avg
Asia
Latin America / Caribbean
Middle East
Africa
The other 5,000,000,000 people are coming…
Worldwide Internet Growth 2000-2010
81% of Users of top sites outside USA
Twice as many Chinese than Americans
The other 5 billionare on an average wageof $10 or less per day
The first thing they are doing is looking to raise their economic status.
And it’s never been easier to learn a trade.
Free Stanford Course in AI.Over 170,000
enrolled, 8x the total number of
students at Stanford.
Simultaneouslyevery industry is now
digitised.
The World is Flat.
The World is Flat.
The World is Flat.
Today Tomorrow
Goods Services
What does all this mean?What does this all mean?
We are the global labor exchange
Some statistics
Users– 4,130,000 and growing
Covering 234 countries, regions and territories
Demographics - 20 regional & growing
Economy – 2,400,000 Projects so far
Economy – Global
–
Turnover US$ million
Banking System
We are the sole provider of bank
accounts to some freelancers
in emerging economies
36 Bids US $268
Design a fully functional Dune Buggy I can drive at 30km / hour
Outsourcing
280 choices for $290!
Crowdsourcing
Crowdfunding
Broke the CSS!
What does this mean for your business?
Opportunities:• Flexible labour force• Skilled labour on demand• Labour at next to no cost• Build fast and experiment
Trend 3
What does this all of this mean?
Distribution is unprecedented.
What does this all of this mean?
% of US Households
Technology adoption is accelerating
➔ In 1900, <10% of families owned a stove, or had access to electricity or phones
➔ In 1915, <10% owned a car➔ In 1930, <10% owned a fridge or washer➔ In 1945, <10% owned a dryer or air-conditioning➔ In 1960, <10% owned a dishwasher or colour TV➔ In 1975, <10% owned a microwave➔ In 1990, <10% owned a cell phone or Internet
➔ Today.. more than 90% own all the above.
Not so long ago.
What does this all of this mean?Computing mutates as it goes pervasive
Desktops, Laptops Mobile Phones, Tablets
.. and faster
.. and faster!
.. and faster!!
.. and faster!!!
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
0
100
200
300
400
500
600
700
800
900
1000
Facebook (millions of users)
What does this all of this mean?
Parabolic growth comes from harnessing distribution fire hoses
Facebook Firehose
Apple Firehose
Google Firehose
Reddit Firehose
Other Unconventional Firehoses
Virality. Social. Reviews. Friends. Inviters.
What does this mean for your business?
Opportunities:• Provide your products through popular
distribution platforms• Increase product virality and user
uptake• Increase marketing ROI
Trend 4
What does this all of this mean?
Every business today is an Internet business.
What does this all of this mean?All this stuff is free.
Virtualised computer.. Only this computer is a
hotel reservation system!• PBX
• Hotel Reservations• Wifi
• Minibar• Movies
Free!
What does this all of this mean?All this stuff is cheap.
What does this all of this mean?All this stuff is cheap.
Even if none of this stuff makes sense to you, freelancers can put it
together for you.. cheap!
What does this all of this mean?You can start a company off a credit card
What does this all of this mean?A new class of Venture Capital has arisen
What does this all of this mean?Digg.com
• Outsourced original software for $60• $6000 to get site up and running• $1200 for domain and 12 months
hosting
Offer from Google for $200 million 4 years later
What does this all of this mean?PCTools / Spyware Doctor
• Outsourced original software for $1000• Bootstrapped to profitability• Raised financing only at very late stage
Sold to Symantec for $300 million 6 years later.
What does this all of this mean?RetailMeNot.com
• Built with $30 in one weekend• Bootstrapped to $30m in revenues
Sold to WhaleShark for $90 million 5 years later.
5 Billion Internet Users by 2020
Internet Users
Mobile only Internet Users
• 350m users in 6 years
• 950m users in 8 years
• 100m users in 45 days?!?
Internet Scale
Internet Scale Growth
2% of.. The Internet.Alexa rank #16 in the US
• Founded in July 2007• Financed in July 2008• Makes silly flash games• 2011 revenue $1.2 billion
• Founded Nov 2008• 2011 revenue $1.6 billion• Spams you deals of the day• WSJ “made $1 billion in sales
faster than any other business, ever”
Internet Scale Revenue
Years to reach $1 billion in revenue
1976 1984 1986 1994 1994 1995 1997 1998 2007 20080123456789
10
Year of Incorporation
What does this all of this mean?
How can your business benefit?
What does this all of this mean?
Think what your business can do with…
What does this all of this mean?
…infrastructure at next to no cost
What does this all of this mean?
…unprecedented distribution at next to
no cost
What does this all of this mean?
…labour at next to no cost
Case Study
Company: an Australian software provider to major telcos
Opportunity:• Had a potential client in a Chilean telco• Needed to demo their product quickly
Problem: Only one issue: it was in English
Case Study
Solution:They used Freelancer to translate their product
A Chilean freelancer translated it:– In 2 days– For $75
What does this all of this mean?
Think what your business can do…