Disruption and disruptors

Oct 10, 2014
Capgemini

0EG_3863A real connected home today

In the morning of day two of the Sogeti Executive Summit, Jochen Burkhardt from IBM took the audience on a ‘tour of the future’. Anyone has probably seen the glam videos of futuristic looking homes that self-regulate themselves around the wants and needs of the home owner. Jochen showed what it looks like in real life, today, working in real time. With a down-to-earth attitude, Burkhardt showed how he could remotely switch on and off lights in the living room, move the shades, check his mailbox, etc. Through automation his home heating knows when to switch on, thanks to signals from his car. Through a sensor on the roof, the house knows when to close the shutters. Better than that, the sensor-data is shared with others, so they too can automatically regulate their shutters based on the amount of daylight. The plants water themselves, inside but also in the garden. Webcams cover the house and everything is available online. The demo served as a great example of how technology is available to really do practically anything you think of. But what about security and privacy? Burkhardt doesn’t worry too much: everything is behind bank-level security and the cloud helps make it secure. And when do we all have this? That may take another ten years, Burkhardt concedes.

Hunting for Billion dollar startups

Mark Plakias from Orange Institute talked about their latest research into Unicorns, Startups and Giants. The report was triggered by observations of so called ‘unicorns’ such as Whatsapp, when it was bought by facebook for 19 billion dollars. How could such a small company of fifty people be worth that much money? What does this mean?

Unicorn

Orange Institute looked at 60 technology unicorns and found that they represent a total valuation of over $230 billion. Is that a bubble? Perhaps: there was a 67% increase in the number of billion dollar startups from 2012 to 2013 alone.

In any case, the disruption is real: existing organizations are being upended by these young companies. Often disruption looks like nonsense to the incumbents: it just doesn’t seem to make any sense. Until for example in the case of WhatsApp, you look at the text-message business that is being disrupted: the value of that market makes the total price paid for Whatsapp seem trivial. Yet one nagging question remains: what prevents these disruptors from being disrupted themselves? Could another app replace whatsapp overnight?

And what does the one billion dollar buy for a startup? Strong teams, intellectual property, aggressive growth curves and a valuable network. It also positions the startup in the right position to start playing in adjacent activities, that are almost naturally disruptive: crossing segments, connecting markets and bringing new value.

Meanwhile, the funding model of startups is shifting, to more private capital, longer pre-IPO phases… but still with big valuations.

Disruption through customer satisfaction.

Uber is an example of such a disruptor. The taxi-type app grew out of San Francisco in 2009 to now over 200+ cities, with every week 7 to 10 new cities added. Triggered by a bad experience of a normal cab, the founders designed Uber to bring a better experience using regular cars. Fast forward to today, and a map of San Francisco shows the reality of disruption: there are now at least one but often two or three transportation opportunities per block. Thomas Oehl, from Uber Germany spoke about the growth, the ambition and the challenges for Uber.

Embedded into Uber is the constant interaction with the customers about quality of the experience, which makes it radically different than old school taxis. Looking at customer satisfaction, this is exactly what makes uber outcompete regular cabs: from a negative experience to a positive one!

And why does the taxi industry not take the challenge and try to beat Uber at their own game? Why are they fleeing to regulators and lawmakers? It’s easy, Oehl says, they just want to protect their business and use any means they can to do it. Meanwhile, Uber continues to dream up new adjacencies that may be the next unicorn for them: Uber Icecream anyone? Uber packages? Uber … ?

About the author

SogetiLabs gathers distinguished technology leaders from around the Sogeti world. It is an initiative explaining not how IT works, but what IT means for business.

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