Amplification beats disruption

Disrupting markets have for years been a formula for success for startups. Be nimbler, nicer looking and cheaper than the incumbents in your market, grow at a blistering pace whatever the costs associated with it and you will be on to doing great things taking your idea from it’s inception into potentially a unicorn scale-up.

While these startups have been blasting the competition to the roadside, there are a couple of things, we haven’t really discussed. One is the obvious fact that the expansion has only been possible due to a presence of excessive funding, sometimes with very little prospects for developing a viable business model going forward (Uber comes to mind as the poster example of this). The other is the more important one; that in the quest for disruption, more value has been destroyed than has been accrued by the startup.

Of course there is no rule anywhere in the capitalist world that suggests that challengers should be mindful of not destroying more than they create, and you could also very well argue that for customers that are left with a better service at a cheaper price, it’s a pure win. But in terms of the prospects of economic growth on the longer term, I would still suggest that the business of disrupting things just for the sake of disrupting it runs counter to what should be our common interests.

The challenge with disruption is that in the absence of real innovation, disruption doesn’t create anything. To put it in other terms the size of the pie stays the same, as there is no real growth anywhere. Now, you could argue that customers being able to get more for less increases the overall economic activity and make the individual better off, because he gets access to more, but we need to ask ourselves whether we really do think that improving our economic prospects by going cheap is really sustainable?

Just ask the American middle class. Think about how much of their economic growth is really down to the availability of ever more cheap products and services – aka crap IMHO – than, say, an ongoing positive development in their disposable income? It’s a lot more of the former than the latter, and it’s actually quite a systemic problem that we have done preciously little to try and fix but will need to fix sooner rather than later. If not for anything else then for ensuring social stability in society.

It might be a small detour to take, but in essence my point is this: The things we celebrate as being innovations and creating value are really the opposite. A lot of it is piggy backing on extracting value that already exists other places while creating nothing meaningful new, and the end result is that while it undoubtedly leaves a few better off, it leaves more worse off. That’s not a winning recipe long term. It is a race to a bottom, you don’t want to reach.

So the question then really becomes how we might work to change this dynamic? How do we get from celebrating the gold calf into innovating in a way that is not only positive in itself but net positive for economic growth and with that society itself?

We need to get back on the track where innovation is about creating breakthroughs that unlock new kinds of value instead of sucking existing markets dry. We need to come up with technologies that create new markets that can in essence function as amplifiers of new markets.

For startups this means that instead of looking to disrupt someone already there and try to get their slice of the cake, the focus should be on how to ensure that the cake itself gets bigger, and whatever is added to said cake the startup in question will be well positioned to grab its significant share off.

Doing that will surely require a vision above and beyond 99,99 % of all vision statements ever presented by startups or corporates. But think about the opportunity? Think about being the innovators edition of Christopher Columbus setting sail to find something that no-one has found before only to end up with far more than what you were able to imagine, you would ever find?

We need that kind of imagination to replace the fighting for scraps in areas we already know really well. We need this to get a situation, where innovation is a net positive of a more significant nature than used as a cover up for ideas that could in essence very well be net negatives for all.

I’ll be curious to see who sets the standard first, and what kind of vision could emerge from this.

(Photo by Daniel Chekalov on Unsplash)

Getting inspired by others

How many times have you met a startup, which has claimed to be ‘Uber for X’, ‘AirBnb for Y’ or another version of something already in existence and hugely popular? Many times. And every time it has been cringeworthy.

But that doesn’t necessarily mean that it is all bad taking your cues from others, who have threaded the path before you and been successful at it. Far from it.

The difference is in how you do it.

You should NEVER do it in public. That’s the first lesson.

If you want to take inspiration and map your journey against someone who have done it before, do it in a war room of sorts; a place – physical or digital – where you can lay their playbook out, study it, plot your initiatives and try to follow their plan forward.

Pick the best, optimize it to your own reality so you get a feel for it and use it in your operations. By all means. If for no other reason because you have validation from those who have gone before you that the approach is effective.

Don’t talk about what you do. Just execute. Most people with even limited insight into the market will quickly spot the resemblance, but since your not being vocal about it, it will just seem like you have been inspired by the way others have done before you.

That’s happening all the time in the world of business, and it’s a perfectly cool way of executing your way to success.

(Photo by “My Life Through A Lens” on Unsplash)

The gig economy challenge

I have never been a big believer in and much less a huge fan of the gig economy.

My analysis has been pretty straightforward : A few get rich or richer by taking advantage of the misfortunes of many.

Maybe it’s time to be a bit more nuanced. Because the gig economy is not one thing; it is several. I count at least three variations, and then the question becomes which one of the three should we progress given that there are some flexibility elements in the gig economy that are appealing to many?

Let’s briefly look at the three versions:

In the privileged version you enable people to get the most of their experience and expertise by helping them build upon their personal brands and get it out to more people, who pay for the privilege of special access.

Think Substack and what they enable content providers to do through paid niche newsletters.

In the convenience version you agree to a marriage of convenience a la “I scratch your back, you scratch mine”, where you get something for your troubles, but it’s not the main thing for you.

Think Uber and their drivers, where many of the latter get an extra income whenever they want to top what they do elsewhere, and Uber gets a flock of mechanical turks to make their service work, until we have self-driving cars or some other form of non-human door-to-door transportation.

It works until it doesn’t anymore. And that’s ok. It’s life.

The final version is the exploitation version. This is the unfortunate fundamentally unsustainable business model in a modern society, where clever people with a certain kind of moral compass use the misfortunes of other people to build a business and enrich themselves.

Why is it unsustainable? Because it does nothing to even the playing field. On the contrary it expands the gulf between the ‘haves’ and the ‘haves not’ in terms of income and prosperity, and looking at it through a historical optic it seldom ends really well for society.

This is where we have services such as meal delivery service Wolt whose business model IMHO is centered around a beautiful UX – or if you prefer; lipstick on a pig – a sizeable fee for participating (typically low margin) restaurants on every transaction and very little ending up with the ‘partners’ (i.e. not ’employees’ with any rights whatsoever) who do the brunt of the actual work.

This last version of the gig economy is what is giving the gig economy a bad name in many quarters. It may sound nice and flexible, but in reality its implications are poisonous over time to a lot of people. And potentially to society at well.

Looking forward we IMHO need to ensure that the development of a sustainable gig economy focuses on providing opportunity and access to the privileged version of it, for those who seek a more flexible lifestyle related to work and living their lives the way they see fit without in effect nesting at the bottom of society.

We can start that by developing services and programs that help these people deliver enduring value that they can actually capture the brunt of themselves.

(Photo: Pixabay)