Digital = Disruptive innovation

We live in the midst of a hurricane. A hurricane of digital activity that many call Web 2.0. Wikipedia, Facebook, Twitter, Groupon, Salesforce.com, just to name a few. How times have changed from those companies that laid the foundation of the technology world as we know it today.

Companies like Microsoft, Cisco, Intel, Google and Amazon have leveraged the power of digital to make the world more productive, efficient and lucrative. We now move information faster than ever and will continue to do so at a breakneck pace. With the proliferation of mobile devices and mobile connectivity, we can remain plugged-in just about anywhere in the world.

It is amusing now to look back into the late ’90s when we heard from many companies and people say “We don’t believe in the Internet” or “The internet is a fad, it will go away.” Today we hear the same thing, just with different digital trends. Search the term “Social media is a fad” and you will find some interesting results. One thing is clear, as true disruptive innovation takes place from one generation to the next, we never go backwards.

Remember the days of going to the library and looking things up in an encyclopedia? Do our children even know what an encyclopedia is? What about a cassette player in your car? Have you tried getting one in a new car? When do you think the CD will go extinct and replaced by yet another high-capacity medium? Remember the days of 12 CDs for 1¢? Nowadays, you don’t have to buy an album but can download a single song for 99¢ on iTunes, Amazon.com or other online stores. Where has the local record store gone? Extinct.

Netflix recently announced the separation of its streaming and DVD rental businesses. While this is painful for many existing customers, it was a very aggressive and business savvy move. Netflix is a content delivery company and leaders are betting its future success is in digital (streaming for now). We know the competition including Apple, Hulu, Google TV, Walmart and Amazon is hot on the heels of Netflix. The company recognizes the need to continue to innovate both technically and business wise in order to survive.

Today is digital streaming but what will content delivery look like in four years? We live in a digital world that will continue to become exponentially faster. Companies must be able to adapt … or they will quickly become extinct. Netflix has adapted with Qwikster to ensure flexibility in the business model. Now the company can optimize for DVD rentals and throttle up that business as the DVD platform dies out. And believe me DVDs will eventually die. Qwikster can now be sold, shutdown, IPO-ed, whatever Netflix wishes to do from a business tactics perspective.

What will be amusing is if Netflix sold Qwikster to Coinstar (owner of Red box), or to Blockbuster, or any other competitor. Some customers say Netflix did something dumb; I say strategically well played on the chess board of corporate maneuvers.

Digitally disruptive innovation over the past decade has altered the entire world and has disrupted successful businesses to evolve or perish. For every Blockbuster, you will find a Netflix. What will Amazon do to hosting and computing hardware manufacturers with Amazon EC2? The story is continually unfolding in front of us. For the next generation of disruptive digital companies like Facebook, with hundreds of millions of people using the tool, Facebook wields a tremendous amount of power in shaping the digital landscape.

My favorite new disruptive innovation is the Google Wallet. Society has trained us to stick any plastic card in our wallet. I bet some of us have some of the most useless plastic in our wallets. While the Google Wallet program is still in its infancy, the thought of being able to get rid of all the plastic in my wallet sounds great.

How can this be disruptive? Let’s start with an easy one. Imagine what this will do to the card manufacturing industry. Let’s go a step farther and ask its effect on credit card companies themselves like Visa and American Express. If you can get a Google prepaid card and Google pays the vendor, Google is now be competing with credit card companies.

Why stop there? With companies having all time highs in profits and cash, why can’t companies all issue payment systems and get in the finance game? Is that so crazy? Every car manufacturer seems to also have a finance business, why not the most profitable digital companies?People that love Apple products are zealots; how about an iWallet? I pretty sure people will use it. Wanna get crazy? With financial stock valuations at as low as I have seen them in many years, do we still need brick and mortar banks?

Personally, I just want to get rid of my wallet.

At Imaginuity Interactive, we help companies figure out how the digital evolution will effect them regardless of industry. If you don’t know how digital change will disrupt your company, give us a call or shoot us an email. We’re happy to start a conversation.

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