Disruption. For decades, it has been the holy grail of the innovation industry, the key to unlocking transformative business models that challenge the status quo. From retail and transportation to media and manufacturing, technology titans have built empires by disrupting established industries and reinventing inefficient markets. Venture capitalists eagerly fund daring startups aspiring to be the next "Uber of..." whatever.
The term "disruption" was coined by American academic Clayton M. Christensen to describe the economic impact of technology and innovation. The term "disruptive innovation" first appeared in his 1995 article "Disruptive Technologies: Catching the Wave," which he co-wrote with Joseph Bower. Their article was written for executives and Wall Street analysts who make investment decisions.
Christensen expanded on this idea in his 1997 book "The Innovator's Dilemma,” wherein he described the process by which a smaller company with fewer resources successfully challenges established incumbent businesses. As incumbents focused on improving their products and services for their most demanding (and usually most profitable) customers, they tended to leave their back doors open to being dis*%$ted.
So, as it was originally conceived, disruptive innovation appeared to be a viceless tide capable of lifting all boats. And, to be fair, a great many people have reaped enormous benefits from technological disruption in terms of increased choice, convenience, and efficiency. Shareholders have rejoiced as disruptive companies' stock prices reached dizzying heights. Even industry incumbents have benefited from adapting their business models and developing new competencies.
The Dark Side Revealed
But the dark side of all this tech-fueled disruption is now being revealed. In our rush to tear down and rebuild industries, we've left ordinary people behind in the rubble. The inconvenient truth is that the jobs lost to automation, algorithms, and AI are not just menial roles but often middle-class careers that supported families and communities. Retail clerks, bank tellers, and even white-collar knowledge workers like analysts, radiologists, and screenwriters are under threat as software becomes smarter.
Main Street economies are collapsing as online platforms and digital services replace brick-and-mortar businesses, taking small and large businesses and their sales jobs with them. Even when new jobs are created as a result of disruption, they're frequently contract gigs with little stability or benefits.
As Kare Anderson wrote in Forbes Magazine all the way back in 2005, "When leaders focus on task excellence and results alone, dehumanization naturally occurs. We need to balance the focus on results with a focus on people.”
Disruption's Ruthless Efficiency
It turns out that disruption's ruthless efficiency extracts a heavy social toll. Mental health suffers as technology colonizes our lives. Privacy is invaded in the name of personalized service. Vulnerable groups face new barriers and biases. Misinformation taints civic discourse. As technology reorders society, it seems no one is instituting proper guardrails or considering second-order consequences.
However, the companies and brand owners driving this disruption do have a choice. They can continue to pursue technological innovation at a breakneck pace, unconcerned about collateral damage. Or they can deliberately balance two priorities: embracing new technology to better serve customers while minimizing harm to workers and society.
Striking A Better Balance
A few daring brands are attempting to strike this delicate balance. Zappos combines artificial intelligence service bots with human interaction. Starbucks' mobile apps help to ensure the job security of its baristas.
Pinterest has just launched a new AI feature that helps users find plus-sized models wearing plus-size wedding gowns: a smart move because, according to Canvas8, over 50% of all body-related searches on Pinterest's platform are for plus-sized fashion.
Despite these efforts, most businesses still exist primarily to serve their shareholders, not society. To avoid the downside consequences of disruption, corporate purpose must be fundamentally expanded.
Delta Airline's recent struggles are a salutary example of how difficult it can be for brand and business leaders to strike the right balance between using technology to drive better profits or serve people better. Delta's new biometric boarding system employs cutting-edge facial recognition software and machine learning, but it's not intended to replace gate personnel, but rather to make their jobs easier. On the other hand, Delta epically failed to prioritize its own customers when it botched the recent reengineering of its popular SkyMiles loyalty program by titling it in favor of its partnership with Amex and away from its most frequent flyers.
Uber's use of smart peer-to-peer matching software to dismantle the legacy taxi industry has to be the poster child for modern-day disruption. Let's remind ourselves why riders first embraced Uber. It was partly due to increased urbanization but also the fact that millennials prefered brands to institutions. Add decades of underinvestment in public transportation and Uber simply capitalized on these pre-existing forces by building a tech platform that benefited from venture capital subsidies supercharged by falling cloud computing costs.
What's been the result of all this innovation? Uber is a globally recognized brand renowned for making mobility more efficient for millions of riders. But it's also a brand that 'employs' thousands of unprotected gig workers and taxi drivers whose livelihoods have been severely harmed.
Even as the pace of disruption quickens, the social fabric frays.
Rethinking "Disrupt or Be Disrupted"
As the cultural insights firm Canvas8 foresees in its latest look-ahead report, “The mainstreaming of AI will have massive implications for people’s sense of agency, and employees will continue to fear the rollout of new technologies in the workplace. We’ve already seen the ramifications of this, with precedents set by writers’ and actors’ strikes in the US as people reject the use of AI by streaming services and ongoing train strikes in the UK as people fear an increased overreliance on technology. Increasing launches of disruptive technologies by businesses in 2024 will see people further advocate for the security (albeit already precarious) of keeping things as they are.”
Maybe disruption doesn’t need to be so destabilizing. Perhaps technology can be introduced gradually and collaboratively, giving people time to adapt. In any case, business leaders must first acknowledge that disruption’s benefits have come at a profound societal cost. The notion of “disrupt or be disrupted” must be rethought.
Otherwise, tomorrow’s disruptive technologies may rupture not just business models but the very social fabric. And no economic efficiency will justify that.