Isn’t the notion of “disruption “, aka disruptive innovation, used and abused by analysts and technology experts? And by dint of abuse, aren’t we in the process of deluding ourselves? At a time when some are fretting about the volatility of the business generated by ‘unicorns’ or even centaurs, it is perhaps worth asking whether we have not entered an innovation bubble, yet accentuated by that of generative AI, marked by the correction of technology values and a return to more traditional values. Yet it may be too early to find out about the reality of such disruptive innovations. Here are my thoughts about the subject with a few references to sources and books I found interesting.

While some have been claiming that we are living in a bubble of innovation (here, here and here for instance and here and here with AI), it has to be said that not everyone always agrees. Especially with the advent of the so-called GenAI revolution.

In this piece, she explains what role disruptive innovation is playing in contemporary markets. She argues that disruption is not just a fad, but something more profound.

Forget all about unicorns, here come the centaurs! Bessemer Venture Partners – State of the Cloud 2022The hype surrounding disruptive innovation is overwhelming. Here is what I found here and there:

Despite this, and the spectacular performance of some companies that have established themselves in just a few years to the point of throwing a spanner in the works of well established markets and provoking defensive reactions, some observers maintain that we are facing an innovation bubble.

And these same observers point out that the expectations they have of these disruptive innovations are not in proportion to what they could deliver.

And when expectations exceed what innovation can deliver, disappointment occurs. As described by Gartner in its “Hype Cycle” with what the US analyst group calls “The trough of disillusionment“.

“The reality is that business disruption is not a fad. It is not a set of buzzwords you need to use in planning meetings, and it is not a way of positioning a brand in the marketplace. ,” explains Joanne Jacobs.

In her view, the only real break is the one that results from the convergence of three elements:

It is the combination of these three ingredients that she believes makes disruption a reality or a fiction.

We could, however, add a few important ingredients to this recipe:

In recent years, we have seen the emergence of new entrants in markets that were thought to be stable and saturated:

“AirBnB entered the top ranks in terms of hotel market capitalisation and Uber represented the world’s fastest-growing car rental with driver service,” Joanne wrote in 2015. These businesses were seen as a real challenge to such established markets. 

But what is the situation today? There was a clear wake up call in the high-tech industry. No more valuations without sound business results underpinning. Well, maybe.

So the question arises, is disruptive innovation overhyped? Vaclav Smil, the famous author of “Numbers Don’t Lie” answers bluntly that we are mistaken. According to him, the most innovative period in human history was the… 1880s ![/caption]

According to the worshippers of the e-world, the late 20th century and the two opening decades of the 21st century brought us an unprecedented number of profound inventions. But that is a categorical misunderstanding, as most recent advances have been variations on two older fundamental discoveries: microprocessors […] and exploiting radio waves, part of the electromagnetic spectrum.

According to Smil, and others, we may be living in a context that reflects a flowering of innovations, an accumulation of gadgets that are more or less important or distracting, but in which we are unaware of the importance of the underlying innovations.

To mimic smil’s deliberately cursory demonstration, we marvel at our little computer phones, but fail to take into account the importance of the work of Nikola Tesla to whom we owe the industrialisation of alternating current. Tesla died in debt and lonely, but without him, none of these gadgets would exist!

Many of the innovations we use are undoubtedly incredible – and I never cease to marvel at those communication tools we wield. Yet, does that mean that all these contraptions are truly disruptive?

Reading this article from 2015 today as the clouds gather over tech stocks and others are towering up is interesting. Where do we stand on “disruption” at a time when, as Smil has it, there are many more important things than that in the economy.

In 2015, “[…]A whole range of disruptor companies from DropBox and SurveyMonkey, to the secretive Palantir Technologies and audacious SpaceX”, were redefining the way organisations were communicating, researching and developing products, Joanne explained.

Even then (2015 seems a long time ago) she was rejecting the idea that we were living in an “innovation bubble”. At the very least, she recognised “a bubble of disruption hyperbole”.

30 years after the development of the commercial Web, we have the necessary hindsight to see what has really changed under the impetus of these ‘disruptive’ companies.

And I have miwed feeling about the result. Both naysayers and proponents of disruptive innovation mays disagree with me, though. Regardless, I have looked at both sides of the equation, and the pros and cons of that so-called disruption.

According to Eric Van Susteren (Momentive’s head of Brand Content strategy), there are 5 pieces of evidence that this disruption exists:

Better still, McKinsey proved to us back in 2019 that the pace of disruption was accelerating in its report “navigating in a world of disruption“:

But what will be left of all this in a few years’ time? Now that Covid has been forgotten, what has become of the ‘great resignation’? Will the wave of wealthy urbanites fleeing to the country last? We saw flock to the Pyrenees a few years ago and now they are all returning home to make a living. Nonetheless, only time will tell.

And how will the exiles in the far-flung suburbs survive such long commutes? Already, businesses are massively scaling down WFH policies. I’ve be a fan of remote working for 35 years, but I’m not sure it is made for everyone in the same way.

And what about the AI boom, noted by McKinsey in its report. In short, how can we tell the difference between disruption and non-disruption? How can we avoid, to use Joanne’s expression, this “hyperbole of disruption”?

Some readers may think that “all this doesn’t matter, it’s all theory, what matters is what happens in the field”. There is truth in that. It doesn’t matter that disruptive innovation is all the rage, the proof will be in the bacon and even in eating the bacon.

Let’s mention Web 3, for instance. Pundits are telling us that the blockchain is nothing but a lie and, ultimately, nothing more than a glorified spreadsheet.

It’s […] not surprising that whenever “blockchain” has been experimented with in a traditional setting, it has either been thrown in the bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a misleadingly named database

Others, no less knowledgeable, tell us that this is a major change and a fundamental breakthrough.

Web3 is not vapourware, it’s a vision that encompasses different principles based on practices and technologies that enable new applications.

Gartner, as far as they are concerned, issued a midlle-of-the-road statement about Web3.

Admittedly, blockchain is only one of the components of Web3, but not the least. So who should we believe? How can a layman navigate this world of “disruption”, to paraphrase MacKinsey?

What if we were living in a workd which has become too complicated for us to understand?

I’ve wondered a few times lately whether the world has really become complicated or whether it’s engineers and marketers that are messing things about so much that noone can understand anything anymore? Unless it’s Google — and AI soon — which made us stupid?

It reminded me of a lecture by the late Bernard Stiegler, who sadly passed away in 2020. His in-depth thoughts on the proletarianisation of our hyper connected society [see his presentation in French] hit the nail on the head (his diagnosis was more impressive than the solution he suggested).

We have lost the ability to understand the world around us

And once again, it’s Vaclav Smil who sets the record straight. The Manitoba hermit joins the French philosopher in a slightly different way.

He begins by pointing out the extent to which ‘experts’, during the outbreak of Covid, by dint of hyperspecialisation, had been unable to help us deal with the pandemic. According to the Canadian thinker, there is an underlying explanation for the fact that it has taken so long for so clever experts to agree on something as simple as wearing a facemask.

[…] explanations of this comprehension deficit go beyond the fact that the sweep of our knowledge encourages specialization, whose obverse is an increasingly shallow understanding—even ignorance—of the basics.

Smil’s sentence rings true, but not only to describe our ignorance of the world in its main components. Proletarianisation also strikes experts in innovation, the Web, digital and the economy, and in the analysis of so-called ‘disruptive’ technologies.

I don’t know whether Roubini is right or whether, on the contrary, the aficionados of Web3 or AI (or of the next high-tech fad) will win the battle. They probably don’t even have a clue themselves. And innovation takes such a long time that it’s possible that we’ll have to wait a decade or two before we know the whole story.

And so it is with ‘disruptive innovation’, and I used inverted commas quite intentionally. If someone had asked me – back when I created internet-banking.com – whether the Internet would ‘disrupt’ the banking sector, I would probably have said yes. And there’s a good reason for this: this selfulfilling prophecy was giving me job. Truth be told, I sincerely thought so.

Nearly 30 years on, my feelings are rather mixed. Almost all the neo-banks have been taken over by big financial institutions, and even if new ones have been created, we’re all keeping our fingers crossed for feare they crash before we’ve had time to withdraw our money (it’s already happend twice with me, once with ING and once with banque directe. Now my business is with Shine but after a year, Socgen got rid of them and this is a bad omen) .

Despite the above, Chris Skinner was predicting bank closures in droves nearly 10 years ago. And reality has finally caught up with many of today’s banking institutions, even in more traditional and stable markets like France.

‘Disruption’ did happen, but not in the way we expected originally.

If there has been disruption in the banking sector, and this is only the beginning, it is because of the impact of automation, a universal movement that affects all professions and that is linked to a natural trend in our societies since the miraculous 1880s, to put it in Smil’s words. Wherever a machine can do the job, it will. After all, human beings cost money, and they always complain that working is hard.

The answer to the question – is this technology disruptive or not – is not trivial, and is above all a matter of judgement and time.

The only thing that is certain is that the proletarianisation (in the meaning that we are losing the ability to understand how things work) that we are experiencing is not going to help us decode the technological innovations of the years to come. And that includes Generative AI in the first place.

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