Rather than being disintermediated by technological disruption, legacy organizations are increasingly understanding how to manage and survive changing technology and the impact of the new organizational and consumer behavior it inspires. In fact, “smart money is going to legacy organizations that are leading the way in adopting new technologies or partnering with disruptive startups to grow their legacy businesses into high-performance fulfillment ecosystems that can lead and win in the new economy,” Mosa said Issachar, Head of Digital Asset Investments at Triumium.
Trium, an SEC-registered venture capital fund manager, is a leading digital venture builder with a vision to identify and solve emerging and frontier market challenges in Africa by harnessing the transformative power of technology backed by smart capital and expertise.
The key to understanding disruption and how new technology replaces old technology is grasping the power of exponential effects. For example, if a sheet of paper could be folded 50 times, the first fold would be only a fraction of a millimeter thick. At its 50th fold, the sheet is about 100 million kilometers thick, about two-thirds the distance between the sun and Earth. This illustrates the impact exponential trends can have on workers and businesses. It also defines what Trium means to be subversive.
True disruption must have an exponential impact on the business. Despite the current hype surrounding disruption, disruption has always been with us. In 1436, Gutenberg’s printing press disrupted the scale and speed of information dissemination, decentralizing the church’s monopoly on the production and reproduction of books and information. Not only did this drive the Reformation, but it is very similar to countless other social, cultural, economic and political changes that have taken place in Europe over 400 years.
In order to clearly define the nature of disruption in the current context, this article will discuss some taxonomies, especially technological disruption. In addition to being exponential in nature and, like the printing press, capable of distributing former monopolies;
News continues after this ad
- Disruption should challenge existing structures. The digital asset ecosystem essentially positions itself as a parallel and alternative system, not just an enhancement of existing traditional analog structures. For example, blockchain offers a completely separate banking ecosystem where value is not created, defined or managed by governments. In fact, on a blockchain, where governments or other authorities have no power to manipulate or manage the ledger, “the fewer gatekeepers there are to prevent or isolate people from using the system, the more the system can improve its transactional capabilities,” Issachar said. As such, blockchain technology represents the first real challenge to money creation, valuation, acquisition, and deployment since central banks began issuing national decrees, first in 11th-century China and medieval Italy, and then as the world left After the gold standard in the early 70s.
- Technological disruption should also provide greater efficiencies than legacy or legacy systems, eroding or displacing previously used infrastructure. If the telephone replaces the telegraph, and then the Internet replaces the landline system, not only is the technology completely replaced, but the capabilities enabled by disruptive technologies are greater than before. In short, the next generation has to offer truly significant benefits. It is unlikely that an expensive legacy system will be abandoned unless the gains in efficiency, performance, or capacity are truly greater.
- Truly disruptive technologies also typically follow an S-shaped adoption curve, first attracting early adopters who can identify and deploy disruptive value. The exponential advantage accrued by early adopters then sparks inspiration.
- True technological disruption is also defined by network effects. Internet technologies, for example, have increased the scale and speed of technology adoption relevance. Technology enables people to communicate across the globe to share and network on the same global platform of technology, language and interests.
- The ultimate defining characteristic of technological disruption is late-stage exponential growth. It took about 500 years to go from the printing press to the personal computer (PC). From the personal computer to the Internet in less than 20 years. However, network effects over the past 20 years have grown exponentially over the previous 50 years.
Once legacy organizations understand the nature of true technological disruption and can determine its value or potential in their business, the next challenge becomes how to adapt to integrate technological disruption for growth. Trium’s experience in building technology startups from scratch and then setting them up to operate independently or integrating them into existing legacy businesses provides valuable insights into how legacy businesses can leverage disruptive technologies for sustainable growth. “Riding the wind and breaking the waves” is always prudent. This explicitly means not positioning legacy organizations as opposed to technological disruption. Instead, organizations should seek to understand the nature of the disruption, especially how the business can use it to improve its capabilities.
Therefore, the second principle of effectively utilizing technological disruption is to understand how to redesign from the first principle. For example, traditional music producers and marketers quickly found themselves redundant in an environment of exponentially growing global music distribution and sales, unaware that Napster had changed the first principles of legal copywriting and ownership.
News continues after this ad
Legacy organizations should integrate new technologies quickly, wholesale. This cannot happen sporadically or too slowly as the organization phases out legacy technologies, develops or acquires new skills, or establishes appropriate structures. Speed of adoption and agility to adapt are critical if traditional organizations are to successfully leverage disruption.
Also, the rule of thumb for legacy organizations is that new technology systems need to be built outside of the legacy model. Disruptive technologies should be built, tested and adopted in smaller systems, “separate from the business” – and then rapidly deployed into formal structures. Traditional enterprises should also develop a two-speed or multi-speed organization capable of Run a different system.
Also, it is wise to learn, develop or use new skill sets. While retraining is important, hiring tech natives who are already proficient in disruptive technologies is key for both immediate capability and deeper organizational learning and change. Finally, legacy organizations need to be able to measure the impact of the technologies they build or adopt. Only by understanding the impact of disruptions can businesses develop products or services that exponentially improve the customer experience beyond the sum of its parts.
Trium has developed a first principles operating model based on its hands-on experience in identifying, developing or partnering with high potential disruptive technology start-ups in Nigeria and other African emerging and frontier markets. This experience has resulted in a culture at Trium that is adept at integrating disruption into a multi-speed business culture, capable of understanding, explaining and advising on the full force of traditional organizations acquiring and deploying disruption.
Learn more about us here, you can also connect with us on Medium, LinkedIn and more Twitter