Identifying the next big disruption

Silicon Valley is full of soothsayers and dreamers; some make it their hobby; some have honed it to a fine art but if there is something in common – it is chasing the next big disruptive idea. If you want to put it on the Gartner Cycle – it is at the upswing just before the exponential curve (and way before the inevitable disillusionment trough). At this stage there is a sudden explosion of realization that this may be BIG; followed by a frenzy of investment from the venture capital community with big corporate not far behind – FOMO (fear of missing out) is a tangible worry. Anyone coming in after that is nothing but a speculator, and we all know where they typically end up! The question begets itself to be asked – can we make this event a wee bit more predictable – especially if this could be vastly disruptive in nature? This would be of immense value for all at hand; for the firms engaged in creative disruption, for the folks funding them – and perhaps most of all serving as the canary for those firms about to be disrupted. While a formulaic approach perhaps does not exist – both to predict the nature and timing of the disruption there are some indicators which could be handy.

While difficult to zoom into a particular company, I have observed that the above framework does help in identifying industries which may be prone (and perhaps deserve) to be disrupted.

1. Traditional market is saturated and players are more focused on grabbing market share rather than growing the base
2. Difficulty for customers to really differentiate between offerings – this can be observed when one relies more heavily on marketing efforts over a clearly better product to do the job
3. When all the buzz words are around efficiency and cost cutting is rampant
4. And finally, when the core beliefs (including how the customer ticks) is out of sync with today’s world.
5. …. There is one more – where a heavily regulated market serves a primary purpose of maintaining status quo rather than fostering innovation!

When these factors coalesce, it quickly becomes apparent that the market landscape is full of stodgy dinosaurs, unable to move fast, to innovate – and the organizations are either at the height of their hubris or incapable of reacting to the writing on the wall.

If one can track these indicators over time (and across players) distinct patterns begin to emerge – and converge. It is then, if you are a smart investor that you need to go hunting. The last barrier (regulation) indeed may create hurdles; but if customer acceptance is gained and it becomes the norm rather than the novelty – then all you need is to stay the course. When that happens – this upcoming disruption will end up as your promising opportunity.