5 things only disruptors know about the future

Disruptive innovation is a critical driver of progress. A cursory look at the past century reveals countless examples: automobiles replaced horse carriages, telephony supplanted telegraphy, email made fax machines obsolete. Life is mostly better for those transitions to superior technologies.

The most recent wave of disruption is driven by digital technology. “Software is eating the world,” as Marc Andreessen, founder of Netscape and venture capital firm Andreessen Horowitz, famously observed, and no incumbent in any industry is safe. In the last decade alone, we’ve changed the way we communicate and connect with people, how we consume all types of media, how we shop and how we travel, to name just a few. These innovations are collectively so pervasive that it’s easy to forget how we lived before them.

While disruption has major upsides, not everyone wins. Yet its force – in form of new technologies, business models, and products and services – is persistent and overwhelming. The Forum’s new report Dealing with Disruption provides the perspectives of leading entrepreneurs and investors on the impact of disruption and how policy-makers and society can best respond.

Amongst countless other insights, five from the report stand out:

1. The next six years will be unprecedented in human history.

As Steve Jurvetson, investor in Tesla, SpaceX and Synthetic Genomics explains, “Three billion people will enter the global economy from their currently isolated pools in rural areas of the developing world. Why? These 3 billion people will come online for the first time via cheap smartphones, connecting to the global economy. They will be potential consumers, entrepreneurs, and they will have access to online education resources like no one has had before. That is incredibly exciting from the point of view of more ideas coming together from more minds across the globe.”

2. The future you want is usually non-linear.

Vinod Khosla, founder of Sun Microsystems and Khosla Ventures, argues that, “There are two ways to predict the future. One way is to extrapolate the past, the domain of economists, and the other is to invent the future that you want, which is what technologists do. The future that you want is usually non-linear, different and full of possibilities usually driven by the passion of imagining what the future might be by an entrepreneur, not an extrapolation of the past, which big corporations and incumbents tend to want to continue.”

3. Some industries are more ripe for disruption than others.

There is no “common thread because disruption can come from different directions”, believes Bill Gurley, investor in Uber, Zillow and OpenTable. “Industries get disrupted for different reasons. Technology can disrupt an industry” but so can other things, as explained by Clay Christensen’s Innovator’s Dilemma. To identify opportunities for disruption Gurley proposes to ask, “Where does technology have the opportunity to materially change the user proposition or the user experience? There is so much venture capital available today that you’ll see “Uber for this, Uber for that” but I’m not a believer that every industry needs disruption. There’s a real question of whether technology adds value in a way that materially changes the user experience, and that’s what we should look for.”

4. Entrepreneurs commonly succeed in an ecosystem.

Andras Forgacs, Co-Founder of Modern Meadow believes, “There is an idealized vision that clever start-ups are conceived in garages and basements, with teams of renegade loners who devise some kind of clever widget or product and take over the world. That’s a great vision, but in my experience it’s rarely the reality. Really successful entrepreneurs are often driven by an understanding of an unmet need, which often means they understand an industry or problem really well, and they actually come from the industry which gave them the insight to see the problem which needs to be addressed. They then assemble ideas or resources that are already around them. That doesn’t happen in a vacuum, but it relies upon many inputs and resources. It relies on technology or insights that may come from anywhere.”

5. Governments play an important role.

Simon Rothman, Partner at Greylock adds, “Historically, innovation has moved faster than regulation, and that’s expected. There is a push and pull on governments from various actors, which, when balanced, is a good thing. Governments need to make sure there is security and safety, for example. Having this tension is good. […] Governments understand those changes, but the pace of change is very fast, and governments must play a role in shaping rules around safety.”

The report includes information from 18 interviews with innovators, investors and thought-leaders at the forefront of disruptive innovation, which together paint a picture of transformative change ahead.

Read the whole report at: Dealing with Disruption.

Author: Peter Gratzke, Project Manager, Investors Industries, World Economic Forum

Image: People gather at a steel mill “Interpipe Steel”, with an installation created by artist Olafur Eliasson seen inside, in Dnipropetrovsk, October 4, 2012. REUTERS/Anatolii Stepanov