Technology has long been a measure of human advancement and power. Today, the next revolution is well underway, and the world is rushing to adapt to the rising speed of development. What feels like incremental change today is truly exponential compared with the past, and expectations continue to rise. Disruption is the new normal and will drive relentless change.
Retail apocalypse. Some of the most obvious disruptions in Western countries have come from retail, as the rapid rise of e-commerce has highlighted retail overexpansion. Many well-known retailers have faced bankruptcy or liquidation, including Toys R Us, Sears and RadioShack. Still, others have successfully navigated into an omnichannel approach, like Target and Walmart. They both have earned praise across the industry for their strategic corporate reorganizations and heavy investments in nailing the customer experience.106
From ridesharing to autonomous rides. Over the last 10 years, ridesharing platforms have transformed transportation. The apps have completely disrupted the taxi industry and changed the conversation about car ownership. It was nontraditional companies like Uber, Lyft, Google and Tesla that brought about the first wave of autonomous vehicle testing on public roads. Sensing disruption, GM invested in Lyft in 2016 to enable innovative partnerships like providing incentives for Lyft drivers to lease GM cars and co-developing autonomous vehicle platforms. Toyota and Uber followed suit. These partnerships have seen varied success.107
The sharing economy. The combination of the economic hangover from the 2009 financial crisis and a growing interest in sustainability launched a number of “shared economy” businesses. Rent the Runway (a fashion rental business) and ThredUp (a secondhand clothing platform) both achieved valuations above $1 billion, also known as unicorn status, in 2019. Airbnb enabled home sharing, Netflix and Spotify enabled entertainment sharing, and companies like Upwork even enabled worker sharing, with its freelance marketplace used by workers as either a primary or secondary source of income.
Amazon everywhere. The last 10 years also saw the dominance of Amazon and Alibaba in an era of tech companies greatly expanding their reach. Amazon, for example, rocked the food world when it announced its 2017 acquisition of Whole Foods.108 In 2021, it’s clear that no industry is immune to possible disruption, considering Amazon’s businesses span grocery operations, web hosting, hardware development, advanced natural language processing platforms, video content creation, and the world’s largest online e-commerce platform and delivery distribution network.
Expanding private capital. While the 2020 COVID-19 pandemic is sure to affect the dynamics of the private capital markets, much of the disruption to incumbents over the last 10 years has come from companies funded by venture capital. As more money flowed into VC, the popular conversation has argued that, because companies can stay private longer, they can operate unprofitably longer – furthering the risk of disruption to established companies. The recent IPO flops of Uber and Lyft threaten that thesis, but (at least pre-COVID-19), the investment in VC has continued to rise year on year to support late-stage rounds that would typically be IPOs.109
Perhaps the most reliable truth about the world is that it will change. With a surge of 5G infrastructure and the maturing of key technologies, the world of the next five years is likely to change even faster than the last. Even at the current churn rate, about half of today’s S&P 500 firms will be replaced over the next 10 years as “we enter a period of heightened volatility for leading companies across a range of industries, with the next 10 years shaping up to be potentially the most turbulent in modern history.”110
As e-commerce continues to expand, retail will see dramatic continued disruption while the industry evolves into an omnichannel model. Store formats like interactive pickup lockers and hyper-local fulfillment centers in which one 10,000-square-foot picking system can serve 15 stores’ worth of deliveries will become more common as companies prioritize consumer convenience over breadth of offerings.
Beyond retail, disruption is likely to occur wherever technology or shifting consumer preferences change the metrics of competition.
According to futurist Michael Rogers, some of those disruptive vectors to monitor include:
Separately, access to data will shape innovative business models and spur unexpected new entrants into industries. Google, for example, has begun applying its machine learning technology to material science research.111 In parallel, as capital continues to shift into private markets, R&D will continue to occur outside of large corporations, and corporate venture groups will become an increasingly central feature of the innovation model of the future.
The most valuable skills that companies can build to adapt to a rapidly disrupting world are, one, recognizing disruptions and, two, disrupting themselves. Rogers believes that the best self-disrupting companies will develop a central group to develop disruptive business models and staff it with entrepreneurial internal leaders. To succeed, the group will have support from executive champions, be free of short-term operating pressures and be institutionally integrated through rigorous processes.