“Disruption” Is For Fools

Every week there seems to be a news story on how an app has been developed to “disrupt” the healthcare industry.  I despise what this term has come to mean and as soon as I hear someone say it, I know I’m speaking with a fool.

“The Uber of Healthcare!”

“The Amazon of prescription drugs!”

“The Airbnb of social care!”

These ideas actually sound really good on paper.  The profitable business model has already been executed and refined in other industries.  So you just need to take the idea and implement it in a different industry and et voila, you’ll have a billion dollar business!

I can imagine the type of people who think that copying business ideas and implementing it in healthcare is a good idea.  Usually people in dark blue suits, rather than a hacker wearing a t-shirt.

I suppose there’s an aura of courageousness associated with carrying out a project that can potentially “disrupt” a given market place.  However, in my own experience I can see why these projects always fail and in most cases, fail really quickly.

What Is Disruption??!

Definitions are important.

Before “disruption” turned into a buzzword, it actually used to mean something completely different.  Nowadays, disruption means a piece of technology that’s designed to destroy a business or a business model.  The people who do not embrace disruption are accused of “protectionism” or not getting with the times.

“I can buy my groceries online, so I want to get all my doctoring online as well!”

This argument is obviously a non-sequitur.  But entrepreneurs in blue suits and the lay public are often incapable of critical thinking…

Disruption used to mean a piece of technology which would radically lower the price of a produced product.  For example, microprocessors allowed computers to get cheap and it allowed new businesses to flourish.  IBM had market dominance in the computer space by making mainframe computers.  They thought that microprocessors would have no significant effect on computers and so other companies came along and “disrupted” them i.e. other companies provided a cheaper alternative to mainframe computers and produced the Personal Computer.  Soon Microsoft made it their mission to “put a PC on every desk”.  The rest is history.

There is a big difference between this kind of disruption and the kind of disruption which is always talked about in the press.  Microsoft didn’t think “we want to destroy IBM and the other evil incumbents!”.  In fact IBM was the company that (mistakenly, in hindsight) gave Microsoft the rights to produce the operating system for their own computer systems.

It is quite interesting that the companies which have actually “disrupted” industries successfully often go unnoticed and are not really thought of as “disruptive”.

PayPal for example disrupted the financial industry with their online payment system.  At the time the financial sector didn’t want to go anywhere near online payments as they feared that the amount of fraud would destroy them.  There was a gap in the market and PayPal took on the risk.  As they grew they figured out ways to lower their fraud levels and made it a profitable business.  Peter Thiel (one of the founders of PayPal) went on to say that although they disrupted the sector their company was welcomed as they actually created a lot of business for companies such as VISA.

There’s a pattern here.  True “disruption” isn’t about creating a lot of noise and trying to destroy particular companies or industries.  It’s about creating technology which creates a meaningful impact in the world.  If certain incumbents fall by the wayside as a result, then so be it.  But that shouldn’t be the mission of the company.

Liberalism & Conservatism

I thought that an addendum would be apposite here.

Recently I’ve been thinking quite a lot about conservatism vs liberalism and its role in entrepreneurship.

I have found in my own experience that a lot of tech entrepreneurs / people who want to “disrupt” industries are more of the liberal type.  These are the t-shirt and jeans types, with strange facial hair and never more than a meter away from an Apple product.  Liberalism seems to go hand in hand with creativity.  Being open to new ideas, new ways of doing things, criticising old ways and paving the way for new ways of doing things is what liberalism is all about.

It’s easy to see why these people would find the idea of “disruption” quite romantic and heroic.  “Imagine if we lived in a world where these bureaucratic systems were not in place.  Technology, could supplant all of these unnecessary  systems.”.

Wait, so earlier in this post I was complaining about people in blue suits and now I’m complaining about people in t-shirts and jeans?!  Well, the worst types of entrepreneur are those in blue suits who are trying to be liberal and trying to act like they are innovators, when actually they’re just people looking to make a buck.

Like so many things in entrepreneurship, it seems to me that the perfect entrepreneur is a mix of liberalism and conservatism.

Entrepreneurs who embrace the past, work with well established institutions and companies, but are also able to embrace the future and lead us to the new world are the real deal.

Peter Thiel to me encapsulates the perfect entrepreneur.  He supported Trump, has quite a conservative outlook, but at the same time is working on AI and has successfully disrupted the financial sector.  He also wears suits, but with his top button undone…Perhaps the best dress code?

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