What is it about disruption?

The reported recent demise of Purplebricks in Australia raised for me something that I had been wondering for a while.

We seem to have become enamoured in our business culture about disruption. There is something exciting and dynamic about disruption. It breaks the mould - and I wonder if we have a perception that in any story, “I” would be the disruptive one, so there is something heroic about it.

Purplebricks was introduced in Australia to a huge fanfare. This was going to disrupt the real estate agents business model by giving sellers a wonderful experience at an all new fixed price point.

And yet here we are now with the disrupter failing to survive. We shout loud when the product is launched and are interestingly subdued about the demise. And Purplebricks is not the only example of that.

I find it fascinating that we have even created a language and expectation that failure is okay. Maybe even noble and desirable. “Fail fast”, “Fail Forward” and “Until you have failed you won’t succeed”. Now maybe that is true of Purplebricks and a new disruptive model will rise from its ashes - and maybe it isn’t. Time will tell.

Disruption and regulation

There are other examples of disruption that I think we also need to learn from because I wonder if we have fallen for a two card trick. These are the ones where the disrupter appears to consciously ignore the existing regulatory environment and treat that as part of the status quo which should be thrown out. Effectively they are thumbing their nose at us as a society. They are declaring that the regulation which exists needs to be dismantled - just for them.

Sadly I believe there are companies who have done this deliberately and have used this regulatory arbitrage to support their ‘disruptive’ business model. [For clarity, I am not accusing Purplebricks of this.]

Frankly I think this should be stopped at the start. 

Regulation is either good for all or should be dismantled for all.

We need to be clearer as a society that regulation is our way to ensure all commercial enterprises stay within our desired boundaries of their potential action. If the regulation is “bad”, then it is bad for all and should be altered or removed. If it is “good”, then it is good for all.

Is there another way? What about innovation?

As a significant participant in a (quite rightly) regulated environment, I think there is an interesting alternative path - which is innovation.

For me the big difference between the two is that disruption is finding a hole in a business model and introducing a new approach which fundamentally undermines the existing business models. I feel it is hard for an incumbent to be disruptive.

I think innovation has a strong sense of incremental improvement and change. It operates within an existing business model and drives change and improvement in the delivery of that model.

So in my situation I believe innovation is critical to my future. And I'm okay with that. I don't need to be a 'disrupter'. However if I fail to innovate in the context of my business, I will fail to be competitive in the future and my particular business will come under threat.

That said, however innovation doesn’t sound as sophisticated and exciting as disruption. Maybe it isn’t. But it seems to me to be a more confident path to the future, especially in a regulated sector. Maybe there will be a disrupter in my segment. If there is, then I think the regulation that we are bound to needs to be matched by them - or removed for all. Regulatory arbitrage cannot be part of the disruption.

Overall the demise of Purplebricks in Australia resurfaced for me a sense that disruption is what we seem to talk about a lot, but maybe innovation is what we need to invest in a lot more.

What do you feel about this? What are your thoughts on disruption and innovation?