Jumping on the bitcoin bandwagon underestimates new technology’s long-term potential

From blockchain to AI, 2017 was the year companies fully embraced jumping on the shiny new tech bandwagon. Bohemia's Alex Connell considers how our tendency to run before we can walk is affecting businesses.

We’re currently living through a time where an ice tea manufacturer can add blockchain to their name and increase their share price 200%, an asset with no perceived value other than market confidence increases its share price from $500 – $18,000 in a year, and supposedly everyone from your local grocer to Amazon is using AI despite not really knowing what it means.

There is no denying it’s a bizarre time not only to be in business but to be alive.

So what’s driving this?

Amara’s law says we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.

Moreover, this current short term disillusionment is by virtue of the current blurry digital age where we haven’t made sense of a lot of things just yet largely driven by mass internet usage only being 20+ years old.

We have augmented the old analogue world with the current digital world, now posing questions such as ‘is TV viewing the device you view it on or the content you consume?’

It took 45 years for the vacuum cleaner and 23 years for the dishwasher to make sense by reaching mass adoption, despite the benefits being clearly visible nowadays.

The pace of change has never been faster, and with better access to global markets than ever before and ability to scale intellectual property via technology, pretty much every business in every market is being disrupted.

However, for every Uber, AirBnb, Tesla, Amazon, there are many more superficial responses to this disruption and confusion continuing to transpire.

Recently New York-based beverage maker Long Island Iced Tea changed its name to “Long Blockchain Corp” and sent the share price up 200%. Burger King Russia also introduced a cryptocurrency-based loyalty scheme called ‘Whopperchoin’ despite not having any logical reason to do so.

Perhaps it’s too kind to look at these ‘innovations’ this way but we can they can be looked at through the lens of ‘sustaining innovation’.

Clayton Christensen famously introduced the ‘sustaining innovation’ concept in his 1997 book The Innovator’s Dilemma to describe how businesses focus their efforts at the higher tiers of markets on what has historically helped them succeed – charging the highest price to the most demanding and sophisticated customers at the top of the market to achieve greatest profitability.

However, it’s often the initial bottom up approach where innovative disruption comes from: lower gross margins, smaller target markets, and simpler products or services that may not appear as attractive as existing solutions when compared against traditional business performance metrics.  

Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving or trying to move upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge, leading to ‘disruptive innovation’.

Blockbuster ignoring Netflix by thinking consumers weren’t ready to watch feature length films online is an example of this.

The canvas of opportunity and the tools to execute have never been greater, but too often it’s brands looking for a quick win with a flashy PR release that taking the headlines and not those willing to undertake vast organisational effort in effort to reimagine what’s possible and want can be solved with the power of technology.  

It’s easy to see why some big business exist in the way they are, and also easy to understand why smaller start-ups are riper for real adaptation and change.

But are explanations enough, or is it a case of adapt, rebuild or die?

Alex Connell is digital manager at Bohemia Group.


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