Innovation is NOT optional

Many long-standing enterprises find it difficult to generate organic growth, with younger companies outperforming established players. To put this in context, the average tenure of an S&P 500 company has been declining as the speed of digital disruption is accelerating [7]. In the late 1970s, the average age of an S&P 500 was 35 years, and this number is predicted to further decline to just 12 years by 2027.

Organizations that have stood the test of time amidst digital disruption have adopted strategies that evolve continuously to help them withstand more fluid or uncertain market times. It doesn’t take much for a new entrant or a startup to come up with an idea that disrupts an entire industry. Let’s look at a few companies that veered off traditional methods and revolutionized their respective industries:

• Airbnb, founded in 2008, is one of the largest accommodation platforms that disrupted the hospitality industry. While traditional hospitality companies owned, maintained, and operated properties, Airbnb revolutionized the tourism industry by serving as an online marketplace for short-term homestays and holiday experiences.
• Uber, founded in 2009, is the largest ride-sharing company that disrupted the car rental and leasing industry. While traditional car rental companies owned and leased cars to customers, Uber changed the dynamic by offering ride-shares through just a mobile app.
• Netflix, founded in 1997, started as a DVD rental business and is now the largest streaming platform that has transformed the way consumers rent and watch movies and TV shows. While Netflix does produce its own movies and TV shows, it primarily leases movies and TV shows that can be streamed on its platform.
• Amazon, founded in 1994 as an online marketplace for books, is the largest online retailer by simply serving as a marketplace platform connecting buyers and sellers, revolutionizing the retail industry, whereas traditional retailers have to own and operate a physical brick-and-mortar store and manage inventory. Since then, Amazon transformed itself into a conglomerate and expanded into several industries.
• Spotify, founded in 2006, is the largest music streaming service but doesn’t own any music. Instead, it licenses music from record labels and lets subscribers stream it for a fee.
• Robinhood, founded in 2013, disrupted the financial services industry by offering commission-free trades of stocks and exchange-traded funds and cryptocurrencies, which was never thought possible before. Robinhood democratized trading through a simple mobile app.
• Teladoc, founded in 2002, is one of the largest telehealth companies that disrupted the healthcare industry by leveraging mobile technology to connect patients and doctors virtually anytime outside of a healthcare facility. Unlike traditional healthcare providers, Teladoc doesn’t employ doctors or have its healthcare facilities.
• Pillpack, founded in 2013, disrupted the pharmaceutical industry that was traditionally dominated by retail players that operated in a physical space, filling prescriptions for patients. Pillpack ideated and implemented the concept of consolidating multiple pill prescriptions and delivering it to customers’ doorsteps.
• Chime, founded in 2012, is a challenger bank that offers banking services exclusively through online and mobile, disrupting the banking industry by offering fee-free banking, early paydays, no fee, and no credit check credit cards, forcing traditional players to respond.
• Rent the Runway, founded in 2009, is a clothing rental company that disrupted the designer clothing industry by allowing customers to rent, subscribe, or buy designer clothes through their online platform. This business model addressed a major consumer concern of overspending and having to own apparel such as event garments, wedding dresses, and ski apparel, which are infrequently used.

One commonality across all these companies is that business disruption is almost always led by modern digital technology. Let us explore how enterprises can innovate and move up the digital frontier.