The goal of this presentation is to investigate how the digital revolution is impacting the way in which disruptive innovation unfolds. The main theoretical traits of disruptive innovation are presented; then, the key dynamics ignited by the pervasive effects of digitalization are introduced and described. Furthermore, a case-study on the Transportation Network Company UBER as the taxicab industry disruptor is presented, highlighting the key elements that are characterizing the company as a digital-enabled disruptor.

1. Andrea Paraboschi, Ph.D.
www.paraboschi.it
Disrupting in the digital era
key traits of an evolution of disruptive innovation
image credit:
scorp84 (Flickr)

2. the digital revolution
one language one channel everywhere
Binary numeric system Internet Wireless
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

3. < 0,2% of population
analog
voice
single purpose
source: ITU
1990
50% of population
digital
data
multipurpose
2015
the digital revolution
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

4. 3 billion
people on the
Internet (2015)
towards an instrumented world
More than 1 trillion
connected devices in
the world
Source: IBM
1 : 333
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

5. 1. tangible
2. easy to value
3. difficult to operate and scale
4. slow to market
5. vulnerable cost structures
1. intangible
2. hard to value
3. easier to operate
4. highly scalable
5. nimble to market
physical and digital
01101001010
01010010101
10110110101
01101100100
thanks to Ricardo Alvarez, MIT
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

6. physical and digital
+
01101001010
01010010101
10110110101
01101100100
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

7. how is innovation
changing
(concept/process)?
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

8. Disruptive innovation
Original theory
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

9. • From technological perspective to a focus on the
business model component
• Low-end / New market
Disruptive innovation
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

10. High-end disruption
Govindarajan and Kopalle (2006)
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

11. Total vs Partial
Disruption
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

12. Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

13. Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

14. Contextualizing Disruptive Innovation
in the Third Industrial Revolution
1.Disruption happens at the intersection between
the economic, the social and the technological
domain
2.Frequency and velocity of disruption increases
exponentially with incremental technological
advancements (combinatorial effects, feedback
loops)
3.Low-end, High-end and Market disruptions now
can happen at the same time
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

15. Technological
breakthrough
Business
model innovation
Socio/economic
zeitgeist
DISRUPTIVE
INNOVATION
value generation,
appropriation and
distribution
demand traction
and durability
HW/SW combination
lackof
value
lack of
demand
lackof
tools
1.Disruption happens at the intersection between the economic, the social
and the technological domain
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

16. recombination - combinatorial innovation
“We usually think of
innovation as
inventing new things,
but we may be
smarter to think of it
as recombining old
ones.”
Race Against the Machine
(Brynjolfsson-McAfee)
2. Frequency and velocity of disruption increases exponentially with incremental
technological advancements (combinatorial effects, feedback loops)
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

17. 2. Frequency and velocity of disruption increases exponentially with incremental
technological advancements (combinatorial effects, feedback loops)
remember this property of technology:
architecture and modularity
“the partition of technologies increases
with the extent of the market” source: Arthur (2009)
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

18. 2. Frequency and velocity of disruption increases exponentially with incremental
technological advancements (combinatorial effects, feedback loops)
image credits: Senseable City Laboratory - MIT
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

19. 3. Low-end, High-end and Market disruptions now can happen at
the same time
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation
A case study

20. impact
1600
1400
1200
1000
800
600
400
Average trips per vehicle
Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jan 14
Average monthly trips per taxicab in SF, trend
Source: SF Examiner
source: SF Examiner
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

21. Key features
easy to use
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

22. Key features
secure
possibility
to rate the driver
no unpaid rides
no cash in car
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

23. Key features
smart
know where
the driver is
know where
customers are
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

24. Key features
efficient
there’s (almost)
always a driver available
compensate drivers
who decide to ride
during critical situations
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

25. Started as on-demand limo service
“everyone’s private driver”
Strategy
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

26. TODAY:
“transportation as reliable as running water,
everywhere for everyone.”
Anyone with a (decent) car can become a driver
Strategic shift
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

27. source: J. Hall, A. Krueger - An Analysis of the Labor Market for Uber’s Driver-Partners in the United States (2015)
Drivership
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

28. source: UBER blog
What’s next
“transportation as reliable as running water,
everywhere for everyone.”
Price leadership strategy
Lowering fares
Demand increase
More cash-flow
Investing server-side
to maximise driver
utilisation
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

29. source: UBER blog
Price leadership strategy
In January 2015 Uber cut the prices simultaneously in 48 cities,
backing these up with income guarantees for drivers.
The historical database allows Uber
to predict how the markets will evolve
and to “forward invest” capital to help
these markets achieve lower
consumer prices even faster.
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

30. : = :
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

31. Existing market
(red ocean)
New market
(blue ocean)
low-end disruption
high-end disruption*
new market
disruption
*theory extension proposed by Govindarajan and Kopalle (2006)
back to Christensen…
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

32. Existing
market
Extended
market
low-end
disruption
high-end
disruption
ext. market
disruption
a
b
c
d
new market
disruption
new market
disruption
new market
disruption
e
e
e
New
markets
Uber started in 2009 as a premium
service with black cars and suited
drivers.
a
b
With UberX private drivers can join the
platform, threatening taxicabs from the
bottom
c
d
Uber’s perpetual ride goal is achieved,
no need to own a car. Uber as cheap
as public transportation
Uber progressively lowers the price of
UberX rides, attracting at the same
time new drivers through subsidies -
UberPool introduced (ride sharing)
e Uber’s big data knowledge applied to
other markets and sectors (logistics,
driverless cars, city analytics)
Uber’s disruption
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

33. Contextualizing Disruptive Innovation
in the Third Industrial Revolution
1.Disruption happens at the intersection between
the economic, the social and the technological
domain
2.Frequency and velocity of disruption increases
exponentially with incremental technological
advancements (combinatorial effects, feedback
loops)
3.Low-end, High-end and Market disruptions now
can happen at the same time
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation

34. Suggested readings
• Arthur, W. B. (2009). The nature of technology: What it is and how it evolves. Simon and Schuster.
• Charitou, C., & Markides, C. (2012). Responses to Disruptive Strategic Innovation. MIT Sloan Management Review,
…, 44(2). Retrieved from http://sloanreview.mit.edu/article/responses-to-disruptive-strategic-innovation/
• Christensen, C. M., & Overdorf, M. (2000). Meeting the challenge of disruptive change. Harvard business review,
78(2), 66-77.
• Christensen, C. (2013). The innovator's dilemma: when new technologies cause great firms to fail. Harvard Business
Review Press.
• Christensen, C., & Raynor, M. (2013). The innovator's solution: Creating and sustaining successful growth. Harvard
Business Review Press.
• Danneels, E. (2004). Disruptive Technology Reconsidered: A Crtique and Research Agenda. Journal of Product
Innovation Management, (1), 246–258.
• Downes, L., & Nunes, P. F. (2013). Big-bang disruption. Harvard Business Review, 91.
• Govindarajan, V., & Kopalle, P. (2006). The Usefulness of Measuring Disruptiveness of Innovations Ex Post in Making
Ex Ante Predictions*. Journal of Product Innovation …, (2004), 12–18. Retrieved from http://onlinelibrary.wiley.com/
doi/10.1111/j.1540-5885.2005.00176.x/full
• Paraboschi, A. & Alvarez, R., Disrupting in the digital era: key traits of the evolution of disruptive innovation. Andrea
Paraboschi’s Ph.D. thesis, October 2015.
• Wessel, M., & Christensen, C. (2012). Surviving disruption. Harvard Business Review, (December). Retrieved from
http://www.pdf-archive.com/2012/12/21/survivingmaxwessel/survivingmaxwessel.pdf
www.paraboschi.it
Andrea Paraboschi - Disrupting in the digital era - key traits of an evolution of disruptive innovation