In the spirit of innovation, we aim to disrupt the business. And I think there are several categories we can look at how companies have been disrupting the market. If we look at two dimensions - in the first dimension, there are business model where simply changing the business model already disrupt the market. There are other company where it was the technology breakthrough that help us to break through and disrupt the market. Now, if we look at another dimension, some of this disruption are actually revolutionary. They completely change the landscape. They completely change the market. There are disruption which are evolutionary which means this is almost like a natural thing. At some point, someone in the industry will think of a way to change that industry. If we go back to the dimension for the technology and business, there are a third category. Some company needs innovation in terms of both business and technology in order to disrupt the market. And we have a lot of... lots of examples in each of these categories. So, let's take a look at some of them. For example, if you look at budget airlines. They all started in Europe. Ryanair, EasyJet are among the pioneers. How did they disrupt the market? If you think about it, it was mostly business model. Of course, we cannot do without technology. So, how did they change the business model? If you think about it, a lot of travelers - if we asked them ‘What would be your number one criteria for choosing an airline?’ I think most of them would say 'The price.’ And of course, quality, the time and everything else are also the other criteria. What they didn't mention actually if you asked them truly the number one criteria is safety. But safety is a hygiene factor, because most airlines are very safe. So, people stop thinking about this criteria. Now, let's go back to what they call the number one criteria - price. So, in other words, budget airline really disrupt the market by addressing our number one needs in flying. They reduce the price significantly. How do they do that? They reduce the cost by, for example, selling only direct online. They don't sell through agents. They only sell through their own website. That automatically save around 6% of the cost. They fly at a slightly smaller or cheaper airport. They don't fly the main airport which is more expensive to serve. They fly only one type of plane, so they make the operation very much simpler. All the crews can serve any plane that they fly because they only fly on one type of plane. Contrasting the conventional or the traditional airline, they have all sort of planes and each crew must be trained in order to serve in every single plane. They don't give you the meals. They don't have in-flight entertainment. And they don't run very expensive loyalty scheme. And they have many many other ways to save cost. Now every bit add up. And as a result, they manage to save a lot of the cost and they share this cost-saving with the customer, i.e., us and, therefore, they can offer very very cheap price compared to the conventional airlines. And hence, they disrupt the market. If you look at the budget airline, now they actually ship more passenger than the conventional airlines. The budget airline when they entered the market, they actually did not take away customers from the conventional airlines. Instead, they created a new market. They managed to get people who were not flying for holidays before to think about it and become travel by air on their holidays. So, they actually brought in new customers. So, they disrupted the market and they created a new segment of customer. But, these innovators or this entrepreneur in the budget airline, they could not have done that if they didn't know the industry very well. So, the founders of these budget airlines are typically also a very experienced veteran in the airline industry. That's how they know what need to be changed. That's how they know how to perfect the business model and hence, they disrupted the airline industry. If we look at another example - also by changing the business model - the consulting industry. In the traditional way, the consulting industry, the strategic management firms, they have a whole batch of people. The consultants. They have the research staff... even the production for the presentations. Of course, they have fancy office. They have a lot of support from secretaries, accounting and so on. These are the traditional firm where it is a full house. They have every function in the company in order to serve the consulting clients. So, who are the people who disrupting the consulting industry? Well, these are the company where they don't even have consultant in-house; they don't have the production in-house; they don't have the research in-house. These are the company where you can call them the Uber of consulting industry. They rely on a fleet of independent professional. They managed to connect the professional with the client. And in the process, if they need research support, if they need production, they outsource all the functions. So, these smaller consulting firm are very lean and mean. They have retained almost nothing but the staffing functions. So, comparing to the traditional firm, they are very very heavy and they require to support a lot of staff. So, this is how again people can come up with idea where purely by changing the business model they disrupt the market. In the case of the consulting industry, these are the founders of these new upcoming consulting firms are also veteran consultants in the traditional sense. Because only the veteran in this market can truly know what are the needs of the clients, how the industry can change as a result. So, let's take a look of another example which is on technology breakthrough. If we go back to the beginning of digital cameras, people have been taking photos using films for over a 100 years. And so the idea of using a digital storage media and a digital camera is is a new idea in terms of the storage but not in terms of taking photos. Now, today we all almost everybody has a cell phone, everybody uses cell phone or digital camera to take our photos. But how did we change from the film to the digital camera? Back in the late ‘90s, when this technology becomes a reality, company actually start producing digital camera and as a result the biggest company that produce films have gone bankrupt, namely, Eastman Kodak. How did a company like Kodak miss the opportunity? Well, you will be surprised also at the beginning of the digital camera era, Kodak was among the first company to produce a digital camera. You would ask how come a company that was in a dominant position in the … in the photo, I mean, photography industry and a pioneer in the digital camera technology would fail to capture the opportunity. Now, you have to think about Kodak at that time was already a giant. If you are in the board of Kodak and you are giving a choice, you ask your whoever is responsible for the film sales and you have another person who is responsible for growing the digital camera industry - on the one hand, you give … continue to give a growth target for the person who's responsible for selling films; but on the other hand, you ask the person who's responsible for the digital camera to start and grow the market which you know very well the more digital camera you sell, the more you will cannibalize your film industry. So, how do you balance the interests? How do you stop the internal fighting between your two presidents who are responsible for the different products? I think it is a very very difficult task. And, therefore, this is like a big company disease where the legacy is hindering its innovation. Unfortunately, history has told us that the outcome of that story. So, in this example, we see digital camera as a technology disruptor where it completely replaced the traditional method of doing something, but in the meantime, the giant who thrived on selling the old stuff also disappeared with the old technology. So let’s take a look at another technology: electric car. We know Tesla is disrupting the industry. How do they do it? Is it because just purely on changing the method of powering the car, namely, using electricity versus the traditional way using gas - gasoline. Well, that's only part of the story. I think the thing that Tesla is truly disrupting the market is not just in the technology of powering the car, it is in a lot of its software, in a lot of its patent and also in the way they actually hold the technology of producing their car whereas a lot of the traditional car manufacturer rely on their manufacturer. So, whether this will be a long-term success. History will tell us later. Let's look at another way of disrupting the market. In this example, it is both technology and the business model. And we would like to look at Uber and Airbnb Well, now we use this app daily. How they disrupt the market? Very simply, their idea is - why do we have to rely on just one source to supply a service? Why not everybody who has a car, who has a spare flat or house can go into the market and become a supplier to the market? And so the idea is sharing economy. Can we make use of these resources - idle or otherwise - can we bring them into the market and become a useful resource? The idea itself is already quite a disruption because it disrupts the traditional service provider. However, without the technology that goes behind it, it will not become successful. And the technology I'm talking about is mobile technology, matching engine and so on. In this example, I think the success of Uber and Airbnb are both relying on business and technology breakthrough. So, there we have it examples that are completely business-driven or technology-driven or both, but all these entrepreneurs, pioneers, they are disrupting the market as we know it.
