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Tech Industry Confronts A Backlash Against 'Disruptive Innovation'

Jan 28, 2019
Originally published on January 29, 2019 8:52 am

Tech entrepreneurs have long prided themselves on disrupting traditional industries and creating new ones.

Print encyclopedias have been replaced by Wikipedia and Google searches.

Newspapers are struggling against online news sites and social media. But new problems have emerged as a result of this transformation: fake news and the bankruptcy of the traditional news media.

Clay Christensen, a Harvard University business professor, coined the term "disruptive innovation." He still says it's ultimately good — even as the tech industry reels from the backlash against it.

Christensen wasn't trying to disrupt anything when he began the research that became his now iconic 1997 book, The Innovator's Dilemma. He just noticed how certain companies — such as the computer-maker Digital Equipment Corp. or retail icon Sears — went from industry leaders to struggling has-beens.

"I've always wondered why is it that companies that are successful have such a hard time to sustain their success," Christensen says.

In his research, Christensen saw that big established companies were often undone by smaller innovative players that came along with cheaper and more affordable products. Henry Ford turned the automobile into a mass-market product, which made it faster and easier for people to travel. But it wasn't so great for the saddle and stagecoach industries.

"Overall, it's a good thing," Christensen says. "It hurts to be disrupted, but it also creates markets."

Fast-forward a century or so; today's tech world worships at the altar of disruption. Entrepreneurs dream of creating one of those companies that upend entire industries.

They look to Amazon, which disrupted books and then all of retail, or Apple and other smartphone-makers, which disrupted the film, camera and other industries. Jobs were lost, but society got great new products that sped up communication and brought down prices.

You could have seen this dream in action during a recent visit to a building called the Aspiration Dome in Sunnyvale, Calif., in the heart of Silicon Valley. At a presentation hosted by Alchemist, a successful startup accelerator, entrepreneurs got up onstage in an enormous room filled with investors and business leaders to test out their ability to pitch their companies.

Ravi Belani, managing director at Alchemist Accelerator, speaks at a recent presentation by the startup in Sunnyvale, Calif.
Laura Sydell / NPR

One of them was David Conway, the co-founder and CEO of SmartBins. "What we're building is absolutely disruptive," he says. He wants to disrupt the food-packaging industry. Anyone who has purchased bulk items at the supermarket knows it's kind of awkward: You have to find a pen and write the bin number on a tiny twist-tie — and the stuff can spill out.

Conway says his company has tech to make it easy. "That's what SmartBins is doing ... bringing shopping the bulk aisle from a little niche market to mainstream — making shopping bulk as easy as prepackaged," he says.

Conway admits that even this small disruption may take jobs away from people who work in packaging. "There's always a dark side to anything," he says. "I mean, look at what's gone on with Facebook and Google — like a lot of people's private information. But guess what — we're in the early stages of all this, and people are going to make mistakes."

Yet, like most entrepreneurs, he is filled with optimism. "I can tell you, at least the tech community I'm in, everybody is in here to make the world a better place," Conway says.

But to those who lose their jobs, Conway's words may be cold comfort. Many outside critics might scoff at Conway's naiveté or perhaps his inability to see the downside of a technology that may make him rich.

Still, the fact that he is ready with a response to criticism about disruption is a sign of growing sensitivity in the tech community.

Facebook CEO Mark Zuckerberg famously told his developers to "move fast and break things." That phrase is being re-examined by some big-time investors like Hemant Taneja, a managing director at the venture firm General Catalyst.

"What does it mean to create the new world order with technology but not necessarily in a way that's just moving fast and breaking things?" he says.

Taneja now believes that Facebook was careless. "The reason this happened is because they didn't think hard about how to police the nefarious-use cases of that technology," he says. "It's not about the technology — it's how we implement it and what are the use cases we want to enable."

Taneja says that now, before he funds a company, he wants to know that the founders are looking for what could go wrong before it happens so they can prevent it.

"Capitalism is a privilege," Taneja says. "I think if we don't build businesses that are broadly good for society, I don't think this entire system really lasts."

But many investors and entrepreneurs may have a hard time slowing down long enough to be a constructive force in the world when they are making so much money disrupting it.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

ARI SHAPIRO, HOST:

This month, we've been looking at what's ripe for disruption in 2019. Now we're going to take a moment to think about that term, disruption. Tech entrepreneurs pride themselves on their ability to disrupt industries. And they have, from newspapers to transportation. The Harvard professor who coined the term disruptive innovation still sees it as a force for good. But as NPR's Laura Sydell reports, disruption also has consequences.

LAURA SYDELL, BYLINE: Harvard University professor Clay Christensen wasn't trying to disrupt anything when he began the research that became his now iconic 1997 book, "The Innovator's Dilemma." He just noticed how certain companies - say, the computer maker Digital Equipment Corporation, DEC, or Sears - went from industry leaders to struggling has-beens.

CLAY CHRISTENSEN: I've always wondered, why is it that companies that are successful have such a hard time to sustain their success?

SYDELL: It's impossible to fit all of what his research uncovered into this story. But he saw that big, established companies were often undone by smaller, innovative players that came along with cheaper and more affordable products. Henry Ford turned the automobile into a mass-market product, which made it faster and easier for people to travel. But it wasn't so great for the saddle and stagecoach industry.

CHRISTENSEN: And overall, it's a good thing. It hurts to be disrupted, but it also creates markets.

SYDELL: Fast forward a century or so. Today's tech world worships at the altar of disruption. Entrepreneurs dream of upending entire industries. Amazon disrupted books and then all of retail. The smartphone disrupted the film and camera industries. Companies have gone bankrupt. People have lost jobs. Facebook disrupted advertising and news.

DAVID CONWAY: What we're building is absolutely disruptive.

SYDELL: David Conway is the co-founder of SmartBins. His aim is to disrupt the food packaging industry. Anyone who's purchased bulk items knows it's kind of awkward. You have to find a pen, write the bin number on a tiny twist tie, and the stuff can spill out. Conway says his company has tech to make it easy.

CONWAY: That's what SmartBins is doing, is bringing shopping the bulk aisle from a little niche market to mainstream, making shopping bulk as easy as prepackaged.

SYDELL: Conway is speaking to me at an event for the tech accelerator Alchemist, which supports startups like his. We're in a large space in Silicon Valley called the Aspiration Dome. He says the big upside is that his technology creates less waste than packaged goods. So it's better for the environment. Of course, Conway admits even his small disruption may take away jobs from people who work in packaging.

CONWAY: There's always a dark side to anything. I mean, look at what's gone on with Facebook and Google - like, a lot of people's private information. But guess what? We're in the early stages of all this. And people are going to make mistakes. But I can tell you, everybody is in here to make the world a better place.

SYDELL: Many would disagree that they are doing that. There's fake news, data breaches and jobs lost to automation. But the fact that Conway is at the ready with a response to criticism about disruption is a sign of a shift in the mindset of the tech community. Facebook CEO Mark Zuckerberg famously told his developers to move fast and break things. That phrase is being reexamined.

HEMANT TANEJA: What does it mean to create the new world order with technology but not necessarily in a way that's just moving fast and breaking things?

SYDELL: Hemant Taneja is a managing director at the venture capital firm General Catalyst. He now believes that Facebook was careless.

TANEJA: And the reason this happened is because they didn't think hard about how to police the nefarious use cases of that technology. It's not about the technology. It's how we implement. And what are the use cases we want to enable?

SYDELL: Taneja says now before he funds a company, he wants to know that the founders are looking for what could go wrong before it happens so they can prevent it.

TANEJA: Capitalism is a privilege. I think if we don't build businesses that are broadly good for society, I don't think this entire system really lasts.

SYDELL: But many investors and entrepreneurs may have a hard time slowing down long enough to be a constructive force in the world when they are making so much money disrupting it. Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.