Dino TalicSenior Product ManagerFreelancer.comemail: dino.talic@freelancer.comtwitter: @freelancer, @dtalic

Disruptive Innovation – key drivers and how your business can benefit from a shft in the global workforce

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Overview

1) What is disruptive innovation

2) What are the trends driving disruptive innovation today

3) What does this mean for your business

“The Myth of Technology Innovation”(…or why established companies fail)

Misconceptions about Innovation

Company A releases an innovative product and dominates a particular market

Earns outsized profits

Becomes complacent

Misconceptions about Innovation

Competitors innovate more quickly and bring better products to market

Company A loses market share

Company A becomes insolvent

“Technology Mudslide Hypothesis” - Clayton Christensen

“Technology Mudslide Hypothesis” - Clayton Christensen

MYTH

Reality

Good management teams don’t turn bad overnight

Types of Innovation

Sustaining Innovation

Breakthrough Innovation

Disruptive Innovation

3 Main Types of Innovation

Disruptive Innovation

Disruptive Innovation

• Disruptive innovations are often worse than the incumbents when first introduced

• They create a new market and value network

• Market disruption is usually not a function of technology but a change in application

What happens to companies that don’t react to market disruption?

• 1975 Kodak introduces the world’s first digital camera

• 2012 Kodak files for bankruptcy

So what happened?

What happened?

• Early digital cameras were inferior to film

• Suitable for niche applications only (low volume, low profit)

• In 1978 Kodak had 90% market share of photographic film sales in the US

• Eventually digital cameras became “good enough” and disrupted the market

• The same is now happening to digital cameras

A current example of disruptive innovation

Harvey Norman Share Price

Many more examples

We are in an age of unprecedented rate of technological innovation and disruption of

incumbent companies

What are the driving forces behind these changes?

Trend 1

What does this all of this mean?

“Software is Eating the World”– Marc Andreessen

What does this all of this mean?

Advertising

Physical Software

What does this all of this mean?Telecommunications

Physical Software

What does this all of this mean?Retail

Physical Software

What does this all of this mean?Books

Physical Software

What does this all of this mean?Scrapbooking

Physical Software

What does this all of this mean?Notepad & Pen

Physical Software

What does this all of this mean?Maps

Physical Software

What does this all of this mean?Music

Physical Software

What does this all of this mean?Retail Estate

Physical Software

What does this all of this mean?Hang with Friends

Physical Software

What does this all of this mean?Photography

Physical Software

What does this all of this mean?Video

Physical Software

What does this all of this mean?Travel

Physical Software

What does this all of this mean?Education

Physical Software

What does this all of this mean?

Coupons

Physical Software

What does this all of this mean?

Drug Dealing

Physical Software

What does this all of this mean?

“The Reimagination of Everything”- Mary Meeker

What does this mean for your business?

Opportunities:• Switch to digital distribution channels• Integrate with mass platforms• Is there a cheaper and more efficient

way in which you can provide your product or service?

Trend 2

70% The other

of the world’s population areabout to join the Internet.

Source: Internet World Stats & United Nation

It’s 2012.

World Population

7,030,000,000

Number on the Internet

2,267,233,742 (32.3%)

North America266 million users77.4% penetration

Europe475 million users58.4% penetration

Latin America204m (of 592)34.5% penetration

Africa110m (of 1014m)10.9% penetration

Asia825m (of 3834m)21.5% penetration

Worldwide Internet Penetration 2011

146%

179%

352%

445%

621%

1033%

1825%

2357%

0% 500% 1000% 1500% 2000% 2500%

North America

Oceania / Australia

Europe

World, Avg

Asia

Latin America / Caribbean

Middle East

Africa

The other 5,000,000,000 people are coming…

Worldwide Internet Growth 2000-2010

81% of Users of top sites outside USA

Twice as many Chinese than Americans

The other 5 billionare on an average wageof $10 or less per day

The first thing they are doing is looking to raise their economic status.

And it’s never been easier to learn a trade.

Free Stanford Course in AI.Over 170,000

enrolled, 8x the total number of

students at Stanford.

Simultaneouslyevery industry is now

digitised.

The World is Flat.

The World is Flat.

The World is Flat.

Today Tomorrow

Goods Services

What does all this mean?What does this all mean?

We are the global labor exchange

Some statistics

Users– 4,130,000 and growing

Covering 234 countries, regions and territories

Demographics - 20 regional & growing

Economy – 2,400,000 Projects so far

Economy – Global

–

Turnover US$ million

Banking System

We are the sole provider of bank

accounts to some freelancers

in emerging economies

36 Bids US $268

Design a fully functional Dune Buggy I can drive at 30km / hour

Outsourcing

280 choices for $290!

Crowdsourcing

Crowdfunding

Broke the CSS!

What does this mean for your business?

Opportunities:• Flexible labour force• Skilled labour on demand• Labour at next to no cost• Build fast and experiment

Trend 3

What does this all of this mean?

Distribution is unprecedented.

What does this all of this mean?

% of US Households

Technology adoption is accelerating

➔ In 1900, <10% of families owned a stove, or had access to electricity or phones

➔ In 1915, <10% owned a car➔ In 1930, <10% owned a fridge or washer➔ In 1945, <10% owned a dryer or air-conditioning➔ In 1960, <10% owned a dishwasher or colour TV➔ In 1975, <10% owned a microwave➔ In 1990, <10% owned a cell phone or Internet

➔ Today.. more than 90% own all the above.

Not so long ago.

What does this all of this mean?Computing mutates as it goes pervasive

Desktops, Laptops Mobile Phones, Tablets

.. and faster

.. and faster!

.. and faster!!

.. and faster!!!

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

0

100

200

300

400

500

600

700

800

900

1000

Facebook (millions of users)

What does this all of this mean?

Parabolic growth comes from harnessing distribution fire hoses

Facebook Firehose

Apple Firehose

Google Firehose

Reddit Firehose

Other Unconventional Firehoses

Virality. Social. Reviews. Friends. Inviters.

What does this mean for your business?

Opportunities:• Provide your products through popular

distribution platforms• Increase product virality and user

uptake• Increase marketing ROI

Trend 4

What does this all of this mean?

Every business today is an Internet business.

What does this all of this mean?All this stuff is free.

Virtualised computer.. Only this computer is a

hotel reservation system!• PBX

• Hotel Reservations• Wifi

• Minibar• Movies

Free!

What does this all of this mean?All this stuff is cheap.

What does this all of this mean?All this stuff is cheap.

Even if none of this stuff makes sense to you, freelancers can put it

together for you.. cheap!

What does this all of this mean?You can start a company off a credit card

What does this all of this mean?A new class of Venture Capital has arisen

What does this all of this mean?Digg.com

• Outsourced original software for $60• $6000 to get site up and running• $1200 for domain and 12 months

hosting

Offer from Google for $200 million 4 years later

What does this all of this mean?PCTools / Spyware Doctor

• Outsourced original software for $1000• Bootstrapped to profitability• Raised financing only at very late stage

Sold to Symantec for $300 million 6 years later.

What does this all of this mean?RetailMeNot.com

• Built with $30 in one weekend• Bootstrapped to $30m in revenues

Sold to WhaleShark for $90 million 5 years later.

5 Billion Internet Users by 2020

Internet Users

Mobile only Internet Users

• 350m users in 6 years

• 950m users in 8 years

• 100m users in 45 days?!?

Internet Scale

Internet Scale Growth

2% of.. The Internet.Alexa rank #16 in the US

• Founded in July 2007• Financed in July 2008• Makes silly flash games• 2011 revenue $1.2 billion

• Founded Nov 2008• 2011 revenue $1.6 billion• Spams you deals of the day• WSJ “made $1 billion in sales

faster than any other business, ever”

Internet Scale Revenue

Years to reach $1 billion in revenue

1976 1984 1986 1994 1994 1995 1997 1998 2007 20080123456789

10

Year of Incorporation

What does this all of this mean?

How can your business benefit?

What does this all of this mean?

Think what your business can do with…

What does this all of this mean?

…infrastructure at next to no cost

What does this all of this mean?

…unprecedented distribution at next to

no cost

What does this all of this mean?

…labour at next to no cost

Case Study

Company: an Australian software provider to major telcos

Opportunity:• Had a potential client in a Chilean telco• Needed to demo their product quickly

Problem: Only one issue: it was in English

Case Study

Solution:They used Freelancer to translate their product

A Chilean freelancer translated it:– In 2 days– For $75

What does this all of this mean?

Think what your business can do…