Way forward: Disrupting the market

Wednesday, 28 November 2012 02:07 -     - {{hitsCtrl.values.hits}}

High-cost CD sales were seriously impaired when Amazon.com and iTunes Stores burst into the market and wooed music lovers. This low-end disruption is one of the best examples of disruptive innovation. It depicts the definition of disruptive innovation: ‘An innovation that helps to create a new market and a value network, and eventually goes on to disrupt an existing market and a value network (over a few years or decades), displacing an earlier technology.’

The potential of disruptive innovation, particularly in the ICT sector, is one that we are only starting to consider now in Sri Lanka. Some of the key stakeholders in the local ICT sphere shared their views on the subject and their take on the potential disruptive innovation to shape both the Sri Lankan and global business landscape.

When Prof. Clayton Christensen first explained disruptive innovation, the focus was on disruptive technologies. Today, the theory covers a wider scope with emphasis on a technological business-model, and new-to-the world product innovations.

Interpreting disruptive innovation, Sujiva Dewaraja,  Chairman, SLASSCOM and Executive Vice President and Head of IT Sector, John Keells Holdings had this to say, “Disruptive innovation should either address existing consumer needs and wants in a revolutionary new way that was never before envisaged, or create new needs that the consumer never realised existed.

“As a result, completely new markets/categories are created, which may sometimes complement or else replace existing markets over a period of time.”

How digital photography eventually displaced chemical photography is a clear cut example of technological innovation. “Even though it is too early to predict, mobile payment methods are trickling into the Sri Lankan economy,” noted Prof. Gihan Dias, Department of the Computer Science and Engineering, University of Moratuwa.

“The Sri Lankan market is ready for this type of innovation. Given the speed with which over 12 million Sri Lankans adopted the mobile phone, we are quick to embrace innovative ideas and products,” he added.

Business-model innovation is the discovery of a fundamentally different business-model in an existing business. Reshan Dewapura – Chief Executive Officer of the Information and Communication Technology Agency (ICTA) of Sri Lanka spoke about how new models in the ICT sector initiated changes.

“Disruptive innovation is an essential undercurrent in civilisation. In one of the latest developments in bringing the benefits of ICT to the people of Bangladesh, cyclists take the facility with connectivity to remote areas where there is no telephone connectivity. The people in such areas carry out their internet activities by making use of the facility brought to them by these cyclists.”

“Today the Government of Sri Lanka provides a large number of its public service through the eSri Lanka initiative and the Government Information Service Centre (GIC) or 1919. This is a clear example of a mechanism through which disruptive innovation has taken place in Sri Lanka in a remarkable manner,” he added.  

The Government Information Centre (GIC) Project provides information in relation to Government organisations and citizen service in Sinhala, Tamil and English through a call centre (1919). In order to provide the same information online, a parallel project was initiated to design the GIC website.

Disruptive innovation is much more than a radical new strategy. According to experts, to qualify as an innovation, the new business-model must enlarge the existing economic pie, either by attracting new customers into the market or by encouraging existing customers to consume more.

Dias explained, “Unlike incremental innovation, disruptive innovation tends to replace existing products and services with more affordable or effective products or services. In this framework, I would say Sri Lanka is a potential market for disruptive innovation if the new products and services are inexpensive and useful.”

Dewapura further illustrated the status of the Sri Lankan market: “There is huge potential for Sri Lankan companies to practice disruptive innovation. One of the main vehicles of disruptive innovation in Sri Lanka is the internet.

“According to the latest economic indicators report from the Central Bank of Sri Lanka, the number of internet and email subscribers in Sri Lanka has increased by 77.3% year-on-year during the second quarter of this year. This means that there are approximately 1.15 million internet and email subscribers in Sri Lanka today. Sri Lanka currently is in the ratio of 112 telephones to every 100 people, up from 104 phones for every 100 people in the previous year.”

Sri Lankan consumers are ready to embrace innovative products but what about actual engagement and disrupting the market? Shanil Fernando – Partner, Leapset answered this question.

“We believe that Sri Lankan organisations have a role to play in building the world’s future and that Sri Lankans can be disruptive innovators. This is firstly because Sri Lanka is by no means an isolated country, and the internet has made the sharing of ideas and access to global markets easier than ever before.”

In the BPO dominated software development industry of Sri Lanka, Leapset has taken a significant step forward in not only deviating from the traditional BPO industry but also creating an innovative product that will eventually disrupt the current way in which credit card payments, point-of-sale systems and online purchasing works and replace it with one synergistic platform.

Sri Lanka needs to step up to the challenge and embrace disruptive innovation. An environment needs to be created that provides smart entrepreneurs the opportunity to try and succeed in building innovative products. Large organisations need to embrace and invest in disruptive innovations, not only traditional ERP systems.

The Leapset platform focuses on the small and medium merchants; it revolutionises the way that merchants interact with their consumers with the use of modern technologies and smartphone devices. The applications are conceptualised and developed in Sri Lanka.

“For Leapset, this means we have a wealth of ideas and new ways of thinking flowing in from the home of IT innovation on a daily basis, and our developers get to visit the Silicon Valley and experience the culture first-hand to learn and grow. We believe that fostering our pathways of connection to the global market is the key to success,” reinstated Fernando.

The Leapset platform originated from Silicon Valley, California, the home of disruptive giants such as Facebook and Google. Leapset enables the retailers to engage their customers on a virtual platform and conduct sales via this platform connecting the two parties seamlessly.