Disruptive tech start-ups have been bucking trends and inspiring revolutionary change across multiple industries – from finance, to regulation and insurance – since the early 1990s. As our modern world continues to change at the hands of disruptive tech start-ups, we ask the question ‘how much do we owe to the disruptors?’

These days, it’s not difficult to find someone talking about disruptors, naming their favourite disruptive start-ups in a list, or praising them for the innovations they inspire. Since the term was coined in 1995 by business academic Clayton M. Christensen, ‘disruptors’ has become a widespread concept, and their work with emerging technologies has led to our world changing rapidly.

What Makes a Disruptor?

“A disruptive product addresses a market that previously couldn’t be served — a new-market disruption — or it offers a simpler, cheaper or more convenient alternative to an existing product — a low-end disruption.” Clayton M. Christensen, Harvard Business School via TechCrunch

Despite it being a common thread throughout all disruptor activity, innovation in itself is not ‘disruptive’ – even if it can be construed as revolutionary. A disruptor must instead cause an established market or industry to fundamentally change, much as the mass-produced Ford T-Model achieved with the automobile industry in 1908.

Without Henry Ford making cars more accessible for the masses, and the process of manufacturing streamlined and affordable, we wouldn’t have the automobile industry we have today. Thus, the transformational effect of a disruptor can be long-standing.

Disrupting the 21st Century

Fast forward to the modern day, and the advent of greater technology and accessibility to new processes and skills has meant that the whole world is up for reinvention. What’s more, it’s hard to go a week without a new list of the top 50 disruptive start-ups, or 100 disruptors to look out for.

Today, we’ve gone beyond disrupting just the automobile industry (though driverless cars are in sight) and now almost every established industry is targeted for change. For example, UK InsurTech start-ups target the insurance industry, changing how claims are processed, money is handled and even how quickly people can insure their favourite items. These disruptions have meant consumers can interact with the insurance industry with fewer hurdles, much more simplicity, and in a way that better fits into how we live our lives.

Is Disruption a Bad Thing?

“The word “disrupt” is so frequently used these days by technology companies that it seems no start-up can claim greatness if it doesn’t “disrupt” existing business models.” Babel Ismayli, CEO of OneDome via HuffPost

Not all commentators see tech start-up disruption as a good thing. At the end of 2016, as they predicted what was to come in the year ahead, the Financial Times framed the headlines as ‘five industries under threat from technology’. The article highlighted which industries – travel, insurance, manufacturing, car repair, and financial advisers – would face disruption by technology in 2017, but focused on how new innovations were essentially ruining the ‘old ways’.

Expanding further on the reasoning behind this negative outlook, The Huffington Post UK raised the argument of whether the future of technology is collaboration, rather than disruption. In the article, OnDome CEO Babel Ismayli stated that disruption is “exploiting weaknesses within the system to gain market share”. He argued instead that firms should be applying innovation to under-served markets in order to add value to consumers and businesses.

These negative opinions of tech disruption are by no means exclusive to Ismayli and the Financial Times. Opposition is always to be expected from the established standard. The manufacturers of luxury motorcars for the elite weren’t happy with Henry Ford. However, the industries currently being disrupted are those behemoths which still linger behind the modern way of living.

A Call for Change

Established industries need to fundamentally change to keep up with consumer demands. With technology playing a central role in how we live our lives, and the public’s trust being damaged by the controversies of recent years – such as the 2008 financial crisis – industries such as insurance and finance must embrace change to keep up with demand.

Indeed, if disruption is simply “exploiting weaknesses” then it’s clear that the industries are aware of what improvements need to be made – and the businesses themselves have the opportunity to improve upon those areas by pairing up with disruptive start-ups or allowing themselves to be overtaken.

An example of this working is in the RegTech sector, where disruptive innovators have identified a weakness in how financial institutions stay compliant, and offer their innovations directly to the firms that need them, changing the industry from within.

A Debt of Gratitude

As a team at the heart of the technology sector, Kaleida has seen the different facets of the industry affected by disruptors. Likewise, bespoke software development – our speciality – has played a decisive role in facilitating those disruptions.

We understand that an innovative disruptor can go a long way to changing things for the better, and we’re happy for start-ups to continue to challenge the status quo, and to keep on disrupting for years to come. That’s because, no matter your opinion on disruptive start-ups, it’s clear that they have helped to bring industries in line with new technologies and modern consumer sentiments.

Much like how we owe our ability to drive to work every morning to Henry Ford’s ingenuity, much of how we live our lives now and how we will live them in the future comes down to disruptive start-ups. They’ve brought us new ways of booking holiday accommodation, the ability to order a pre-paid taxi from an app, and are even ensuring compliance across our banks.

For that, they deserve our thanks.

Kaleida is a bespoke software development house based in Manchester, helping clients to overcome operational challenges and embrace an innovative new way of thinking. Talk to us to find out how bespoke software could benefit your business.