The real meaning of disruption

Stefano Virgilli

Over the past decade or so we have been hearing the word “disruption” in a positive light. For instance, the classic statement: “Uber disrupted mobility” refers to the fact that the tech company disintermediated an industry by potentially transforming everybody in a taxi driver. Subsequently, they tackled food delivery too, and so did competitors such as Careem, Grab, and GoJek.

But looking at what this disruption has caused, we can see that the change was more in the mindset than in the technology itself. Growing up in the 70s, the 80s, or the 90s, children would have heard their parents saying: “Don’t take a ride from any stranger.” Another mindset changed by the disruption was the idea of not interacting with strangers on the internet. So the real disruption that Uber brought to the society was more cultural than technological, as it is now safe to take a ride from a stranger met on the internet.

Dictionaries would provide at least two definitions for the word “To Disrupt”. One of them being “interrupt (an event, activity, or process) by causing a disturbance or problem” and the other one “drastically alter or destroy the structure of”. The latter definition sounds more in line with the innovation to which it is usually associated with. However, the former one is the type of disruption that we are witnessing these days.

The COVID-19 pandemic has created an immense disruption, in terms of interruption of services. For example, the travel industry has been terribly disrupted, not because of positive innovation, but simply because traveling in 2020 is nowhere like it used to be. Similarly, international trades have been disrupted, but this might have implications that go beyond COVID-19. In fact, if we look at recent history, disruption to the supply chain has occurred more than once.

According to the Financial Times, every 3.7 years the world experiences a disruption in the way trades are operated. Most importantly, the aftermath of such disruptions echoes in the geopolitical choices of the buyers and sellers. It is estimated that a quarter of all the global exports, worth more than $4.5 trillion, might move to new countries within the next 5 years. This is particularly noticeable when compared with the data from 2014 to 2017 when only 7 percent of all trades moved to other countries.

Throughout the 90s as well as the first decade of this century, China was de facto the world’s factory for all sorts of goods. But as China became progressively richer, the production of the same products found large internal demand. Therefore more countries emerged as manufacturers as China became both more expensive and more likely to satisfy the internal market first. Moreover, the disruption to production noticed during the pandemic crisis forced many OEMs to rethink their supply chain altogether. So in the near future, we can expect significant shifts in the global trades towards emerging markets.