The dangers of being a disruptor

This article was contributed by Brad Gerstman, partner at Gotham Government Relations.

The word “progress” is defined within the English language as “the process of improving or developing something over a period of time.” Here in the United States, it is a term that has quite literally defined our growth and success as a nation. Through progress, British colonists cultivated an entirely new form of government, which in turn, led to the birth of our American democracy. From there, great minds have continued to disrupt the status quo, consistently redefining the landscapes of society with the emergence of newer, more advanced technology. 

Throughout history, we’ve traded in candlelit homes for light bulbs and electricity, horse and buggies for cars and airplanes, and carrier pigeons for telephones and email. However, despite proof that our early American ancestors were the ultimate disruptors, our government continues to fear standing on the side of progress. Why? Because by introducing new technology, disruptors are challenging the state of a current market, as well as those who occupy and regulate it. 

Digital transformation

Let’s take the emergence of ridesharing, for example. Beforethis technology, city dwellers were tasked with flagging down cabs to travel from point A to point B. For those who lived in the suburbs, securing a car required planning, calling ahead, and sometimes even higher fees. However, the birth of ridesharing completely shifted the narrative. Thanks to an easy-to-download mobile app, users can now connect with available drivers at the touch of a button, right from the comfort of home. Plus, with additional features, they can also digitally split costs, share rides, and upgrade vehicle size. 

Similarly, on-demand movie and television viewing platforms like Netflix have changed the nature of traditional broadcasting and commercial advertising. By eliminating common viewer inconveniences like commercials and weekly scheduled programming, Netflix and its counterparts (such as Hulu, Peacock, etc.) have given viewers every reason imaginable to opt for the convenience of their platform over cable television and in-person movie rentals. 

For the public, the introduction of simple, efficient technology is a no-brainer. However, for current industry leaders, it is a threat to their very survival. A disruptor is not just a fast-growing competitor; it is a business, which, by design, is looking to turn a well-established industry on its head. 

Since the onset of ridesharing and web-based video, major conversation and numerous roadblocks have emerged for disruptive technologies in just about every industry. But who should these up-and-coming innovators fear most? Let’s break it down.

Striking a balance between regulation and innovation

Without a doubt, regulators are the first, and oftentimes, the highest hurdle for disruptors to overcome. Whether we’re talking about a person or a body of individuals, these positions are often appointed to supervise a specific industry or area of business. When the introduction of a disruptive technology threatens pre-existing regulations, it can lead to a disconnect between how current businesses and industry leaders are being managed in comparison to ones that cannot fit that same, existing model. As a result, regulators and policymakers will often try to slow or stop disruptors from moving forward. Caution, lack of information/understanding, outdated legislation, and fear of potential risks are all stumbling blocks that can leave an unprepared business dead in the water. 

Regulators, legislation, and policymakers aside, it is nearly impossible to disrupt an industry without simultaneously threatening someone who occupies it. As a result, a second hurdle new technologies must overcome is, of course, big business. As mentioned earlier, for Uber, it was yellow taxicab companies. Similarly, for Airbnb, it was major hotel chains. Ultimately, big businesses have the financial means to push back on disruptors legally, as well as through legislation, public relations initiatives, and the like. 

However, that’s not all. In fact, there is one more obstacle that can often knock a disruptor right out of the arena, and that’s special interest groups. Depending on the industry and the size of the group, these associations can also utilize legal and legislative means to prevent progress and stop a new business or industry from succeeding. Let’s look at crypto mining as an example. For those who are unfamiliar, crypto mining is a complex process that requires the use of numerous high-performance computers and cryptographic techniques to solve advanced computational problems. As you can imagine, this process has drawn the attention of green advocates and environmentalists due to the large carbon footprint it creates. With both financial power and public support, green groups are capable of lobbying, litigating, and utilizing mass media to paralyze those involved in crypto mining.  

That said, it is still important to remember that historically, progress has proven to be the key to American success. So, if you are a disruptor who wants to survive, it is essential you have experts in your corner. These are the individuals who will not only help you navigate inevitable dangers, but also utilize the law, legislation, and mass media to your advantage. 

Brad Gerstman is a partner at Gotham Government Relations.