Are industries really more disrupted than ever? That’s one question we sought to answer using the 2019 Accenture Disruptability Index. For most of the 106 industries we studied, the answer was definitively yes: 74 percent saw an increase in disruption between 2011 and 2018. Three forces have driven this rise:
An army of emerging startups are attacking legacy players at the individual products and services level. Consumer-facing industries have seen some of the most notable increases in activity. The Retail and Consumer Goods sectors, for example, saw a more than 500 percent increase in the number of unique venture capital (VC) deals between 2011 and 2018, with total VC funding of just under US$12 billion in 2018.
A prevailing trend in these sectors has been the growth of direct-to-consumer (D2C) companies. They now serve a huge range of niche markets: Hims is a men’s wellness brand that provides remedies for problems men are often too embarrassed to discuss; Dirty Lemon offers wellness drinks that promote the production of collagen; and, Eaze delivers cannabis in California, and CBD-products to 41 other states.
Born on platforms, D2C firms can rent the benefits of scale. AWS supplies their computing power; Shopify their sales and fulfilment; and, Instagram their marketing. This even enables individuals to build billion-dollar brands: Kylie Jenner’s Kylie Cosmetics started in 2015, has just seven full-time employees, but generated US$360 million in revenue in 2018.i
New forms of capital—from crowd to mega-funds—are turbo-charging the growth of startups, enabling disruptors to access markets in new ways.
Total VC funding in the sectors we analyzed increased by a factor of five from 2011 to 2018.ii With more capital available, companies are raising more money than ever. During 2018, 56 percent of the reported capital raised by private tech companies was closed in venture funding rounds totalling US$100 million or more.iii This is contributing to the increasingly large proportion of startups garnering the “unicorn” moniker. There are currently more than 320 unicorns, with more than 100 “born” in 2018 alone. And the average value of these firms is US$174 billion, up from US$67 billion in 2015.iv
Technology sectors—like Software and Platforms—continue to attract the bulk of investment. But the Financial Services sector is among those seeing significant growth. In fact, Ant Financial’s 2018 US$14 billion Series C round was the largest-ever VC transaction.v
New players are driving much of this activity. SoftBank’s huge US$100 billion Vision Fund has broken the VC mold, forcing others to build war chests to compete. Peer-to-peer marketplaces, such as Funding Circle, and crowdfunding platforms, such as Crowdcube, are another new source. British craft-beer producer Brewdog, one of Europe’s largest unicorns, has raised GDP£67 million (US$85 million) across five crowdfunding rounds. And the 96,000 investors can use the “Equity Punk” forum to influence business decisions, from what beers we should make to where their next bar should be.vi
Startups and financiers aren’t the only ones getting in on the act. Increasingly, incumbents are becoming insurgents. Seeking opportunities outside of their traditional industry value chains, they’re expanding into broader ecosystems through platform models. Freight logistics, genetic sequencing, order management, toys, consumer lending, digital advertising, payments, fashion, asset management, publishing—it might be easier to list industry sectors in which no one has yet thought to attempt a platform model.
There are many types of platforms, including a de facto standard such as Microsoft’s Windows, a trust architecture such as Airbnb’s, and a user base such as Tencent’s. We focused on 10 of the largest—Alphabet, Amazon, Apple, Facebook, Microsoft, Baidu, Alibaba, Tencent, Softbank, and Recruit Holdings—from three homes—the United States, China and Japan—and found that the value of their cross-sector investment activities has almost quadrupled since 2011.vii
Large platforms have been particularly active in the Insurance, Automotive and Travel sectors. For example, platforms made deals in the Automotive sector valued at more than US$1.2 billion in 2018. These included Alibaba’s backing of Chinese automotive trading platform Souche, alongside Amazon’s recent investment in electric vehicle manufacturer Rivian.
The next wave
Perhaps most worryingly for incumbents, the disruptive forces are beginning to evolve. While in the past disruptors retrofitted digital technologies onto the physical world, they’re now using disruptive technologies to change the makeup of the physical world.
While platforms like WeChat and Snap have enabled us to develop and edit our virtual selves, a combination of artificial intelligence (AI), robotics and CRISPR may soon enable us to edit our physical selves. And while Uber and Didi brought together mobile, cloud and analytics to connect people to existing transportation systems in new ways, the likes of Hyperloop One and Kittyhawk are now building entirely new transportation systems.
Contrary to Peter Thiel’s refrain, we may soon get our flying cars to go with our 140 characters.i Forbes