Glacier Quarterly 3 - 2018

GLACIER
QUARTERLY
SEPTEMBER 2018 QUARTER 03 | NEWS, VIEWS AND INVESTOR INSIGHTS | WWW.GLACIER.CO.ZA
GLACIER FINANCIAL SOLUTIONS (PTY) LTD AND SANLAM LIFE INSURANCE LTD ARE LICENSED FINANCIAL SERVICES PROVIDERS

CE’S NOTE
As South Africans continue to feel economic pressure,
recent headlines stating that the country had entered a
recession for the first time since 2009 certainly weren’t
welcome. According to the Bureau of Economic Research,
SA is likely to exit this technical recession during the third
quarter this year – we hope they’re right.
We know it’s in times like these that our business partners
field many queries from concerned clients. It’s also in times
like these that your role as trusted adviser and coach is
invaluable – in many instances convincing investors to leave
their portfolios as is and to do nothing, often the most
difficult thing to do.
It’s no surprise that this issue of the Glacier Quarterly
focuses on technology and its impact on our industry. We
recently launched our first Artificial Intelligence (AI) fund
– the Glacier AI Flexible Fund of Funds – demonstrating
our commitment to innovation. We don’t normally launch
our own funds, so this is something special, and we look
forward to tracking its performance. We hope that this fund
appeals to your millennial and older investors alike.
In this issue, Gavin Meiring of Sanlam Global Investment
Solutions unpacks AI and why we need it. Our AI fund aims
to address investors’ main concern – that of capital loss –
by actively adapting to changing markets using multiple
machine-learning technologies with a level of analysis far
beyond human capacity in order to deliver improved
investment outcomes.
Also in this issue, Monica Singer of ConsenSys demystifies
the hype around blockchain and shows how it can be used
in everyday processes, Tebogo Legodi of Sanlam Employee
Benefits takes a look at how best to connect with millennials
and the importance of digital engagement in this process,
and Bronwyn Williams of FluxTrends highlights the importance
of trust and relationships in the age of always-on-technology.
Lastly, Mitch Ilbury of Mind of a Fox shows why so many
disruptions arrive in a digital format.
We hope the articles provide food for thought. We’d also
like to wish you all the best for the remainder of the year.
Khanyi Nzukuma
Chief Executive:
Glacier by Sanlam
1

ARTIFICIAL INTELLIGENCE
2

Intelligent exposure:
Man with machine is far more efficient than man alone
We live in unprecedented times and financial markets are no exception.
Through increased use of technology,
markets are moving faster than ever
before. Luckily, artificial intelligence
(AI) can be used to help investment
strategies adapt quicker to these
changing environments and market
behaviour.
What is AI and why do we need it?
In its broadest definition, AI is the
use of machines to perform tasks
that would normally involve humans
and human intelligence.
When properly harnessed, AI has
the ability to process massive amounts
of data far more efficiently than
humans.
In many ways, humanity has become
paralysed by the vast amount of
information at our disposal. Every
day we create some 2.5 quintillion
bytes of data – that’s 25 and 17
zeros – Tolstoy’s War And Peace
(1 225 pages) is less than 2Mb!
But creating data is one thing. We
need to be able to analyse, sort
and interpret it. Fortunately we’ve
also seen increases in computation
speeds and decreases in computation
costs, resulting in greater informationprocessing
capabilities.
Finally, we’re witnessing more powerful
and self-adaptive algorithms being
created to assist in defining and
analysing this data.
Is AI relevant to investments?
The role of AI in investments is to cut
through the noise, eliminate human
error, emotions and behavioural biases
and constantly learn and adapt to
changing markets conditions.
When a client defines risk, they often
define it as ‘losing money’. In reality,
an investor’s risk isn’t just about losing
money. Risk can be deconstructed
into:
• The risk of going down
• The risk of staying down
• The risk of not getting back quickly
enough.
Given that a high number of traditional
asset managers fail to add value net
of fees, the industry is looking for
another way to enhance returns and
provide a better investment journey
to clients. Sanlam Global Investment
Solutions believes that through
leveraging AI we can create a process
to match the time to invest in the
market with the investor’s risk. We
call this intelligent exposure.
In order to optimise the outcomes of
intelligent exposure, we’ve harnessed
a specific sub-set of AI called machine
learning (ML).
3

ARTIFICIAL INTELLIGENCE
4

The power of ML
ML is the ability of machines to learn
by themselves and improve their
own performance. They don’t rely
on human-driven rule-based
programming, instead using AI
algorithms that identify patterns
across data and predict future
market direction and magnitude.
Importantly, the AI can learn and
adapt in order to improve the quality
of the predictions as time goes on.
We could view ML as a way of
getting computers to ‘know things
when they see them’ by producing
for themselves the rules their
programmers cannot specify.
How Sanlam uses AI
At Sanlam Global Investment Solutions
(SGIS) we use an AI and ML
investment engine in the management
of our investment solutions. The
predictive investment engine analyses
and interprets available data to:
• Identify and predict evolving
market behaviour
• Minimise the capital loss and time
in loss (drawdowns)
• Maximise portfolio outcomes
(total returns).
In June 2017, the Sanlam Managed
Risk (SMR) UCITS Fund started using
AI to provide intelligent exposure to
markets for its investors. This year,
the SMR Fund was shortlisted for
Investment Week’s Specialist
Investment Awards 2018, potentially
making it the first UCITS fund
leveraging AI to receive such a
nomination. The SMR Fund is available
on the Glacier International platform.
Using the same active AI proprietary
fund management techniques, Glacier
Management Company has also
launched the Glacier AI Flexible Fund
of Funds, a multi-asset flexible fund
diversified across property, bonds
and equities. The Glacier AI Flexible
Fund of Funds launched on
3 September 2018.
The world’s markets are evolving and
advancing at ever increasing speeds
and Sanlam is providing clients with
intelligent exposure to markets
through the use of AI and ML. By
leveraging these tools, we create
investment strategies that adapt
quicker to constantly evolving markets,
with the aim of providing investors
with a better investment experience.
We believe that man with machine is
far more efficient than man alone.
All of these should lead to a better
investment journey for clients.
The purpose of our AI proposition is
to address investors’ primary concern
– their risk of capital loss – by
providing a solution that can
proactively adapt as quickly as markets
evolve in order to supply them with
improved investment outcomes.
Gavin Meiring,
Sales and Marketing
at Sanlam Global
Investment Solutions
5

TRENDS
TRUST AND TECHNOLOGY:
Rebuilding client relationships in the age of
low-cost robo-advisers and always-on bank bots
This article focuses on understanding
millennials and how to interact with
them. In our second article on
millennials we show how their
behaviour is shaping the financial
services industry.
Across the globe, consumers are
losing trust in the traditional banking
industry, with a widespread belief
that the banks were responsible for
the 2008 financial crisis. Elderman’s
2017 Trust Index shows only 41% of
South Africa’s population trusts
financial institutions. What’s more,
consumers have more trust in
preferred brands than they do in banks.
A recent Wharton study had 4 000
millennials from around the world
rank how much they trusted banks
against a list of non-bank payment
providers, including social networks,
peer-to-peer transaction services,
retailers, and brands. Half of the
responders ranked traditional financial
industries at the bottom. Less than
4% of the responders believed banks
enable their lifestyles.
Similarly, Markinor’s Brand Trust Index
showed South Africans trust chocolate
6

Consumer brands have responded to
this demand opportunity by inserting
themselves into the payment process
and investing in financial service
offerings. Millennials are comfortable
about it, with 62% of them happy to
pay via a trusted brand’s app.
Starbucks’ rewards and payments
app, for example, has more than 12
million monthly users. More than 15%
of Starbuck’s revenue is processed
through the app, which has proved
so successful that CEO Howard Shultz
has redefined his role to focus on
Starbucks’ potential as a mobile
payments company. The Starbucks
app is now available as a third-party
payment platform that also accepts
crypto-currencies as payment.
bar brands more than they do bank
brands. Consumers rated Cadbury’s,
Tastic and Ace brands as more trustworthy
than those of their banks,
Absa, Standard Bank and FNB.
Non-traditional players
This distrust opens up an opportunity
for non-traditional players to enter
the financial space. JWT research
shows 72% of millennials would
be likely to bank with at least one
non-financial services company if it
offered banking services.
It’s clear then, that retailers, social
networks, media and telecoms
companies who’ve built trust
relationships with consumers are a
particular threat to the formal financial
services industry.
In South Africa, PEP Stores offers a
range of financial services through
its Mamma Money app, including
loans and cross-border remittances.
Consumers aren’t just trusting brands
with their money, they’re also looking
to the technology in their pocket to
solve their financial needs.
Banking bots
Social network-powered, artificially
intelligent banking bots give
consumers the on-demand financial
services they need and want.
Social networks already own
consumers’ identities, trust, and
attention so it makes sense that they
start taking charge of their users’
financial lives too.
Already a host of fintech start-ups
use pre-existing social media and
7

TRENDS
messaging platforms to run banking
and payment services.
Kudi, for example, is a banking bot
start-up developed in Nigeria that
facilitates free cash transfers and
low-cost payments among other
basic banking services for its clients
– all through the Facebook Messenger
app. Users deposit money into the
app and can then transfer and make
payments directly to their Facebook
connections.
Cleo is a similar, but more advanced,
artificially intelligent robo-adviser
service that offers full-service banking,
financial advice, and investment
execution, all through the customer’s
messaging application of choice.
Absa offers chat banking through
Facebook-owned WhatsApp.
Social networks step in
There are now clear indications that
social networks are not content to
leave the profit potential of these
kinds of integrated financial services
to third-party start-ups.
Snapchat, the social network of choice
for Generation Z (the generation
born around the turn of the century),
filed two trademarks in 2017 on peerto-peer
payment bank bots.
Likewise, Facebook, the world’s biggest
social network, with 2.23 billion
active users, already has business
licences to provide money services
in 48 American states and has just
launched a small peer-to-peer payments
service test there, with plans
to roll out across its network.
Facebook has also approached several
of the largest global banks, including
JP Morgan Chase, Citigroup, and Wells
Fargo to map its clients’ information
to their Facebook profiles. The plan is
to integrate this information with
Facebook Messenger, ultimately
making Facebook the primary clientfacing
virtual ‘branch’ of the underlying
banks. Facebook already knows more
about its users than the banks – or
indeed the users themselves.
When data this big is combined with
the power of artificial intelligence in
8

Be available
and meet your
customers
where they are
and when they
want you.
the form of banking bots and robot
advisers, it’ll become very difficult
for human financial advisers to
compete on quantitative terms. After
all, banking bots never sleep. They’re
available with instant information
and advice, 24/7.
Lower cost, raised expectation
What’s more, these algorithms and
robot advisers drive end-user costs
down, adjusting consumer value
expectations, and putting pressure
on financial intermediary margins.
For example, Schwab Intelligent
Portfolios are robo-adviser-run funds
that don’t charge advisory, account
service or commission fees.
Similarly, the Easy Equities share
trading platform in South Africa
charges a flat investing fee of just
0.25% –far less than traditional
brokerages and investment firms.
In short, consumers will no longer
stand for fat overheads and
intermediaries who get between
them and their own money without
adding value to their lives. This
means the intermediary must be
much better than a robot to keep a
client’s interest in their services.
Still place for human advisers
That said, human advisers still have
the opportunity to rebuild trust by
building real relationships.
Consumers want control over their
own money and financial
independence. At the same time,
most South Africans are still seriously
underinvested for the long life spans
and lengthy retirements for which
they should be planning. Also, because
many SA millennials are firstgeneration
investors, they’ll benefit
from guidance on how to make good
money decisions.
So as an adviser, it’s crucial to build
human relationships, embrace the
power of network and connection
and take the time to get to know
your customers on a personal level
in a way a bank bot can’t yet do. Be
available and meet your customers
where they are when they want you
– and that’s probably online, on social
media and often outside of traditional
9-5 Monday to Friday banking
hours, which are ‘so last century’!
Most importantly, you need to add
real value to their lives by demystifying
money, empowering them with
financial education, involving them
in the investment process and gaining
their trust for life.
Bronwyn Williams,
Trend Translator and
Future Finance Specialist
at FluxTrends
9

MILLENNIALS AND FINANCE
The future of the financial
services industry –
millennials and beyond
Over the past few years, organisations
have been focusing extensively on
the millennial market – the age group
born between 1980 and 2000. This
group’s views on customer
engagement have revolutionised the
way brands interact with their clients.
This digital generation is still in the
early stages of their career, but they
are also decision- makers in the B2C
and B2B space. As an industry, we’re
better served by understanding what
products and services millennials
want and how they want to be
engaged and retained as clients.
Their affinity with the digital world
is a defining characteristic of the
millennial generation. Africa is the
youngest continent in the world
and a mobile-first tech continent,
meaning that exposure to technology/
digital has a significant impact on
young adults in South Africa.
Millennials are the largest demographic
in the marketplace and
10

comprise more than 40% of the
South African workforce.
In SA, millennials are shaped by
the advent of democracy and the
subsequent strengthening of the
economy. They’re also influenced
by the post-Mbeki era during which
widespread looting of national funds,
‘state capture’ and the virtual
destruction of the South African
economy has resulted in many of
them adopting a cautious outlook
on life. They’re a generation that
entered the workforce around the
time of the 2008 Global Financial
Crisis and therefore tend to mistrust
financial institutions.
As a financial services provider,
regardless of your current target
market, it’s important to evaluate
how you can cater for the everchanging
needs of younger consumers.
Remember that they’ll evolve to be
future leaders. Wait until then and
it’ll be too late to connect with them
as they’d already have built an
emotional connection with other
brands when they were younger.
Interacting with millennials
We need to look afresh at how to
11

MILLENNIALS AND FINANCE
interact and capture millennials’
attention with an attractive
proposition for financial savings
products on the understanding that
they are, on average, better educated
than any previous generation.
Millennials tend to mistrust our
industry due to perceived hidden
fees, and lack of transparency. This
is based on use of industry jargon
when speaking to clients and
observing the generally poor outcomes
of their parents’ savings.
So how do we better connect with
them? Engaging with millennials
means being willing to adapt your
approach to your audience. The first
thing to keep in mind is that millennials
save for specific, tangible goals that
are meaningful to them, for example,
adventure experiences, a holiday or a
car. They don’t see retirement as an
attainable goal. Saving for retirement
is too long term, they associate the
word retirement with old age, and
it’s seen as a grudge purchase.
They also tend to be impatient as a
result of being used to technology
that facilitates instant gratification.
The best way to get around these
barriers is to replace the word
‘retirement’ with ‘long-term planning’
and use gamification to break down
the goal into digestible chunks that
make it more attainable and appealing.
‘Empower me’
According to the Sanlam Employee
Benefits 2018 Benchmark research
study, millennials have several pain
points with our industry: they feel
they’re not empowered to be in
control of their choices, are unclear
as to how much they’re paying and
what they’re actually paying for, and
find the annual feedback cycle is too
long. They have high expectations
of the services and products they
spend money on. They expect to
know the outcomes and demand a
consistent level of service as well as
flexibility in terms of where and when
they can be serviced.
12

Replace the
word ‘retirement’
with ‘long-term
planning’ and
use gamification
to break down
the goal into
digestible chunks.
Transparency
When dealing with a native digital
organisation such as Uber, clients
know how much they’re paying and
how long the service will take – and
the feedback is instant. This is the
level of transparency that millennials
expect from financial institutions. As
an industry, we need to accept that
we’re competing with brands such as
Uber, Facebook and Google in terms
of the digital experience they offer.
That is what our clients expect from us.
Digital engagement
Digital engagement is one of the
defining characteristics of the
millennial generation. They’ve grown
up with smartphones, social media
and ‘always-on’ connectivity as a
way of life and expect instant access
to information. Millennials expect
brands to be present on multiple
social channels and connectable
from multiple devices.
Authenticity
Brands that successfully connect
with millennials are authentic and
able to converse using their
language without coming across as
trying too hard. If you want to reach
them, you have to get to the point
and be original and practical.
Channel your message in a format
they want to receive, such as an
infographic or mini video, and ensure
the content is relatable. Before
making a purchase decision,
millennials will do their research
online, evaluating peer review feedback
on previous purchases and
review ratings for items. They’ll also
listen to word-of-mouth
recommendations from trusted
sources. They have many choices for
how to engage with client service
before, during, or after a transaction.
Hence, it is crucial that businesses
have other ways to keep in touch
with millennials instead of just a
website, call centre or waiting in a
line.
To retain millennials, companies
must invest in adapting their client
engagement models to better fit and
support their needs. It’s also important
to bear in mind that although these
solutions may be focused on
millennials, other generations benefit
equally from proactive, transparent
engagement with their financial
services providers.
Tebogo Legodi,
Digital Lead at Sanlam
Employee Benefits
13

BLOCKCHAIN
BLOCKCHAIN
is here to stay
Blockchain – probably one of the
most hyped and least understood
words of the past decade. The claims
of blockchain technology are
staggering and resistance to its
implementation in many quarters is
almost militant. In this article we’ll
peel back the hype, have a look at
the origins of blockchain and explore
some of the real places it’s being
used in the world.
During the 2008 Global Financial
Crisis a short white paper was
published entitled Bitcoin: A Peerto-Peer
Electronic Cash System.
(https://bitcoin.org/bitcoin.pdf). The
white paper went largely unnoticed,
even in the crypto world where it
was initially distributed. The name of
the author was Satoshi Nakamoto,
almost certainly a pseudonym. No
one has ever met the real Satoshi
14

Nakamoto and once Bitcoin became
more popular, this now famous author
also disappeared from the online
world.
Blockchain’s beginnings
At the beginning of 2009 a small
network was built based on the
concepts written about in Nakamoto’s
white paper. This computer network
maintained consensus on a single
distributed ledger without any external
trust or enforcement. Each debit
and credit had to be validated by
all the computers on the network
and they all had to agree on every
single transaction – no small feat
and something that had never been
achieved before on any scale.
15

BLOCKCHAIN
The experiment needed some kind of
token to be transferred between the
parties on the network and a way of
getting new tokens into the system.
A simple monetary supply mechanism
was set up and the first tokens were
issued. They needed a name and
because they were digital (bits and
bytes) and were meant to represent
some kind of monetary token (coins)
they were simply called bitcoins.
The transactions were batched to be
processed. These batches were called
blocks of transactions and each block
was linked to the previous block to
create a chain of blocks filled with
transactions. Although the word
blockchain was never used in the
original whitepaper, this chain of blocks
became known as a blockchain.
‘Pizza Day’
The experiment continued for over a
year, with more and more people
becoming interested in this unique
way of transferring tokens. Some
people even started collecting tokens
and building up stores of bitcoins.
Eventually in May 2010, on what is
now known as ‘Pizza Day’, a bitcoin
collector called ‘Laszlo’ offered 10
000 bitcoins to anyone who’d deliver
two pizzas to his house. He was
hungry and even specified a couple of
preferences! (https://bitcointalk.org/
index.php?topic=137.0). Two pizzas
were in fact delivered and from that
moment on, bitcoins had a value. If
10 000 bitcoins could buy you two
pizzas, they were no longer worthless.
Trading starts
More and more people started
participating in this growing
experiment and soon exchanges
were created (or converted) to allow
people to trade bitcoins for fiat
currencies. The most infamous early
bitcoin exchange was the Japan-based
Mt. Gox (Magic: The Gathering Online
Exchange), which was actually an
online card trading platform that was
converted to trade bitcoins.
Human nature soon reared its ugly
head and in 2013 it was discovered
that most of the bitcoins supposedly
held in custody by the Mt Gox exchange
had in fact been stolen. The
price of bitcoin, which had soared to
more than $1 000 per bitcoin, now
dropped to a little over $100.
Ethereum
Around this time a Russian-Canadian
teenager called Vitalik Buterin started
putting together a white paper
describing a new kind of blockchain.
It used many of the concepts of
bitcoin, but where the bitcoin blockchain
was specifically designed
for running a ledger based on a single
token, Buterin wanted to extend
that to provide a platform where
developers could create different
In the not-toodistant
future,
a cross-border
payment won’t
take two or
three days
16

types of tokens. He wanted developers
to have the ability to program logic
that would be run everywhere the
blockchain was running. He named
his new ledger ethereum and the
underlying token that would power
this ledger ether.
This piqued the interest of several
people who realised the potential of
this new multi-asset ledger with
programmable logic. Those with
backgrounds in capital markets saw
the ability to issue different kinds of
new instruments and that centralised
custodians of assets may one day be
replaced by a distributed ledger.
One of these people was Joseph
Lubin, a former hedge fund manager
at Goldman Sachs who immediately
saw the potential of ethereum. He
worked with Buterin and others to
set up the Ethereum Foundation
and in July 2015 launched the public
ethereum network.
Lubin then turned his attention to
all of the developers who had ideas
about what to do with this new
programmable ‘world computer’,
as it was starting to be called. He
founded a company called Consensus
Systems, or ConsenSys for short, and
invited anyone with a great idea for a
product that would run on ethereum to
come and develop it with him. Three
years later, ConsenSys employs more
than 1 000 people and is developing
well over 50 different products all
running on ethereum.
Enter financial services
Some of those products are now
being tested by traditional financial
market players. In 2018 Canada’s
central bank ran a project called
Jasper in which it experimented with
issuing the Canadian dollar on a small
permissioned ethereum network. Later
that year, the Monetary Authority of
Singapore (MAS) ran a similar project
but extended it to interbank
payments and liquidity savings
mechanisms. It implemented this on
three different blockchain networks –
ethereum, corda from R3 and hyperledger
fabric.
17

PERSONAL FINANCE
One of the issues when a number of
commercial banks and a central bank
are all on the same ledger is that
everyone can see all of the
transactions. To fix that problem, the
MAS implemented a new shielding
technique in order to hide various
details of the transaction and ensure
that only the counterparties directly
involved in the transaction could see
all the details.
Project Khokha
In early 2018, the South African
Reserve Bank (SARB) launched a
similar project called Project Khokha
(meaning ‘pay’ in isiZulu). The aim
was to extend the work done by the
Canadian central bank and the MAS
and see if the technology could handle
a real-world network setup and realworld
volumes while still maintaining
transaction detail confidentiality.
The SARB set the banks and the
ConsenSys team a target of
processing 70 000 transactions in
a two-hour period across a fully
decentralised and fully confidential
permissioned ethereum network. The
transactions were processed in 90
minutes. The project proved a great
success. Not only did it show that
this technology with its roots in a
pizza purchase was now ready for
regulated financial markets, but it
generated collaboration, excitement
and momentum across organisations
that were traditionally competitors,
but that now saw the mutual benefit
of a utility payments platform based
on blockchain technology.
The next wave of projects according
to the Project Khokha report
(https://www.resbank.co.za/Lists/
News%20and%20Publications/
Attachments/8491/SARB_ProjectKhokha%2020180605.pdf)
produced
by PWC will be in cross-border
payments (payment versus payment
or PvP) and trade of assets (delivery
versus payment or DvP). Recently
the MAS announced a DvP project
with the Singapore Stock Exchange
18

(https://www.ccn.com/singaporestock-exchange-turns-to-blockchainfor-rapid-settlements/).
Products such as Adhara (payments),
Trustology (custody), DrumG (market
data), uPort and Sovrin (identity)
and many others are being tested,
piloted and implemented. All of
these run on blockchain networks
and all have the advantages of a
common, distributed, shared source
of truth. These product teams aren’t
being run by crypto enthusiasts, but
by people who have decades of
traditional banking and financial
markets experience.
The future
The hype cycle around blockchain
technology has probably peaked.
The hard work has now begun. The
promise of blockchain won’t be
delivered in some glamorous
idealistic way, but gradually and with
effort. In the not-too-distant future,
a cross-border payment won’t take
two or three days, a payment to
someone at a different bank won’t
only show up tomorrow – they’ll all
be near instant. You won’t need to
produce a proof of identity or
residence every time you interact
with a financial institution. A simple,
secure sharing of specific data from
your blockchain identity will be
enough.
These simple, everyday processes
will make life easier, with many projects
under way to build financial systems
that include people currently excluded
from the digital financial world.
Blockchain technology is here to
stay. Soon we’ll all be buying pizzas
using this great technology.
The author can be contacted on
monica.singer@consensys.net for
more information.
Monica Singer,
Creator of Opportunities
at ConsenSys
19

SCENARIO PLANNING
A GOOD BREAK:
Tech reminds us that sometimes rules
are made to be broken
The appearance earlier this year of
Facebook CEO Mark Zuckerberg
before the European Parliament
reminds us of the company’s founding
motto: ‘Move fast and break things’.
It’s since become something of a
mantra for tech entrepreneurs who
believe disruption is key to innovation.
Normally, innovation within an
industry is incremental and the
industry evolves accordingly.
Disruption, on the other hand,
unsettles industry by replacing a
defining characteristic with something
completely new and more efficient.
So it’s both creative and destructive.
In a way, disruption is evolution
through revolution.
The ride-hailing apps Uber, Lyft and
Didi are classic cases in point, having
turned the traditional taxi industry
on its head.
What drives disruption?
But why are tech-based companies
so often the drivers of disruption?
Because they’re able to break rules.
That may sound counter-intuitive,
but remember, not all rules are the
same.
As all foxes should know, there are
written and unwritten rules in any
game. Written rules are laws and
regulations – the difference between
civilisation and anarchy.
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Unwritten rules are usually cultural
characteristics, or are determined
by the limits of current technology.
Therefore they can change.
If written rules determine what we
may not do, unwritten rules include
what we can’t do. A simple example:
school rules say you’re not allowed
to take someone else’s lunch box,
but that doesn’t mean you’re physically
unable to do it. So, you may not, but
you can. Conversely, no one’s saying
we’re not allowed to live under
water, it’s the technology that says
we can’t. Yet.
And this is the reason why many
disruptions come in a digital format –
they break the ‘you-can’t-do-it’
unwritten rules. Here are some
examples: you can’t read the news
unless you buy a newspaper; you
can’t enjoy your photographs unless
someone develops them; you can’t
buy something unless you go to a
shop; you can’t do any banking unless
you go to a bank; you can’t test your
blood pressure unless you visit a
healthcare provider; and, more
recently, you can’t travel in a car
unless someone is driving it.
In the game of disruption, you can’t
do something – until you can.
This article originally appeared in
the publication Fox Bytes and on the
mindofafox Growing Foxes app in the
week of 28 May 2018.
https://www.mindofafox.com/?p=1498
Mitch Ilbury,
Director, Mind of a Fox
and Growing Foxes
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