Disruptive innovation in the consumer business industry

The rate of technological change is growing at an ever-increasing speed. New innovations are being churned out by the day, intensifying the competitiveness of the business environment to unprecedented levels. This has seen companies that fail to re-invent easily being displaced by those who lead through innovation. But adopting new technologies in and of itself is not enough; being amongst the trail blazers means harnessing the power of early adopters to gain market lead. In today’s digital age when innovation is the main driver for economic and social development, laggards soon get relegated.

By Steve Kaluna

Disruptive innovation and technological change

Kenya is a leading innovation hub in Africa attracting global brands that seek to venture into technology in emerging markets. Innovation has contributed to economic growth in Kenya and the region over the last two decades. According to the 2019 Global Innovation Index (GII) by the World Intellectual Property Organization (WIPO), with PwC as a knowledge partner, Kenya was ranked the second most innovative country in Sub-Saharan Africa. Globally, Kenya was ranked 77th behind South Africa (63) and followed closely by Mauritius (93). Kenya’s position in this ranking has steadily improved since 2011, driven by consistent investment in innovation in areas such as market sophistication and investor protection.

Whilst it is true that new technologies change business processes, the real disruption is caused by changes in user experiences and behaviours. Products tend to drive adoption by catering to existing users’ behaviours and enable disruption by allowing users to adopt and sustain new ways of meeting their needs.

Self-disruption in media That said, innovation is hard and disruptive innovation is even harder. Self-disruption is the hardest of all! The majority of truly innovative disruptors have involved a startup displacing an established player. Netflix, for example, in a move that led to the bankruptcy of BlockBuster, eliminated late fees, facilitated greater content selection and provided this service on-demand and electronically. The same company exhibited a rare move of self-disruption when it introduced streaming media as a separate business from its DVD sales and rental business.

The online Video on Demand (“VoD”) streaming business model has attracted numerous competitors including Hulu and Amazon. Locally, we have seen a number of VoD players emerge such as Viusasa by Royal Media Services that specializes in offering local content. Similarly, a number of audio music streaming services have emerged. As home internet connectivity improves and becomes more widespread, we also expect an increase in subscriptions to these services.

Disruptive technologies in agriculture Agriculture has been a major driver and beneficiary of disruptive technologies. Some of the innovations in agriculture include wearable sensors for livestock, drone surveillance on farms, spraying and weeding robots and the use of robots to automate repetitive processes.

In South Africa, farmers are using wine bots to prune vines. In the near future, we expect to see bots that can herd cattle and mix animal feeds. Another disruption in the agricultural sector is blockchain.

Farmers have adopted this technology to trade their agricultural products globally with improved transparency and accountability through blockchain’s ‘permanent record’ of transactions. Over 1.6 tons of farm produce worth over USD 360 million has been traded with blockchain technology.

The World Bank recently sponsored the Disruptive Agricultural Technology conference in Nairobi. Through the Ministry of Agriculture, the World Bank plans to deploy digital platforms that can help small scale farmers increase their crop yield. Mobile phones will for instance help farmers gain access to crucial farm inputs like seeds, fertilizers, markets and knowledge.

Kenya is well known for financial inclusion enabled by mobile lending. Several startups have flourished which give unbanked farmers access to credit that is based on data collected about their farms. For example, M-Farm Limited provides a platform that helps farmers know what produce is needed in the market, when it is needed, who is selling it and the best price.

Disruptions in manufacturing Disruptions emanating from machine learning, 3D printing and industrial internet of things (IIoT) continue to impact the manufacturing sector. The use of 3D printing has the potential to cause a paradigm shift in manufacturing from heavy investment in machinery complemented by low labor costs to cheap technology enhanced by creative people.

Virtual Reality is now being used to accelerate the technical training for staff who work in factory lines. It is also helping to lower the cost of developing and testing prototypes of new products and processes. Drones are being used to deliver products like medicines and other goods where there is poor infrastructure.

In conclusion, we stand a better chance of benefiting from technological disruptions in countries like Kenya as compared to countries with longer and more complex legacy systems of commerce and production. Our early-adopter culture ensures that we will not be left behind whilst technology advances; similarly, our appreciation for creative disruption can just as easily be used to destroy as it can to build.

It is time to reimagine the possible, and as PwC, we are happy to partner with you.

Steve Kaluna

Senior Associate, Forensics at PwC Kenya

E: steve.kaluna@pwc.com T: +254 (20) 285 5547

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