Why Every Organization Must Pay Attention to Disruptive Innovation


By Jim Harris

A staggering 93% of car accidents are due to driver error. So think about the 40,000 lives that will be saved in North America every year in 2025 when all new cars are autonomous vehicles – self driving cars. 


Think of the 4.4 million people who won’t be injured in North America annually, the HUGE reduction in trauma for families and the billions of dollars of savings in health care costs. That’s the GREAT news. 


The bad news is that if you’re an insurance agent selling auto insurance, you’ll witness the evaporation of the $500 billion a year auto insurance market. If you’re in auto insurance you had better be planning to find a new $500 billion a year market for premiums to replace it. (Thankfully the cyber risk market will grow to that level in the same time frame. But currently only 10-15% of brokers are comfortable in writing policies in this new field.) 


And driverless vehicles have a profound and cascading impact for other organizations as well. 


In seven years time your autonomous Tesla will drive you to work, you’ll get out – and tell it to go forth and earn its keep – as an autonomous vehicle in the Uber pool. You won’t need a parking spot for the day – saving you the $35 you currently pay every day in downtown Toronto. 


When no one needs a parking spot, what happens to the value of parking lots in urban centers? Do you know that currently a parking spot in some urban cores sells for as much as $100,000?!


And what does the value of used car dealerships fall to when no one wants to buy a used car that doesn’t have an autonomous system? After all, what’s the value to you of your spouse and children’s’ lives and well being? If you own used car dealerships, now might be a good time to sell. 


I was recently working with an executive who happens to own 16 car lots. He was arguing that electric vehicles and autonomous systems are less than 1% of the market and therefore irrelevant. Jarring new information that threatens our world view and our current business model is rejected by most people. 


Look at the next three graphs of car sales in the high end large car luxury market: 


In 2014 Mercedes Benz dominated this category.

2014 Car Sales.JPG

But by 2015 things had changed and Tesla now dominated the category: 

2015 Car Sales.JPG

Finally in 2016 Tesla’s acceleration was even more pronounced: 

2016 Car Sales.JPG


In 2007, Lexus represented only 2% of Toyota’s unit sales, but a staggering 33% of the company’s auto profits. In other words – the luxury car market is where car companies make a disproportionate share of profits. 


So you can now hear the huge sucking sound as Tesla strips profitability from the auto industry? Realizing this, can you now comfortably say that Tesla with less than 1% of auto sales in North America is irrelevant?


One simple disruptive innovation – autonomous vehicles – has huge cascading implications for insurance, health care emergency room capacity, car dealerships (both new and used), parking lot owners, taxi cab companies, city planners and auto executives. 


Imagine the impacts of other trends – such as artificial intelligence (AI), the Internet of Things (IoT), 5G wireless and Moore’s Law – when amplifying each other will have on companies, industries, society as a whole. 


I'm looking forward to expanding on disruptive innovation at the Results Business Execution Summit in Kananaskis in February.


Jim Harris is the author of Blindsided which focuses on disruptive innovation. It is published in 80 countries worldwide and is a #1 international bestseller. You can follow him on Twitter @JimHarris or email him at jim@jimharris.com