Disrupting models: The companies redefining business
Disrupting, enabling, reinventing the system - whatever you want to call it, a shift in the status quo is alive and well in the UAE
ARGUABLY, there is no word that more accurately sums up the first half of 2020 than “disruption”. There has been disruption to our healthcare systems, public transport, economies and lifestyles – with most changes putting significant and negative strain on established systems. At the moment, reading the term in a news headline is to guess that the story inside will most probably not be positive.
Paradoxically, for the last 25 years, disruption has been the ultimate ambition of companies straddling varied sectors, from steel to telecoms or cinema, and most geographies. Now – perhaps more than ever – disruption is a real and vital necessity for businesses that wish to flourish amidst upheaval.
Over the past decades there has been discussion about how, exactly, it should be defined. A prevalent (if unnerving) trend is to avoid its definition whatsoever; a raft of businesses coming into the market will invariably have the ‘disruptive’ label duly slapped on them by their PR, used as a catchall term for being vaguely innovative.
In a seminal article from 1995, Harvard Business Review makes the useful distinction between disruptive and “sustaining innovations”, offering examples for the latter such as the addition of a fifth blade to a razor, or a mobile phone provider that offers better reception. Both are useful examples of an incumbent company offering value-add to its customers, but neither is particularly disruptive.
A disruptive company, the article posited, would not look at adding helpful features or exceeding the demands of its customers. Instead, it would do the very opposite: ignore the majority, and focus on technologies that did not address the needs of most of its customers.
After all, “the large photocopying centres that represented the core of Xerox’s customer base at first had no use for small, slow tabletop copiers… IBM’s large commercial, government, and industrial customers saw no immediate use for minicomputers,” wrote Joseph Bower and Clayton Christensen.
It was not that these technologies were particularly new or intricate from a technological standpoint, posited the authors. It was that they presented a “different package of performance attributes – ones that, at least at the outset, are not valued by existing customers.”
It was this heady combination, of performance attributes and rapid market improvement, that would unseat established incumbents and add new players into the mix.
So who are these new players in the UAE, and how are they defining themselves?
Uber is a company often assigned the descriptor of “disruptive” – a reasonable assumption, given that it exploded into the market and changed the way that we thought about travel. But some thought otherwise; an article in the Harvard Business Review written in 2015 argued that: “disrupters start by appealing to lowend or unserved consumers and then migrate to the mainstream market.” Originating in San Francisco, where residents were already using taxis with few qualms, Uber went in exactly the opposite direction, said the authors: “building a position in the mainstream market first and subsequently appealing to historically overlooked segments.”
If disrupters begin by appealing to unserved customers, it stands to reason that Careem – a ride-hailing service that originated in Dubai and quickly spread its wings to other parts of the Middle East that included Palestine and Baghdad – could easily be labeled a disrupter.
Beginning in 2012 and receiving $1.7m of seed funding in a round led by STC Ventures a year later, the service made both financial and cultural waves. Women were employed as drivers in countries including Pakistan, Egypt and Jordan – with women in Saudi Arabia comprising 80 per cent of the company’s customers.
“We often heard people from Saudi Arabia say that there’s a pre-Careem Saudi and a post-Careem Saudi,” said the company in a blog. There was no doubt that the service gained foothold in a market whose rockface did not just have relatively few footholds – but was entirely sheer. But to term it a disrupter, said the company, was to misunderstand its ideals.
“As a company that started out as a ridehailing service, it’s easy to see why people associate Careem with disruption. In other parts of the world, ride-hailing companies have disrupted established orders, but given how Careem started out and where in the world we launched, Careem is something different – an enabler.”
The company pointed to its transformative effect on the lives of women in Saudi Arabia and the launch of peerto-peer credit transfers in the works as examples of technology that “empowers people in the MENA region to realise their full social and economic potential.” However, the pandemic has curtailed operations in recent weeks. In early May, the company laid off 536 employees, representing 31 per cent of its workforce, as well as stopping new initiatives such as its mass transportation business Careem Bus, which was just 18 months old.
Though the “disruptor” terminology can be questioned, there is no doubt that the automotive sector in the UAE is ripe for innovation. According to a report from research firm TechSci, Saudi Arabia and the UAE are among the biggest Middle East markets for vehicle volume, with the UAE recording 1.96 million passenger vehicles and 610,000 commercial vehicles on its roads in 2018.
The volume of drivers – coupled with a high smartphone penetration and comfort with on-demand services – led Rashid
Al Ghurair to develop Cafu, a refuelling service that allowed drivers to skip busy fuelling stations.
“At Cafu, we have completely transformed a sector that has been very conservative for nearly half a century,” says Al Ghurair. “By that I mean the way people have serviced and refuelled their cars remained unchanged for the longest time. We are now using technology that enables us to deliver fuel anytime, anywhere and that has the potential to make brick-and-mortar gas stations a thing of the past.”
Founded in Dubai as a self-funded project in 2018, the service has over 180 trucks on the road equipped with AI-powered tracking technology to predict peaks in demand and identify areas where this demand will occur. “We have delivered more than one million fuel-ups in the UAE, which equals more than 60 million litres of petrol,” says Al Ghurair. “Our safety tested trucks that are driven by trained pilots, can deliver over half a million litres a day and will reach most customers in less than 30 minutes. In the first year, we had over half a million downloads of our app.”
Like many other disrupters, the aim of the company was not overly complicated. “The idea was simple – how can we use existing technology to fuel cars at the touch of an app while giving back customers their time spent at the fuel station. We have been the first company to offer this service in the MENA region and I am happy to see that Cafu has not only changed people’s lives but also disrupted and transformed the refuelling industry. We see this trend only going upwards and onwards.”
Another startup that has ‘disrupted’ operations within the transport and logistics sector is TruKKer, a digital freight platform which was founded in the UAE in 2016. Currently operating across the GCC and Jordan, it enables instant booking, real time demand and supply matching, cargo tracking and digitisation of document processing for land freight. The company, which has over 15,000 member trucks, raised $23m in Series A funding in November last year, led by Saudi Technology Ventures (STV) with support from International Financial Corporation (part of The World Bank).
HEALTHY TRENDS
A central tenet of disruptive companies is their ability to build systems that are entirely different to their predecessors. A sector often pointed to as ripe for disruption has been healthcare, where systems can be archaic and under-reliant on technology.
The UAE’s healthcare sector has some unique pain points that technology was apt to fix, says Fodhil Benturquia, CEO and founder at Okadoc. “Patient no-show currently stands at 37 per cent in the UAE and 40 per cent in Saudi Arabia. In comparison, the US has about a 20-22 per cent no-show rate,” he says.
To combat these no-shows, Okadoc developed an instant doctor platform directly integrated to healthcare
+50% of consultations globally can be replaced by telemedicine
providers’ information system, where patients can view doctor availabilities in real-time, instantly book appointments, receive reminders, reschedule, cancel or request reminders for earlier availability. Its platform connects patients to over 1,000 doctors across every emirate and 70 specialties, from dermatology to pediatrics and mental health, covering approximately 10 per cent of bookable doctors across the UAE.
As well as easing the bookings process to see a doctor in person, telemedicine will be a vital tool during the Covid-19 pandemic, adds Benturquia.
The company closed its $10m Series A funding round in February to launch telemedicine in the UAE and Indonesia and to expand into Saudi Arabia.
“Research shows over 50 per cent of consultations globally can be replaced by telemedicine,” says Benturquia. “What makes our telemedicine platform different from others is that Okadoc connects patients to doctors within clinics or hospitals. This means that patients can virtually connect with their own doctor or connect with any doctor they wish who is available.”
By offering virtual visits, healthcare providers can offer a cost-effective and safe way to deliver medical care. “The recent pandemic has proven that people are more willing than ever to use video conferencing,” says Benturquia. “We believe governments and regulators could consider making telemedicine mandatory as a backup in case of future pandemics.”
Healthcare and food are proving two vital sectors in the fight against the pandemic. With food supply chains disrupted as restaurants falter and hotels remain shuttered, individual demand is at an all-time high.
“It is now common knowledge that by 2050, we will need 70 per cent more food to feed the roughly 9.5 billion people on the planet in order to avoid widespread food shortages and the problems that come with that,” says Sky Kurtz, cofounder and CEO of Pure Harvest.
Based in Abu Dhabi, the agrotech firm is well poised to address food security in the region; it set up its first farm in 2018, and in April 2020, secured a multi-year $100m commitment from Kuwait’s Wafra International Investment Company.
“We have successfully created what we believe to be the highest yielding (per square metre) high-tech greenhouse in the world – harnessing the abundance of light in the Middle East to locally produce year-round, sustainably-grown fresh produce anywhere,” says Kurtz. “Using water-efficient irrigation solutions, we have developed a solution that enables us to grow efficiently in some of the harshest places in the world.”
He adds: “We don’t need to wait until the food security challenges compound into an unmanageable, de-stabilising force – the future is now.”
In its pilot farm, Pure Harvest produces 17 varieties of tomatoes that are sold to major retailers including Carrefour, Spinney’s and Waitrose. Although grown in a greenhouse, the energy consumption is far more efficient than the alternative of importing, says Kurtz.
“We are also experimenting with solar power integration later this year and believe that it has significant promise both in terms of cost and sustainability,” he adds. “Our solution will integrate well with a solar independent power producer (IPP), as the IPP’s peak production of power is during our peak consumption (long summer days with lots of sunlight).”
To disrupt in agriculture, companies must factor in that the sector is an industrial process, says Kurtz. “This is why technology can help tackle inefficiencies – to increase yields, reduce costs, and reduce resource utilisation. The difference is that farming is even more important – the cost of failure has a profound impact on humanity.”
Despite the varied offerings that these companies bring to the table, there are similarities, both in their ambition and process. An appetite for on-demand services – be it for fuel, a ride or a doctor – have fuelled the growth of companies such as Cafu, Careem and Okadoc. For Careem and Pure Harvest, a connecting ambition to empower their region proves vital to their existence – whether they would define it as disruptive or not. And for all of them, it is a new idea that binds them. A farm in the desert. A doctor in the Indonesian jungle. A taxi where none had existed before. They may not be traditionally disruptive – but who’s to say they aren’t life-changing?