Instead of just disrupting, try building businesses
Last January, the beleaguered department store company Macy’s announced that nearly 100 stores would be shuttered in 2017. Our family was one of many affected by Macy’s decision to downsize, as we had been selling teriyaki in a mall that lost its department-store anchor by March.
So far, the 133,000-squarefoot vacancy has yet to be filled, leaving behind an eyesore emblematic of the ailing state of the brick-and-mortar retail industry. Fortunately, despite the loss of our Macy’s, we were able to counteract a small drop in the food court foot traffic by signing up for an online food delivery service. Instead of depending on the mall retailers to draw in hungry shoppers, we can now take our teriyaki directly to our customers.
The irony that online startups have both hurt and helped our business has not been lost on us. Our restaurant suffers because online marketplaces like Amazon are forcing major retail companies out of business; it flourishes because food delivery startups build up existing restaurants by expanding their outreach.
Of course, a few examples of building-focused enterprises don’t counteract the fact that “disruption” has been a key mantra embraced by the startup culture. Some of the most successful and talked-about companies — Uber, Lyft, Airbnb, Amazon — are the ones that have challenged and even displaced the incumbents of their respective industries.
Unfortunately, the term “disrupt” is also appropriate to describe the lives of common workers whose livelihoods are upended by upstart enterprises. According to the U.S. Labor Department, nearly 90,000 employees in general department stores like J.C. Penney or Macy’s were laid off between October 2016 and April 2017, a figure greater than the total number of people employed by the American coal industry. This number doesn’t include those whose jobs and businesses depend on the foot traffic drawn in by the large anchor stores, as in the case of my family’s teriyaki store.
Companies like Uber and Lyft are expected to take up more than two-thirds of the cars-forhire market by 2020, according to the Boston research firm Aite Group. Other startups with an eye toward the future are also working toward disrupting white-collar industries including medicine and finance. No industry — and by extension, no occupation — will be safe from the promise of disruptive innovation. And many professionals will find themselves out of a job without comparable work to return to.
The emphasis on disruption will go on as long as it continues to be rewarded in our society.
In a November article published in theHarvard Business Review, the authors conducted research of 2,000 entrepreneurs by comparing their LinkedIn profiles with data on startup funding and data on full-time employees within their respective companies. On average, entrepreneurs who presented themselves or their companies as “disruptive” had amassed 1.7 times more funding than entrepreneurs who presented themselves or their companies as “builders.” The researchers concluded that after controlling for variables, “the degree to which a startup team valued disruption … significantly predicted the amount of funds that the startup raised.”
Rather than reinventing the wheel and specifically seeking to replace jobs and businesses— particularly small businesses — that already exist, startups could work alongside existing enterprises to help them grow. If businesses and investors can take all stakeholders — including the workers — into account, we will be able to capitalize upon more equitable innovations that enable empowerment, rather than displacement.
Otherwise, disruptive innovations will foster greater inequality as small businesses crumble and older, experienced workers are unceremoniously cast aside for the pursuit of market share and profit.