Ladies and gentlemen welcome to session 3.

The disruptor playbook in this session we're going to explore what it is that disruptors
do to be so successful. What is the secret sauce of their success.

And this is called the disruptor playbook.

There are five distinct stages that every disruptor goes through that enables them to
achieve global domination.

And I am going to share those with you.

The basic point is this disruptive innovation creates a new market with new rules and
value networks that displaces traditional firms and their products and value networks.

The innovator wins by replacing the incumbent firm rather than trying to compete with
them.

So the five stages of the disruptive playbook are as follows:

1. Stealth stage
2. Surprise stage
3. Speed stage
4. Scale Stage
5. Sustained stages

1. Stealth stage.: We recognize that what Uber did is he went to find what's called
an underserved customer? you might learn in this session this is probably the
most important one. Innovators especially disruptive innovators do not start by
attacking the traditional incumbent in the traditional market.

Instead they find a new kind of customer who's not getting what they want. In
this case the underserved customer someone in the city who is basically too rich
for a traditional taxi but she's too poor to have her own private driver all the time.

She's probably an investment banker and she's a Gen Y and so she's looking for a
new kind of service that would give her exactly what she wants. So in stealth
mode Uber identifies this as her potential target customer.

2. They are not going for the people who are taking traditional taxis and the way we
serve them is by offering them a surprisingly superior offering. So we're not just
going to launch a sort of Taxi Limousine hybrid. No no no no we're going to use
one of the megatrends accelerating technology to offer a whole new concept that
on your smartphone you can press a button and instantly or nearly instantly a
private driver will roll up to your door. This is a total game changer right. Instead
of waiting in the rain for a taxi you can sit in your home and book a car and it will
arrive and tell you when it's ready. Not only that you can pay through credit cards
you can see through the trust and rating systems what the reviews are like on a
four star a five star you can see on the map where you're going to go do you feel
 safe whereas you drive it all these are really important questions. So what this
basically means is that you're offering something that is really different and really
cool to this underserved customer.And she's thinking. Finally I'm getting what I
want.
3. Stage three in the speed stage it's all about upgrading as quickly as possible. The
speed is focused on making your innovation grow as quickly as possible so that it
becomes really really awesome. Really importantly you are not focused on scale.
You are not trying to grow to 1000 different cities at once. No you are staying in
New York City and you're focusing on upgrading the innovation.

The uber app as best as you can as fast as you can. And the reason for this is
because if you build a half assed offering there is no way you going to go global
with that because it's going to cost too much time and effort to keep updating at
the global level. Much better to stay local and build something that is truly wow
you know when you completed the speed stage.

4. When you get someone to use your innovation and they say wow which is
certainly what I did when I used Uber for the first time because it was just so
much better than the traditional taxi experience. So what's happened by the end
stage three is that you have a wow offering and you're ready to conquer the
globe.

So that means you're going to scale like crazy. So what Uber then did is
essentially attack every major U.S. market and city and then very quickly after that
go global. Paris London and everyone else followed and what you're able to do is
use your WoW innovation to destroy the competition who have their crappy
traditional offerings.

Let's be honest it's not even close between having an uber experience or a
traditional taxi experience and you're never gonna go back. Once you start using
Uber but a really important insight needs to be made aware of him which is Uber
didn't scale with Uber Black you were black as a luxury service Uber scale through
Uber X which is essentially allows anyone to drive any car and pick up any
customer.

And so this is what really and that makes it democratic experience anyone can do
it and that's really what drove the scaling aspect and that's how Uber started to
steal customers from the taxis. It was no longer the luxury market it was in the
entire transportation market.

So now that you're dominating the world and you're experiencing what's called
exponential growth which is you're doubling regularly and you have a hockey
stick growth which means your lines are all going up and everyone says awesome.

5. You have to be very careful because some disruptors have been successful at this
stage but then everything falls apart and collapses. Blackberry for example were
growing very rapidly as a disruptor and then they all fell apart.
 And the reason they fell apart is because they were not able to embed themselves
as a platform. And this is the fifth stage of disruptive playbook sustain your
offering. You do that by embedding yourself in what's called the Value Network
so :

a) Uber doesn't just want to drive you from A to B.

b) You will also wants to deliver your food which is why we have Uber eat.
c) Uber wants to embed itself in public transport systems which is why we have
things like Uber hitch and
d) in some cities in the US their local cities are actually paying people to use
Uber hitch instead of providing local bus services because that's cheaper for
them.
e) And then we also have Uber trucks or what is known as auto trucks.

So what this means is that Uber is embedding itself in the fabric of transportation and
using the network effect it makes it very hard to replace and therefore prevent itself from
being disrupted.

And this is critical because that is what's going to need were you to sustain your
evaluation and keep growing.

Now what's happening essentially at a global level is the explosion of what are called
unicorns unicorns are privately held companies so they're not in the stock market.

They have achieved a valuation of over one billion dollars. It was valuation is 66 billion
dollars today and that is huge. However some people criticize that by saying no that's
ridiculous. You know that you know they're not even making a profit.

But the key insight here is that Uber is aiming to do a billion trips a day not just for cars
but also food deliveries and truck deliveries that kind of stuff. So that's you know that
that is incredibly ambitious but not utterly impossible. So let's imagine they do a billion
trips a day and let's imagine they earn five dollars per trip.

That means that per day you're making five billion dollars. Right.

Which means per year five billion times 365 is around two trillion dollars right.

That's bigger than most economies. And based on that you can then say well the
traditional way of valuing a company is to five X's annual revenue.

So that gives you a 10 trillion dollar valuation.

And if you consider that Uber is valued at 66 billion today is that you're only at 1 percent
of its potential valuation.

So in other words the markets are going to be huge and what's really happening in the
innovation age is the creation of these trillion dollar companies.

So what you need to stop doing and start doing you need to stop ignoring disruptors or
they will kill you.

Every industry is being disrupted.

And if you don't know that you're being disrupted it's because you haven't taken the
time to find out go out there and find out who the disruptors in your industry start using
the disruptor playbook yourself.

Any company can actually apply these five steps to their own way and unleash massive
growth. Just imagine if a taxi it had created their own Uber app they could have
prevented Uber from taking them over and actually unlocked a whole new universe of
revenue and eventually become billion or trillion dollar companies themselves.

So in summary what we have covered in this session has been that disruptors are
successful because they replace traditional incumbents by creating new markets every
disruptor succeeds by following five critical steps of the disruptive paper.

Stealth surprise speed scale and sustain the final point here is that you should start
disrupting yourself instead of waiting to be disruptive.

That way you can stay in control and direction of the market and unleash the potential
for massive growth.