What Happens When Disruptors Become Disrupted?

Could a disagreement & a solid state battery disrupt Tesla?

The tech community certainly isn’t without its scraps, but back in 2008 a particularly catty dispute broke out between Tesla Motors and a certain Henrik Fisker. Fisker was hired by Tesla to design the Model S, but left to build his own hybrid instead. Tesla claimed that Fisker had stolen confidential design information, which he disputed. Tesla scrapped his designs, setting themselves three to six months back in their production plans. However, Fisker Automotive made one too many mistakes. By 2012 the company was bankrupt, and Tesla had triumphed. In fact, it wasn’t until last year that Fisker was back to haunt Tesla with an unsettling claim. . . The company was back with a vengeance, and gearing up to make Tesla’s precious battery technology pointless. Now the disruptors are at risk of being disrupted, what are they going to do about it?

Fisker Automotive’s 2016 effective relaunch as Fisker Inc. came with the bold claim that lithium ion batteries would be made obsolete by a new battery made with a graphene based material. Tesla largely seemed to ignore this statement, and continued to invest billions of dollars in a 15 million square foot ‘Gigafactory’ devoted entirely to the development of lithium ion batteries. Fisker, however, doesn’t appear to have been bluffing. This month, the automotive veteran filed patents for a solid state electric vehicle battery that offers 500 miles per charge and a charge time of just one minute. Tesla’s current equivalent provides 300 miles from a charging time anywhere from 10 minutes to over an hour. What’s more, solid state batteries are supposedly safer than lithium ion alternatives, and could enable higher energy density. As of yet, Tesla CEO Elon Musk hasn’t commented on the return of Fisker. What he did do, though, was reveal the development of two new electric models at a presentation in California – a truck with a range of 500 miles per charge, and a new Roadster with a range of 620 miles. . . Interesting.

The Disruptor’s Dilemma

Businesses recognise that the threat of disruption is a reality, but in many cases they don’t know quite what to do about it. Once a company or innovator has disrupted a market, they’re at risk of having the same thing happen to them. The first wave of the current era of disruptors as we know them – think Tesla, Uber, Netflix – have now become the incumbents in their respective industries. As such, younger companies see them as the major competitors and want to disrupt them. So, what can they do about it? Although there’s no shortage of options, they depend on the company’s willingness to take risks. One potentially problematic option is to adopt innovative technology to improve processes, but the success of this depends on whether the technology will serve a genuine purpose.

Another strategy could be to use the resources of another company, whether that be through a partnership or an acquisition. Sometimes, it may be necessary to reinvent the business – for example, IBM transitioned from a computer retailer to a software behemoth. Employing a policy of radical innovation is certainly risky, but just look at Amazon to see how well that risk can pay off. The increase in partnerships, acquisitions and investments as companies jostle to make valuable connections is causing industry wide transformation. On the one hand this is likely to drive healthy competition, consolidate talent and fuel innovation. On the other, it may discourage companies from releasing public offerings as they spend more time gathering support before launching a product or service. Either way, incumbent disruptors have a lot to contend with, and their strategies need to be as fluid as markets themselves.

It’s been shown time and time again that disruption is an ever present risk, and the disruptors who rest on their laurels could fall foul of the same fate they successfully inflicted. That being said, the incumbent disruptors that lead their markets today are well aware of this. Even though a disruptor may be at risk of disruption, there are numerous strategies they can pursue to avoid the same fate as their predecessors. Consider the Fisker example – Fisker may be back on the EV scene, but it would be unfair to start writing Tesla’s eulogy. Fisker’s company has a habit of making outlandish claims, and Musk is a seasoned innovator with a tendency towards long term vision. Although it’s not possible to tell the future, changes can be tracked and reacted to. Sometimes, this involves redefining, the purpose of the business. This willingness to self scrutinise and innovate is how legacy companies have remained relevant, despite the potential disruptions that has threaten to displace them. We’re about to find out if Tesla can do the same.

Will the solid state battery make lithium ion obsolete? How else can businesses stay ahead of disruption? Does Fisker Inc. present a serious disruptive threat to existing EV battery technology? Share your thoughts.