FEB Unpad

Department of Accounting

Disruptive Innovation:
Accountant View

SEMINAR NASIONAL
50 Tahun Akuntansi Unpad untuk
Jabar dan Indonesia

3-Feb-18 hamzahritchi
------
Hamzah Ritchi

BSc – Universitas Padjadjaran

MBIT – University of Melbourne
Dr – Humboldt Universität zu Berlin

hamzah.ritchi@unpad.ac.id
Extended profile

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Underlyin
g
Wisdom
Impact on
Accounting and
Disruptive 101 Enactment Business

3-Feb-18 3
 Ecosystemis reshaping

Preserving proprietary encouraging transparency.

Established structure agility and flexibility.

Dictating consumers and users more exercising their

power.

From economy of scarcity economy of abundance.

– Information rules
- Tapscott and Agnew, 1999
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Daxueconsulting.com 3-Feb-18 5
Beyond Factory Wall

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 Technology changes, Economics and IS wisdom

• Two Sided Market --> Two

Sided Network Effect
• Value of platform
• Network Effect
• Search Cost Reduced
• Transaction Cost Reduced
• Economics of Attention
• Demand economies of scale
Feedbacks, claps, comments,
stars, complaints
• Switching Cost and Lock-in
• Metcalfe and More Law
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 Metcalfe’s Lawon Network Value
– The value of a network is proportional to
the square of the number of users of the
system :: n (n-1).
- Robert Metcalfe -
– Value increases exponentially as the square
of connection n2, while
– Cost c increases incrementally along with
additional connection + fixed cost F.

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 Connection n
1 2 3 4 5 6

Value n (n-1) v
0 2v 6v 12v 20v 30v
Fixed Cost F+ nc

F+0 F+2c F+3c F+4c F+5c F+6c

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 Network Effect

Source: Parker and Van Alstyne, 2016

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 Disruptiv
e 101

Impact on
Underlyin Accounting and
g Enactment Business
Wisdom

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Disruptive

Smartphone vs Digicam
 Root
Process by which a product or
service takes root initially in simple
applications at the bottom of a
market and then relentlessly moves
up market, eventually displacing
established competitors .
~ Clayton Christensen

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Overhyped
Lexicon yet
misconceived

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 Revitalizing Disruptive Innovation
Disruption is a process, not a moment in time
– Most disrupters begin small baby step

Typically utilize different business models, not just

different products or services, from incumbents.
Disruptive innovation does not translate into
[immediate] success.

Incumbent should not overreact by

dismantling a still-profitable business
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 Revitalizing Disruptive Innovation
Disruptive innovations don’t catch on with
mainstream customers until quality catches up to
their standards.

Disruptive innovations originate in low-end or

new-market footholds.

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 Revitalizing Disruptive Innovation
Are these folks theoretically disruptive innovation?
- Uber
- iPhone
- Netflix
- Gojek
- Tokopedia

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 Enactment

Impact on
Underlyin Accounting and
g Disruptive 101 Business
Wisdom

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Daxueconsulting.com 3-Feb-18 19
Pipeline Model
NewVenture of Business Model
Value is created upstream
Customers are acquired
Products follow plan and capacity
Ownership to resources

Platform Model
Value is co-created
Prosumers emergence
Products follow interaction
Access to resources
parivedaperspectives.com
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 Riseof the Machines

Big Data and • Faster

Analytics • Cleaner IoT
• Accurate
• Cheaper
• Reliable
Robotics
AI/ML

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 Indonesia Fintech Start-up Map

Source: (http://fintechnews.sg , 2016)

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Perkiraan Pembiayaandan Pengguna Potensial Fintech INA2015 - 2021

Courtesy of:
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Huge Connectivity Base

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HowBlockchain Works

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3-Feb-18 26
Serve Financial Inclusion: Beyond Fintech and #bitcoin
• Immutable history • Agriculture
• Trustless transaction enabled • Healthcare
• Cost Reduction • Legal
• Secure transaction over
distributed ledger • Business process management
• Serve the unbanked people • Logistic
through smart transaction • Compliance infrastructure
• Reduce settlement time • etc
• Eliminates error handling

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 A Triple
Secure data transfer
Entry Accounting
Register or Ledger
Money/account balance on web
Secure transfer of assets
Computationally without
intermediary

Email protocol tells the web how https://research.csiro.au/data61/blockchain/

to send email. Blockchain tells

the web how to send money
(Imanzah Nurhidayat, 2017)
Blockchain ≠Bitcoin!

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 Impact on
Accounting
and Business
Underlyin
g Disruptive 101 Enactment
Wisdom

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 Accounting Challenge (Opportunities?)
• Accounting for Value Proposition
– How to translate review, claps, likes and capitalize into value
proposition.
– Platform model valuation (Kornberger et al, 2017)
– Race with the machines
• Governance and Risk Consideration
– Generavity, Relationality, Radically distributed control
– Risk consideration (e.g., Blockchain):
 Standard Risks
 Value Transfer Risks
 Smart contract Risks

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 SomeTakeaways
• Blockchain use, far beyond bitcoin only.
– Agriculture
– Insurance
– Education
– Audit
– Industry …. the next industry 4.0

• Continuous Research for Improvement

– IS Governance
– Accounting valuation
– Management control system, especially in platform-based model.

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 ThankYou
• Tapscott, D. and Agnew, D., 1999. Governance in the digital
economy. Finance and Development, 36(4), p.34.
• Hagiu, A, 2009. Multi-Sided Platforms: From Microfoundations to Design
and Expansion Strategies. Harvard Business School Strategy Unit
Working Paper No. 09-115. doi:http://dx.doi.org/10.2139/ssrn.955584
• Parker, G.G. and Van Alstyne, M.W., 2005. Two-sided network effects: A
theory of information product design. Management science, 51(10),
pp.1494-1504.
• Kornberger, M., Pflueger, D. and Mouritsen, J., 2017. Evaluative
infrastructures: Accounting for platform organization. Accounting,
Organizations and Society, 60, pp.79-95.
• Christensen, C. M., Raynor, M. E., & McDonald, R. 2015. What is
disruptive innovation. Harvard Business Review, 93(12), 44-53.

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