Transformation and disruption

Digital transformation and digital disruption are important concepts in startup terminology. Digital transformation describes a rather slow and continuous process of integrating digital technology into all aspects of a business that fundamentally changes value creation and delivery (Skog et. al, 2018).

While digital disruption refers to the radical change which re-define the value proposition of the business and even cannibalize traditional business processes and models. Digital disruption emerged from the disruptive innovation concept, which was introduced in “The Innovator’s Dilemma” book by Clayton Christensen (1997). Christensen underlined those disruptive innovations could be widely categorized as low-end or new-market disruptive innovations as a result of refining his theory (Christensen and Raynor 2003).

Low-end disruption: Machine made carpet was a low-end disruptor in handwoven carpet business as they took advantage of the performance surplus, when handwoven carpet performance and price overshoots what customers can use. They utilized a new operating and financial approach to win the low-end of the market and offered a discount prices for customers who just want to cover their floor. As the market grew, they improved the quality, variety, colour and design and disrupted handwoven carpet.
New-market disruption: Chamrosh business model can be seen as a new-market disruption which targets high end customer similar to iPhone and Tesla who disrupted mobile/laptop and car respectively. Chamrosh is trying to transform rug business and disrupt machine made carpet by harnessing digital technology to reinforce authenticity. This is done by integrating IoT, image processing and blockchain and focusing on five domains of digital transformation including customer, competition, data, innovation, value suggested by David
Rogers (2016).

David Rogers (2016) argues that disruption happens when a challenger has significant differential on both sides of the business model: “A difference in value proposition that dramatically displaces the value provided by the incumbent for some customers” That difference can come from value proposition generative such as price, freemium, access, simplicity, personalization, socialization, unbundling and rebundling)”

“A difference in value network that creates a barrier to imitation by the incumbent”

Customers: From passive targets to dynamic networks

Chamrosh treats customers as active player to cocreate the legacy of a rug. By recording data-backed from weaving process, Chamrosh narrates a reliable story for each rug which is the result of stakeholder dynamic contribution which can be verified

Competition: From products to platforms

Chamrosh is open and participative platform that connects luxury rug owners/producers to rug customers/fans by generating an electronic version of a rug. The customers can both buy and sell rugs in this platform.

Date: From process to strategic asset

Chamrosh leverages data including the ownership records and other environmental data such as temperature, moisture, location of use and light density and store them on blockchain. This to builds an efficient end to end traceability and surveillance system along with the rug supply-chain

Innovation: From planning to learning

Chamrosh stimulates innovation to interpret pattern and knotted pile of a rug and generate a digital fingerprint by integrating AI, image processing and cognitive computing This reinforces scarcity and uniqueness by making a rug exclusive and irreplaceable.

Value: From sustaining to adapting

Chamrosh harnesses value dynamics between the key factors in supply chain through integration of IoT, blockchain, image processing and artificial intelligence to generate a tremendous value for a rug, spur it price and influence luxury customer’s purchasing decisions.