‘Disruption, Disrupted’: A Roundup

It’s true, talking about “disruption” is like that old story about the blind men and the elephant: Everyone has their own take, based on a worldview that’s limited to their own experiences — and yet (as one person put it on Twitter), everyone thinks they know exactly what it is. Or isn’t.

To make matters worse, the word itself is overused and misused. But disruption, the theory, is useful — especially for considering options and alternatives when faced with an uncertain future. Disruption theory helps both startups and big companies as they figure out what to focus on and why. The point isn’t to be right or wrong about disruption; it’s to be thinking about it at all.

And this isn’t just an academic exercise. As software eats the world and becomes even more broadly applicable to people’s lives — and reaches new scale — the disruption dynamics that were always present in tech now apply to many other industries, fields, and professions.

So to help navigate both recent and past discussions on the topic of disruption, here’s a holiday link roundup to catch up or consider some select nuances…

What disruption theory is (and isn’t)

“[A] company that does everything by the book…can get blindsided by an innovation that rapidly takes away its markets, because it was doing everything right. The innovations that cause this ‘why bad things happen to good companies’ dilemma are disruptive innovations. The signature story of disruption reads as follows: an upstart low-end competitor displaces a much larger incumbent in a market, with the incumbent either retreating upmarket to higher margin/lower volume products or dying out altogether… The key point to remember is that disruption is a market/business phenomenon…” —Ribbonfarm cheat-sheet

“But for all this, the question remained: does disruption really work? Can disruption get beyond merely explaining the past and actually make it possible for any manager to more accurately predict the future? …the answer, it turns out, is ‘yes.’ …with specific data and analysis demonstrating that disruption has predictive power.” —on The Innovator’s Manifesto

“Disruption theory is an attempt to reliably identify winning challenges. It includes a method of analysis of ‘the setting’ of the fight and ‘the weighing’ of the fighters. In other words, it measures whether the challenger is sufficiently asymmetric and whether the incumbent is flexible enough in their likely response. If there is insufficient asymmetry the theory would suggest the challenger will lose, and vice versa.” —The Asymco Disruption FAQ

“Three things irk me about ‘disruption’ as it’s used in technology: 1. New products that do what existing products do, but (theoretically) better, are not disruptive. They are ‘sustaining.’ … 2. The misplaced obsession with low-end disruption, which, as I argued last week, doesn’t apply nearly as strongly to consumer markets. 3. The characterization of obsoletive technology as disruptive. … [Disruption theory] is dramatically over-applied in technology. Most new products are simply better — stop calling them disruptive! — while the most revolutionary products — all of them, ever more personal versions of truly personal computers — are obsoletive. They are more expensive, more capable, and change the way we live.” —Ben Thompson, Stratechery

Incumbent, beware (Or, beware the incumbent)

“For an incumbent, it is costly to bet on a new, unproven technology when things are going fine with the old one … [The] end result was incumbent preservation through acquisition. And this is not just theorising. My own recent paper…demonstrates just that: disruptive technologies (identified after the fact) are associated with start-ups competing and then being acquired as much as they are associated with those start-ups growing as independent firms.” —Digitopoly

“At its heart, innovation is about change and challenge, things which are anathema to incumbents. Incumbents benefit from the status quo, whether in business or government, not new competition. In fact, incumbent businesses and government will often work together to quash competition and keep things as is.” —AEIdeas

“[Disruptive innovation] is not a theory about survivability… does U.S. Steel make rebar anymore? No, they’ve been taken out of rebar. Do the integrated steel companies like U.S. Steel make rail for the railroads? No… So what do they make? Steel sheet at the high end of the market. The fact is that they make steel sheet at the high end of the market, but have been driven out everywhere else. This is a process, not an event.” —Christensen in Bloomberg Business Week

“Clearly disruptive innovation is not a death sentence for a company. But what we see is that disruption often triggers an industry shakeout, and while often the top players survive and come through stronger, weaker players fail or consolidated away… just because some firms survive and even become more dominant, doesn’t mean a disruptive innovation doesn’t have profound industry effects.” —Urbanophile

Critiques and considerations

“Most big ideas have loud critics. Not disruption… Disruptive innovation is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It’s not a law of nature. It’s an artifact of history, an idea, forged in time; it’s the manufacture of a moment of upsetting and edgy uncertainty. Transfixed by change, it’s blind to continuity. It makes a very poor prophet.” —Jill Lepore in The New Yorker (2014)

“Christensen’s description of how the world works matches how Silicon Valley sees itself, and Silicon Valley has gotten a lot more culturally important. The disruption narrative is one in which the upstarts are the heroes. Their eventual victory over the established order is foreordained, and they are the force that moves society — or at least technology — forward, disruption by disruption. Starting a company holds the potential to be not only lucrative, but also revolutionary…” —Drake Bennett in Bloomberg Businessweek

“Christensen’s theory is based on examples drawn from buying decisions made by businesses, not consumers. The reason this matters is that the theory of low-end disruption presumes: Buyers are rational; Every attribute that matters can be documented and measured; Modular providers can become “good enough” on all the attributes that matter to the buyers. All three of [these] assumptions fail in the consumer market” —Ben Thompson, Stratechery

“But let’s not confuse the diagnosis with the disease… understanding disruption and how to deal with it is a key task for management, even if it’s not the whole story… And, while we are at it, let’s not confuse contemporaneity with causation… Disruption has accelerated over the last decade and a half for very different and simpler reasons, namely, that power in the marketplace has shifted from seller to buyer as a result of globalization and the Internet, with a consequent shredding of many vertical value chains and the creation of new horizontal value chains” —Steve Denning in Forbes

“The Innovator’s Dilemma was published in 1997, making the theory of disruption seventeen years old. A teenager. According to Erik Erikson’s theory of developmental psychology, this is the time when people undergo the transition from child to adult. There is an identity crisis, where the question is asked — Who am I and what can I be? There is an opportunity now for the theory to grow up.” —Whitney Johnson on LinkedIn

On disruption theory as applied to the iPhone (and Android)

“[Christensen’s] most embarrassing prediction was that the iPhone would not succeed. Being a low-end guy, Christensen saw it as a fancy cell phone; it was only later that he realized that it was also disruptive to laptops.” —The New Yorker (2012)

“The iPhone is not and never was a phone. It is a pocket-sized computer that obviates the phone … [It’s] not a phone with other secondary features. It’s a general purpose pocket-sized touchscreen computer, that happens to include cellular phone networking as a feature.” —John Gruber

“As it turned out, the iPhone wasn’t just a phone. It became a whole ecosystem, in which the iPhone met the diverse needs of hundreds of millions of individual iPhone users with a technology platform drawing on the talents of hundreds of thousands of developers. It could be adapted to meet the needs, preferences and passing whims of every single user — a feat for which customers proved willing to pay a substantial premium. As a result, Apple’s ecosystem was able to disrupt the existing producers of cheaper mobile phones like Nokia and Blackberry. It was a different kind of disruption — disruption from above, with a better, more expensive product, rather than disruption from below, with an initially-inferior cheaper product.” —Steve Denning

“[Steve Jobs’ brilliance] was in disrupting one market (portable computers) with a low-end offering while making a ton of profit with a premium offering in a different market (mobile phones)… and all by using the same product.” —Lawrence Lee

“4/B. Right now Apple *is* the disruptor–iPhones/iPads vs Windows PCs. Many surprised by rapid rise of direct substitution, including me. 5/C. Apple *is* getting disrupted right now: Android phones outselling iPhones somewhere between 5:1 and 10:1 worldwide right now.” —@pmarca tweetstorm

What’s missing from disruption theory?

“It’s also clear that some of the toppling is the result of the natural process of market competition. As Joseph Schumpeter famously observed, markets are a powerful engine for ‘creative destruction’ — they invite competitors with a better idea or a better approach to come in and challenge incumbents. It happens all the time. But the key question on the table from this more systemic view of disruption is: why is it increasing so dramatically over a long period of decades? …It’s easy to criticize an existing theory, but even assuming that this one doesn’t work (which I don’t), what’s the alternative? What’s going on?” —John Hagel, Edge Perspectives

“But the theory sheds insufficient light on the question of how do you tell a dangerous disruption from an illusory one. There is no clear metric of disruption. All disruptions are not equal. Applying ‘disruption theory’ to every vertical value chain is misleading and doesn’t deal with the tougher question about how to distinguish between dangerous and illusory disruptions.” —Steve Denning in Forbes

“Apple is — and, for at least the last 15 years, has been — focused exactly on the blind spot in the theory of low-end disruption: differentiation based on design which, while it can’t be measured, can certainly be felt by consumers who are both buyers and users. It’s time for the theory to change.” —Ben Thompson

“[The current theory of disruption is incomplete; [it] does not have a broad enough concept of end-user quality… disruption theory was born in Microsoft/Intel era, when everyone expected computers to have, um, certain issues. Apple brilliantly redefined conception what was possible from end-user quality and integration standpoint, against prevailing assumptions. We have attempted to generalize this concept into ‘full stack’ thinking, which many of today’s best startups are also pursuing. It’s possible disruption theory needs to be evolved to accommodate these newer patterns and learnings… But it’s also possible all such ‘full stack’ patterns are just integrated approaches that themselves will be disrupted in the future.” —@pmarca tweetstorm [More on the full stack startup approach — which bypasses existing companies and builds a full end-to-end product/service in order to completely control the customer experience — here, here, and here.]

“Industries or institutions which have remained largely undisrupted include Energy, Education, Government, Healthcare, Airlines, and Hotels. The study of these anomalies continues and explanations identify conditions that prevent growth. Dependencies on regulation, infrastructure, and absence of technological core enablers caused some of the atrophy to date. However signals of change are appearing in all these industries and paths to disruption are clearly possible.” —Horace Dediu