Digital Disruption
Disruption is an idea that has been much discussed. Paramount to disruption is the idea of the “innovator’s dilemma.” There are times when incumbents are able to fight back and retain their dominance, but more often than not, newcomers win and dominate – until they are disrupted. This is the cycle we have seen play out time and again. Until a few months ago, Internet search was a Google monopoly, and now there is talk of what GPT-powered Bing could do.
I asked ChatGPT to list out industries which have seen disruption in recent times, listing winners and losers:
- Internet and World Wide Web:
- Incumbents: Traditional media companies, such as newspapers, magazines, and television networks.
- Winners: Online media companies, such as Google, Facebook, and Netflix.
- Personal computing:
- Incumbents: Mainframe computer companies, such as IBM and DEC.
- Winners: Personal computer companies, such as Apple and Microsoft.
- Mobile devices:
- Incumbents: Traditional phone manufacturers, such as Nokia and Motorola.
- Winners: Smartphone manufacturers, such as Apple and Samsung.
Besides these, the entertainment industry (music and streaming) has also seen a reset. ChatGPT: “The advent of digital music and online streaming “reset the score” by disrupting the traditional model of selling physical albums through record stores. This shift in technology and consumer behavior created new winners, such as online music streaming platforms like Spotify and Apple Music, and caused traditional incumbents, such as record labels, to lose their dominant position in the industry.” Amazon has done the same to traditional retailers. ChatGPT: “The growth of e-commerce and online marketplaces like Amazon has disrupted the traditional retail industry, with brick-and-mortar stores struggling to compete and some major retailers, such as Toys “R” Us and Sears, going bankrupt.”
Bloomberg Businessweek lists 85 of the most disruptive ideas in our history. In the top 5: the jet engine, microchips, green revolution, Wal-mart, TV.
I had discussed recent digital revolutions in an earlier series, and written: “Even as it has been an amazing ride in my 56 years lifetime, tomorrow’s world promises a lot more. As consumers, business owners and managers, researchers and entrepreneurs, we will see many new and exciting technologies in our lives, with the promise of many more revolutions in the years and decades to come.”
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In 2004, an article in Harvard Business Review had this advice: “You can’t make intelligent investments within your organization unless you understand how your whole industry is changing. If the industry is in the midst of radical change, you’ll eventually have to dismantle old businesses. If the industry is experiencing incremental change, you’ll probably need to reinvest in your core. The need to understand change in your industry may seem obvious, but such knowledge is not always easy to come by. Companies misread clues and arrive at false conclusions all the time…To truly understand where your industry is headed, you have to shut out the noise from the popular business press and the pressure of immediate competitive threats to take a longer-term look at the context in which you do business.”
In the rest of this series, I will look at two related industries: email service providers (ESPs) and digital advertising (adtech, led by Google and Meta). I will argue that new innovations have the potential to reset the score in both industries.
