March 06, 2019

When Disruptors Fail

Damon Young

Damon Young
Senior Vice-President, Governance, Strategy, and Planning for Enterprise Business Transformation/City National Bank

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Republished from LinkedIn, originally posted in 2016 at https://www.linkedin.com/pulse/when-disruptors-fail-damon-young/

As a lifelong Trekkie, one of my favorite films, of course, is Star Trek II: The Wrath of Khan.  But there's a pivotal scene that always seemed to sail over my head as a kid, namely the moment near the climax where Mr. Spock advises Admiral Kirk how to defeat his nemesis, Khan, in an environment where both of their starships are effectively blind.

Maybe it was the confusing "Z-minus" jargon or how the scene is staged and shot, but the key point is this: from their experience of years of deep space battles, the Enterprise crew knew they could fight in 3 dimensions, while Khan, a product of the 21st century, was still basing his attack on the 2-dimensional conflicts of naval vessels at sea.

I thought of this as I read this recent article on Quartz about how the US oil industry, newly emboldened with the innovation of fracking, didn't remember that OPEC could just pump more oil to drive down the price and drive them out of business.

That, of course, reminded me of the sad case of Aereo, that innovative tech startup that wanted to let you stream your free broadcast TV signal over the top, until the big media broadcasters decided to exercise their lobbying power and political influence to drive them out of business.

I think of Napster.  I think of Netscape.  And, I'm sure that, given time, I can think of many, many others.  There are any number of companies who created huge opportunities built around disruptive technologies who did not account for the incumbent's ability to alter the shape of the field of battle to their advantage.

Perhaps your competitors can't match you on innovation, but what are their other advantages?  Brand equity?  Supplier relationships? Lobbying prowess? Litigation avenues?  Cash alone creates any number of advantages that can be deployed as weapons against disruptors.

The lesson in this, in my mind, is that, if your business plan calls for you to transform an existing market, do not expect the people who make millions of dollars from that existing market to take their livelihoods and go quietly into the night.  Sometimes, in the case of companies like Kodak or Blockbuster Video, that is exactly what happens, but, as an upstart, your success should not be based on the assumed inability of your competitors to respond.

And you should never, ever, expect them to fight fair.

Comments? You can contact me directly via my AdvisoryCloud profile.

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