My wife is a project manager who
is responsible for business operations at our local high school. She hired some
people this summer to process and distribute new textbooks within the school,
but they hadn't finished the job and school was about to open, so she needed
someone to come in at the last minute and help get the work done. More
specifically, someone who would follow her instructions and would not expect to
get paid. So I spent a long Saturday with her at the school, schlepping pallets
and boxes of new textbooks to the classrooms, getting everything in place in
time for the start of the new school year.
I wasn't happy with the work (the school was hot, the textbooks heavy) and more than once I thought wistfully about Steve Jobs, who according to biographer Walter Isaacson, had targeted the school textbook business as an "$8 billion a year industry ripe for digital destruction." Targeting textbooks seemed like a good idea to me because not only are they big and heavy and expensive--they don't update easily, either. Unfortunately, Jobs didn't live long enough to disrupt the textbook industry, but others are on the same path and, selfishly, I wish them well! Check out The Object Formerly Known As The Textbook for an interesting look at how textbook publishers and software companies and educational institutions are juggling for position as textbooks evolve into courseware. Also, As More Schools Embrace Tablets, Do Textbooks Have a Fighting Chance? takes a look at how The Los Angeles Unified School District—second largest school district in the country—is equipping students with iPads and delivering textbooks digitally in a partnership with giant book publisher Pearson.
Harvard professor Clayton Christensen, author of The Innovator's Dilemma, is credited with coming up with the term "disruptive innovation," which he defined as:
...a 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.
These
days we tend to associate disruptive innovation with a new or improved product
or service that surprises the market, especially established, industry-leading
competitors, and increases customer accessibility while lowering costs. The
notion is appealing, and it makes for exciting business adventure tales
featuring scrappy, innovative underdogs overcoming entrenched, clueless market
leaders. Of course disruptive innovation has been happening for a long time,
even if it was called something else, but lately technology has made it easier
and cheaper for upstart firms to take on industries they think are
"ripe for digital destruction."
In her recent article The Disruption Machine, Harvard professor and New Yorker staff writer Jill Lepore squinted hard at disruption theory, though:
Ever since “The Innovator’s Dilemma,” everyone is either
disrupting or being disrupted. There are disruption consultants, disruption
conferences, and disruption seminars. This fall, the University of Southern
California is opening a new program: “The degree is in disruption,” the
university announced.
By the
way, USC's Jimmy Iovine
and Andre Young Academy for Arts, Technology and the Business of Innovation is in fact opening this year and will
focus on critical thinking with plans, according to the Academy website, to "...empower the
next generation of disruptors and professional thought leaders who will ply
their skills in a global area." And yes, that is Dr. Dre's name on the
Academy!
But there
are others who believe we have now entered a decidedly more treacherous
innovation environment, one that Josh Linkner in The Road to
Reinvention says is forcing
companies to systematically and continually challenge and reinvent themselves
in order to survive. His fundamental question is this: "Will you disrupt,
or be disrupted?" And Paul Nunes and Larry Downes, Accenture folks who
wrote an article for the Harvard Business Review Magazine in 2013 entitled Big Bang Disruption (they have a new book on the same topic, summarized by
Accenture here)
warn of a new type of innovation which is more than disruptive--it's
devastating:
...a Big Bang Disruptor is both better and cheaper from the moment
of creation. Using new technologies...Big Bang Disruptors can destabilize
mature industries in record time, leaving incumbents and their supply-chain
partners dazed and devastated.
Should
CEOs be worried? When Mikhail Gorbachev visited Harvard in 2007 and said “If
you don’t move forward, sooner or later you begin to move backward”, he was
talking about politics and multilateral nuclear treaties, not companies, but
the warning certainly could have been directed at company CEOs. That message,
refreshed to incorporate the disruptive and big bang innovation threats that
have emerged since then, seems a bit unsettling: If you run a company and you
aren't dedicating resources to continually scanning the marketplace for threats
and improving and reinventing your business, if you are instead taking a
"business as usual" approach, you are at risk of being marginalized
or supplanted by competitors who will bring new products, services, experiences,
efficiencies, cost structures and insights to your customers. Maybe not this
year, or next year, but sometime soon. It's not a question of whether it will
happen, but when. Thus Linkner's question,
restated: Will you disrupt yourself, or be disrupted by someone else?
Of course some industries, like property casualty insurance, may not be high on anyone's "ripe for digital destruction" list, so maybe there's no need for insurance company CEOs to worry. Except perhaps about Google and Amazon. I keep thinking back to Blockbuster CEO Jim Keyes' comments to The Motley Fool in 2008: "Neither RedBox nor Netflix are even on the radar screen in terms of competition." You know the rest of the story, which illustrates the real-life consequences of an incumbent underestimating and then becoming "dazed and devastated" by a competitor.
