It is the domain of a manager (according to her experience and education) to recognize and treat her threats according to their hostility, or to exhaust all the company’s resources to treat all threats equally. However, this experience and education will mistreat a manager (and her company) when a threat is mislabeled as inconsequential. It is (nearly) impossible to identify “the next big thing”, and so managers often fail in this realm.
The most impactful example of disruptive innovation in my life has been digital music. I learned to drive while iPods were coming of age, so I am well aware of the 128 capacity cd holder. It was easy for makers of CDs and CD players to ignore the iPod, as there were at least a dozen inconsequential mp3 players that entered the market before iPod, each of which gained very little market share, and cumulatively they hardly chipped away at the music industry’s strong foothold in the business. MP3 players cater to a small group of people, they argued, and no one is going to give up their huge investment in Hi-Fi CDs for Lo-Fi mp3s, especially when mp3 players’ batteries are so poor.
Enter the iPod. The iPod dramatically changed the music industry, breaking copyright barriers with iTunes, increasing battery life to a practical 10 hours and memory to an unimaginable 20,000 songs, and making an incredibly easy-to-use interface. No other mp3 player came close, although many came before it (which paved the way for the iPod) and after it (that replicated it). Truthfully, it wasn’t before the 4th iteration that the iPod really took off, but by that time it was much too late to regain the lost market share for the incumbent corporations. I no longer had to rely on my dad’s (albeit immense) CD collection, I could upload all of my music (at that time only 5 GB’s worth) to my iPod and take it with me wherever I went. It simply didn’t matter that the music quality was comparatively poor, or that I had to use a radio transmitter that further decreased the quality, because I had all of my music all the time.
At the turn of the millennium, there were many ways to compete with the traditional music industry, but it left a gaping blue ocean of opportunity for the iPod, which Apple seized with both hands. They recognized what was capable with modern technology, identified consumers’ music-listening complaints (through whatever medium), and created the perfect solution.
While record company managers saw the mp3 player coming from miles away, they never thought that digital music would be able to so much as scratch their stone walls. By the time the iPod had shown its polished teeth, it was much too late to produce anything comparable. The best record company managers did not recognize the threat to their cash cow, and consequently have handed their safe keys to Apple.