Big Bang Disruption – Larry Downes, Paul Nunes
A new form of disruptive innovation has emerged that doesn’t follow the classic model, entering the market as a cheap substitute for a high-end product and then gradually increasing in quality and moving up the customer chain. Instead, the innovation beats incumbents on both price and quality right from the start and quickly sweeps through every customer segment. This kind of “big bang” disruption can devastate entire product lines virtually overnight.
Jeff Bezos And Books
The founder of Amazon realized that e-commerce was the natural solution for a fragmented market with an enormous number of SKUs; a small, shippable product; and a stable supply chain characterized by many sellers served by a few dominant middlemen.
He settled on books not because he had any expertise in publishing but because books were a coldly rational choice. They fit the tool he wanted to apply.
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Recognizing Big-Bang Disruption
Big-bang disruptors are rewriting the rules of industry after industry—and the new rules hold only until the next wave of disruption comes along.
Big-bang disruptions usually feature not a vertically integrated supply chain but a virtually integrated one: They are manufactured and deployed via the infrastructure of the cloud.
Seeing It Coming
Learning to recognize the warning signs is key to survival. But since the early market-based experiments usually fail, the familiar signals sent by low-end customers jumping ship may never arrive. You need new tools to recognize sooner than your competitors do that radical change is on the way, and that means interpreting the real meaning behind seemingly random experiments.
Listen To The Truth Tellers
Your truth tellers may be easy to identify, if not to accept. They may be employees far below the ranks of senior management, working on the front lines of competition and change. They may not be your employees at all.
Longtime customers, venture cap truth tellers are often eccentric, and their lucidity can easily be mistaken for arrogance and stubbornness. Consider such difficult personalities as Steve Jobs and other technology luminaries like Bill Gates, Alan Kay, and Mark Zuckerberg.
Italists, industry analysts, and science fiction writers may all be truth-tellers.
How To Spot The Truth-Tellers : Slowing The Disruption
Ensure that disruptors can’t make money from their inventions until you’re ready to acquire them or you can win with a product of your own.
You can’t stop a big-bang disruption once its unconstrained growth has taken off.
You can delay their profitability by lowering prices, locking in customers with long-term contracts, or forming strategic alliances with advertisers and other companies critical to your rivals’ plans.
How to spot the truth-tellers : a fast escape and a quick pivot
It’s up to senior management to confront the reality that even long-successful strategies may be suddenly upended, requiring a radical re-creation of the business. To compete with undisciplined competitors, you have to prepare for an immediate evacuation of current markets and be ready to get rid of once-valuable assets.
How To Spot The Truth-Tellers :
A New Kind Of Diversification
Diversification has always been a hedge against risk in cyclical industries. As industry change becomes less cyclical and more volatile, having a diverse set of businesses is vital.
Example: Fujifilm has survived the transformation to digital photography by transitioning to other products and services, ranging from nanotechnology to the manufacture of flat-panel TVs.
How to spot the truth-tellers : your business is already getting disrupted right now
You can’t see big-bang disruption coming. You can’t stop it. You can’t overcome it.
Big-bang disruption is the innovator’s disaster. And it will be keeping executives in every industry in a cold sweat for a long time to come.
The impact of big-bang disrupters is certainly amplified for technology- and information-intensive businesses, but most industries are at risk.
The Good News
Big-bang disruptions hold immense possibility for those who can quickly learn the new rules of unencumbered development, unconstrained growth, and undisciplined strategy. Your current business may be replaced by something more dynamic and unstable but also more profitable. And the change will come not over time but suddenly. In other words, not with a whimper—but with a bang.
Bonus: The 12 Rules Of Big Bang Disruption
- Rule 1. Consult Your Truth-Tellers
- Rule 2. Pinpoint Your Market Entry
- Rule 3. Launch Seemingly Random Market Experiments
- Rule 4. Survive Catastrophic Success
- Rule 5. Capture Winner-Take-All Markets
- Rule 6. Create Bullet Time
- Rule 7. Anticipate Saturation
- Rule 8. Shed Assets Before They Become Liabilities
- Rule 9. Quit While You’re Ahead
- Rule 10. Escape Your Own Black Hole
- Rule 11. Become Someone Else’s Components
- Rule 12. Move to a New Singularity