The Garrulous Jay – The Disruption Deception

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I read a post on LinkedIn last week written by one of the co-founders of Netflix, Marc Randolph, which Blockbuster famously refused to buy for $50 million back in 2000. It concluded with the words, “If you are unwilling to disrupt your business, there will always be someone willing to do it for you.” What nonsense!

The idea of disruption being the driver of business success has been around for a while. It was arguably popularised by Austrian-born economist Joseph Schumpeter in the 1940s, in his book Capitalism, Socialism, and Democracy. The book described the forces of “creative destruction” that drove the innovation that in turn lead to economic development.

Both before and after Schumpeter’s time there have been countless examples of this process consigning companies and whole industries to the dustbin of corporate history…

In transportation alone we have seen the demise of horse-drawn carriages, the beginning and end of the age of rail, and the rise of internal combustion engine cars. Looking ahead these too may be displaced by EVs and drones.

Elsewhere we have seen the decline of the likes of Kodak, Nokia, BlackBerry & countless music stores as examples of businesses that failed to disrupt their incumbent models and perished.

It is therefore no surprise that “disruption” has become so beloved of the denizens of the technology ecosystem, further encouraged by cheerleaders such as Randolph.

But I think this is wrong. It strikes me as being a peculiarly ‘macho’ approach to business, and one that is both myopic and itself potentially harmful.

I would argue it is precisely because these paradigm shifts in certain industries are so dramatic, and indeed rare, that they garner so much attention. But across a great many industries, most of the time, this is not how companies grow and prosper.

The evidence too seems to point to this: take a look around… Most of us still shop at one of the Big Four supermarkets, although Aldi & Lidl have shaken things up recently. The so-called High Street banks still dominate retail banking. We almost all still have consumer goods in our homes made by P&G and/or Unilever. Even the majority of cars on the road today are made by companies that can trace their origins back decades not years. And the list goes on: pharmaceuticals, insurance, white goods etc.

The danger then, is that even in industries such as information technology which adopt the disruption mantra, it does more harm than good.

By encouraging tech entrepreneurs to behave like bulls in a China Shop they may miss the opportunity to make money helping the China Shop to become more successful.

Collaboration in evolution may lead to greater economic growth than conflict in revolution.

Every business should be open to change and improvement, but for the great majority I think seeking to do this through disruption is a deception and a distraction.