Technology Disrupts at Two Different Speeds
Ten years ago I spoke at a Marketing Technology (aka “martech”) event that was held at the fancy New York Times auditorium; a famous Harvard economist was the keynote speaker.
Although his remarks weren’t long, they certainly made an impression on me. I’ve held onto what he said and have tried to find the source material for the points he raised, with no success. It went something like this (please excuse my paraphrasing that is likely not proper Harvard economist-speak):
Imagine you are the greatest country in the world. You can manufacture and deliver any kind or size of object anywhere in the world at a speed and level of quality better than any other. It’s the late 1800s, and you are Great Britain. You’re so confident of your amazingness that you’ve branded yourself as “Great!” And that’s because you have achieved unprecedented scale in industrializing yourself by harnessing steam power in your factories, textiles, and transportation capabilities. This makes other countries cower in the shadow of your awesomeness.
Then, just as you’re headed into the new century, this thing called “electricity” starts to take off. And because you’re so great, you completely wave it off as a bad idea that can never take hold because steam power is here to stay! But this upstart country called the USA doesn’t have the same sunk investment in steam power greatness, and instead adopts electricity to power its factories. And for an extended period in the USA, if you include the word “electric” in your company name, your market valuation is guaranteed to sizzle and grow.
This riveting story of how technology disruptions take a long time — for reasons that aren’t about the superior qualities of the technology, necessarily, but about the critical mass and timing for the technology to finally take hold — stuck to the roof of my brain, instantly, like peanut butter does in your mouth. Because the story that the economist told was slightly different from the then-predominant take in business circles for how technologies take over, i.e. so-called “disruptive innovation” as advanced by the late Harvard Business School guru Clayton Christensen. I learned Christensen’s take for how a disruptive innovation is one that brings a better/different and cheaper approach, just when the limits of the status-quo approach can no longer outpace and outperform newer competitive forces.
The lesson learned is to be aware that even when you’re the leader in a race, you can easily get taken out by competition that you’re not at all expecting.
The canonical example of disruptive innovation is from the 1990s hard disk world. A bunch of companies were competing to make faster and more dense 5.25” hard disk units as a wave of smaller 3.5” drives were quietly starting to bubble up. The established manufacturers dismissed them as a distraction, of course. Turns out they were the distracted ones, because they failed to see that the smaller drives would open the door to the laptop and mobile computing revolution. They were over invested in competing on larger drives, and they couldn’t shift gears quickly enough and were disrupted. The lesson learned is to be aware that even when you’re the leader in a race, you can easily get taken out by competition that you’re not at all expecting.
However, what stuck with me as I sat in the front row of the auditorium, listening intently to this luminary from Harvard, was the time scale he was talking about. I mean, it was many decades until the disruptive changes led by electricity really got moving at scale. Ever since hearing that talk, I’ve tried to Google my way to finding the source story or any data behind what he said, to better understand whether or not it really happened that way. Then, just this morning I stumbled on the paper “Dynamo and the Computer: The Productivity Paradox” by Stanford economist Paul David, published back in 1990. And there it was! I also found a bonus paper by the late great Herbert Simon, “Steam Engine And The Computer: What Makes Technology Different.”
Technologies with broad, general applications take an inordinate amount of time to truly take hold over society in a disruptive way.
What did I learn by finding the source material after all these years? Both David and Simon explain how steam power and computing technology are general inventions versus specific ones. A specific invention is one that only does a single thing. Whereas steam power, electricity, and computing all provide a driving force that can be applied in many areas. Technologies with broad, general applications take an inordinate amount of time to truly take hold over society in a disruptive way. More narrow inventions, however, like an electric mixer for commercial bakery usage, or a parking meter that takes coins so that a human parking attendant isn’t required, find widespread adoption much more quickly. It’s like the proverbial difficulty to find “product market fit” for a specific startup idea compared to the whole different scale of finding “society market fit” for a paradigm that can impact almost every facet of one’s life.
It’s hard to stay “great” forever :+).
So when thinking about being disrupted, yes, you need to keep an eye on the competition right in front of you (even if you underestimate it or don’t see it at all), as well as the newest thing that’s coming to take you out of the game. But you also need to think at a macroscopic level about how giant shifts are always happening to our society that take many decades to reach their tipping points. The famous Steve Jobs-ism of “relentless focus” is completely valid when trying to get something big and important done, but you also need to be careful to invest time in relentlessly de-focusing yourself as well. And to consciously look to the past for futures that are just about to land, even if they started well before you were born. They’re out there. And they’ll disrupt you just as hard as the ones you think you knew about. It’s hard to stay “great” forever :+).