BIG BANG DISRUPTION
Larry Downes and Paul Nunes, Portfolio, 278 pages, $29.95
Disruptive innovations are becoming more common thanks to the plummeting cost of computing power, the Internet's ability to make new offerings go viral and many other factors. Larry Downes, a researcher and writer, and Paul Nunes of Accenture, a consultancy, argue that if companies are to survive attacks by "big-bang disrupters" they need to ditch the traditional thinking about new entrants inspired by texts such as Clayton Christensen's classic, "The Innovator's Dilemma."
According to this, new competitors typically start wooing a company's least profitable customers with a product that is cheaper or one that costs the same but boasts innovative features. They then gradually bite off bigger chunks of a market as their wares become better known. Savvy incumbents can stop the rot by spotting insurgents early and buying them or by launching rival offerings.
Downes and Nunes think this mind-set and the strategies it has inspired are no longer useful in a world where entire product lines and markets are being created and destroyed at breakneck speed. As Google's decision to offer free navigation services shows, disrupters may not give a jot about making money in traditional ways from a service. Moreover, the Web means all-out assaults on a market can now be mounted quickly and cheaply.
Yet it is not clear that all this invalidates the work of Christensen and others. True, rivals can grow fast, but few successes happen overnight. Thus Facebook spotted the rise of Instagram, a popular photo-sharing service, and snapped it up in 2012.
The challenge facing incumbent firms is to work out which threats are worth worrying about and how best to respond to them — a rich seam that "Big Bang Disruption" fails to mine deeply enough. Downes and Nunes are right that the competitive heat has been turned up. But cool heads are still needed when dealing with disrupters.
THE ECONOMIST
