8 points about Christensen’s Disruption Theory & Bezos’s Amazon
These notes are from The Everything Store by Brad Stone.
1/ Through the first sixty-five pages, the Amazon story could be an appendix to Clayton Christensen’s books on disruption theory.
Disruption theory is “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
2/ The disruption paradox MAKES SENSE. Move up the value chain, let the pups have the scraps.
3/ Problems begin when the pups are full grown, and better at the current or new job.
4/ We often see this too late. We cross the event horizon before realizing what’s happened.
5/ Despite the lead (2 billion compared to 16 million), B&N lost.
“The leading firms in the established technology remain financially strong until the disruptive technology is, in fact, in the midst of the mainstream market.” — Clayton Christensen
6/ There are ways to engage with disruptors. One technique is to spin out the segment to chase down the newbie. Keep it in house and you won’t commit to it.
“A company must deliver the rate of growth that the market is projecting just to keep its stock price from falling.” — Clayton Christensen.
7/ This reminds of when you see a fight and one person is willing to do anything to win. That’s Bezos.
“Disruption works because it is much easier to beat competitors when they are motivated to flee rather than fight.” — Clayton Christensen.
8/ Even when we know this, it’s still hard to do.
Christensen arrived at Harvard in 1992. The Innovator’s Dilemma came out in 1997. The theories WERE RIGHT THERE. Smart people missed them. Getting this whole things right is hard.