December 26, 2013
A few Boxing Day words about one of the country's biggest shippers of things in boxes.
In the Innovator's Dilemma, Clayton Christensen argues that companies tend to put too much emphasis on a successful current business model and fail to anticipate or adopt new technologies that will meet future needs.
This leaves them vulnerable to "disruption from below," competition they ignore because facing it directly would threaten profit margins and require adopting new strategies their long-established business cultures aren't comfortable with.
Paul Thurrott points to this anecdote featured in The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone as a near-perfect example of a businessman following Clayton Christensen's advice practically to the letter:
In a move straight out of The Innovator's Dilemma, Bezos in 2004 instructed the nascent Kindle team not to be hobbled by concerns about the firm's then-successful book business. "Your job is to kill your own business," Bezos told the man running the Kindle team. "I want you to proceed as if your goal is to put everyone selling physical books out of a job."
Brad Stone expands on the thesis in this Charlie Rose interview. And Eugene Wei take on the glib criticism (often, ironically, coming from the left) that Amazon just isn't making big enough profits (unlike, ironically, tree-hugger darling Apple).
If I were an Amazon competitor, I'd actually regard Amazon's current run of quarterly losses as a terrifying signal. It means Amazon is arming itself to take the contest to higher ground. The retail game is about to become more, not less, punishing.
And arriving just in time to provide a real-time, real-world case study of what happens when a company doesn't adapt to that "disruption from below," Blockbuster is closing the rest of its stores and shuttering its Netflix-style DVD mail service.