Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Wednesday, June 16, 2004

Durkheim's Law

This breathless article by BW gets it all wrong - convergence isn't going to 'accelerate' the rate of technological disruption; it's the other way around. Convergence is a nice example of the constantly increasing rate of change of disruption, because there are increasing returns to innovation. This is like a Moore's Law for disruption; except it was formulated by sociologists at the turn of the 20th century.

I think the more interesting bit is that we are at the point where it feels like (technological, market, regulatory) disruption is the new normal. The big question that strategy hasn't answered is this one: what do firms do when disruption is the rule, rather than the exception? Clearly, in this situation, innovation is table stakes - not a game-changer. I think the answer is a return to tactical thinking - to teach managers how to skate around the edge of discontinuity, without falling off.

In fact, I think managers would be better off reading this Guardian op-ed, which discusses the downside to consumers of accelerating disruption - so they can understand how people feel about it. Unless they do this, the strategic outcomes of convergence are already clear:

1) Massive hypercompetition because of competence blur (ie industry walls break down)
2) Hugely increased search space for the dominant design (because the number of goods possible through recombination increases massively)
3) Luck determines winners, who stay lucky for shorter and shorter periods of time. Decreasing competitive advantage period means little payoff to entering convergence market.

Interesting corollaries to look out for:

1) Hypercompetition drives platform costs (ie switching costs) to negative - platforms become interoperable.
2) Replication/distribution economies of scale made possible by convergence disrupt other industries, creating Convergence Wars

-- umair // 10:46 AM // 0 comments


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