Most technologies just seem to come and go. Try explaining to a teenager today about how much fun it was to go to a record store and buy a new album on vinyl, cassette or — heaven forbid! — 8-track and it immediately becomes clear how defunct and meaningless those technologies have become.
In the Innovator’s Dilemma, Harvard professor Clayton Christensen argued that disruption occurs when a technology’s performance surpasses customer needs. When that happens, the basis of competition changes and a new technology arrives that outperforms the incumbent on some other parameter.
Yet some technologies, like Leonardo DiCaprio’s character in the The Revenant, simply refuse to die. When faced with a disruptive competitor, they find new purpose and continue to thrive for decades. A big part of the difference seems to be not just the characteristics of the technology, but how it is able to integrate itself with other innovations.
The Enduring Mainframe
The first full fledged mainframe is often considered to be the IBM System/360. Launched in 1964, it went on to dominate the industry into the the 1980’s. It was designed to be a centralized machine, which would perform tasks for a number of users that connected to it through a series of terminals.
Yet by the mid-late 1970’s, as Christensen’s theory would have predicted, a new disruptive competitor emerged. New CMOS chips, while far less powerful than the bipolar technologies that were dominant at the time, were also much cheaper and more efficient. So customers began to prefer client-server systems made up largely of PC’s and UNIX workstations. Mainframes, as originally conceived, simply couldn’t compete anymore.
Yet engineers at IBM came up with a radical idea. What if, by designing a system in which the cheaper CMOS chips could operate in parallel, they could create a mainframe that could compete in price become far more powerful? That technology, called parallel sysplex, is still in wide use even now.
However, it wasn’t just the technology that had to be reimagined, but the role mainframes played. The new more distributed client-server architecture — and later the Internet — created massive amounts of data. In effect, smaller and cheaper computers created the need for more powerful computers to manage all of the transactions and data they generated. Mainframes were able to fill that role.
Today, mainframes remain a multi-billion dollar business.
Why Video Never Killed The Radio Star
There is perhaps no industry that has been disrupted with such metronomic regularity as the media business. TV was supposed to kill radio and movie theaters. The Internet was thought surely to mean the end of traditional publishers. Yet as each new medium ascends, those that came before manage to persist in new niches.
Part of the reason for this is that as the economy grows, smaller audiences become more viable and older forms of media are able to play a new role. Radio programming adapted from home to in-car listening and shifted from soap operas to music and talk shows. Movie studios learned to distribute their content more broadly.
The latest medium to come under siege is publishing but, as I explained in Harvard Business Review, the industry has remained surprisingly resilient. Margins have fallen somewhat and there has been some considerable belt tightening — lavish expense accounts have become a thing of the past — but traditional publishers continue to survive and, in some case, thrive.
The reason why is simple. Although media distribution has been severely disrupted, the media business as a whole remains an intrinsically human affair. We need talented editors, programming executives and producers to support those who create things that inform, entertain and excite us.
The Web Is Not Dead
In 2010, Wired editor Chris Anderson proclaimed that The Web Is Dead. “Within five years,” he wrote, “Morgan Stanley projects, the number of users accessing the Net from mobile devices will surpass the number who access it from PCs. Because the screens are smaller, such mobile traffic tends to be driven by specialty software, mostly apps, designed for a single purpose.”
Anderson argued that the combination of the need to finance content and the rising tide of proprietary apps would spell the end of the Web as we know it. “Now it’s the Web’s turn to face the pressure for profits and the walled gardens that bring them,” he wrote. “Openness is a wonderful thing in the nonmonetary economy of peer production. But eventually our tolerance for the delirious chaos of infinite competition finds its limits.”
Six years later, it’s amazing how those predictions have both come to pass and at the same time have proved wildly off the mark. The Web not only endures, it thrives; and the apps that he predicted would balkanize it have been integrated seamlessly into the Web’s open ecosystem. Who would use apps like Facebook or Flipboard if they couldn’t access the Web?
Today, it is more clear than ever that open beats closed. While it is true that we increasingly use platforms to access ecosystems, it is increasingly obvious that the bulk of the value lies in the ecosystems themselves. Once you close them off into a walled garden, you diminish them.
Strategy In A Networked World
Step back for a minute and it quickly becomes apparent what the technologies that survive have in common. While some once thrived by dominating choke points in a particular field — mainframe in computing, media outlets in editorial and programming operations — they evolved by creating connections to new ecosystems.
Mainframes were once a standalone technology, but now they form a crucial function helping to manage the dizzying array of transactions that the Internet generates. Media companies no longer dominate what we see, hear and read the way they once did, but still perform the valuable function of curation. The Web, of course, was always an open ecosystem.
So clearly, strategy can no longer be considered a game of chess in which we can rely on making distinct moves across an imaginary board. Rather, we must treat the marketplace as a series of interlocking networks. We can no longer rely on building and leveraging assets to compete, but must widen and deepen connections.
The technologies that endure do not merely innovate with respect to features and functionality, but create value through forming new connections.