Putting Yourself Out Of Business

There have been countless books and articles written about industries that did not see the digital shift coming - take the music industry, or traditional newspapers as just two examples. Why didn't they see the tide turning? Why didn't they see the disruption coming and adapt? Why did they respond so late?

The major challenge faced by traditional businesses that are seeing a digital disruption is that they have to cannibalise or totally sacrifice their cash cows - and its a tough thing to do. They are typically in market leading positions - making good profits - and along comes a disruption. One of the primary characteristics of disruptive innovation is that it drives down margins and commoditises the market. One day you are selling $30 CD's in music stores, and the next you are competing with 99c singles online - or even worse - free downloads. Its a completely different business model - and adapting requires a lot of pain for traditional businesses.

As a counter-point, it has recently been reported about the potential for the iPad to cannibalise Apple's laptop and desktop sales. On one hand, a traditional view-point would be to ensure you have product segmentation and don't release products that compete with each other. Be defensive. Protect your margins.

What I would suggest is that if your products or markets are going to be disrupted, wouldn't you rather be the one doing the disruption? The only way to survive in an environment of constant disruption is to be the one making your own products extinct - even when it hurts.