“It is not the strongest of the species that survives, nor the most intelligent,
but rather the one most adaptable to change.” —Charles Darwin
The world of Business is in a constant state of evolution. Great organizations fade. Fast-moving start-ups step into their place.
In The Innovator’s Dilemma, Clay Christensen studied the evolution of the disk drive industry, where leaps in technology led to physically smaller hard drives. This caused nerds around the world to rejoice. Also, it exemplified the difficulty of change.
In theory, the leap from one size to the next doesn’t seem monumental. You might expect the same leaders to remain over time. However, when the world changed, leaders lost their place. In the 80s and 90s, disk drive manufacturers battled to compete for the top three spots in Market share. Here’s a quick synopsis of how the leaderboard changed:
1980 14″ Drives – 1st: Contol Data, 2nd: IBM, 3rd: Memorex
1984 8″ Drives -1st: Shugart, 2nd: Micropolis, 3rd: Priam
1988 6.25″ Drives -1st: Seagate, 2nd: Miniscribe, 3rd: Maxtor
1993 3.5″ Drives -1st: Conner, 2nd: Quantum, 3rd: Maxtor
1995 2.5″ Drives -1st: Prairetek, 2nd: Quantum, 3rd: Conner
Small shifts can disrupt the market.
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Even the clever must adapt.
If the disk drive industry is simple, the semiconductor market is complex. Semiconductors are so difficult to make that the leading players boast billion-dollar research budgets. These budgets are supposed to create barriers to entry, barriers that protect the giants while preventing new companies from entering the market. However, just like in the simple disk drive market, shifts in technology cause new leaders to emerge.
Leaders in the Computer Chip Market:
1955 Vacuum Tubes – 1st: RCA , 2nd: Sylvania, 3rd: General Electric
1955 Transistors – 1st: Hughes, 2nd: Transitron, 3rd: Philco
1965 Semiconductors – 1st: Texas Instruments, 2nd: Fairchild, 3rd: Motorola
1975 Integrated Circuits – 1st: Texas Instruments, 2nd: Fairchild, 3rd: National
1985 VLSI Circuits – 1st: Motorola, 2nd: Texas Instruments, 3rd: NEC
1995 Submicron – 1st: Intel, 2nd: NEC, 3rd: Motorola
RCA , for example, was once double the size of IBM. They were rockstars in the vacuum tube market, but apparently people don’t buy vacuum tubes anymore. RCA struggled with change, and eventually, the company was displaced. (Mental note: stop selling vacuum tubes.)
Not to tell anyone how to think.
But if we can learn from history, we (collectively) could be not so focused on protecting what we have, but rather on adapting to the next big thing.
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