Jeffrey Barr's Key Ideas from Big Bang Disruption
by Larry Downes, Paul Nunes

The first key to survival is understanding that big-bang disruptions differ from more-traditional innovations not just in degree but in kind. Besides being cheaper than established offerings, they’re also more inventive and better integrated with other products and services. And today many of them exploit consumers’ growing access to product information and ability to contribute to and share it.

But perhaps the biggest challenge to incumbents is that big-bang innovations come out of the left-field, combining existing technologies that don’t even seem related to your offerings to achieve a dramatically better value proposition. Big-bang disruptors may not even see you as competition.

They’re not sizing up your product line and figuring out ways to offer slightly better prices or performance with hopes of gaining a short-term advantage. Usually, they’re just tossing something shiny in the direction of your customers, hoping to attract them to a business that’s different from yours.

How did Jeff Bezos decide to enter the book business?

E-commerce, he realized, was the natural solution for a fragmented market with an enormous number of SKUs; a small, shippable product; and a stable supply chain characterized by many sellers served by a few dominant middlemen. He settled on books not because he had any expertise in publishing but because books were a coldly rational choice. They fit the tool he wanted to apply.

Big-bang disruptors are rewriting the rules of industry after industry—and the new rules hold only until the next wave of disruption comes along. There’s almost no time to adapt. Bold strategies are the only way to cope.

Big-bang disruptions usually feature not a vertically integrated supply chain but a virtually integrated one: They are manufactured and deployed via the infrastructure of the cloud. In the face of such nimble yet perversely well-resourced competition, your operational assets suddenly morph into liabilities.

Learning to recognize the warning signs is key to survival. But since the early market-based experiments usually fail, the familiar signals sent by low-end customers jumping ship may never arrive. You need new tools to recognize sooner than your competitors do that radical change is on the way, and that means interpreting the real meaning behind seemingly random experiments.

Your truth tellers may be easy to identify, if not to accept. They may be employees far below the ranks of senior management, working on the front lines of competition and change. They may not be your employees at all. Longtime customers, venture capitalists, industry analysts, and science fiction writers may all be truth tellers.

Truth tellers are often eccentric, and their lucidity can easily be mistaken for arrogance and stubbornness. Consider such difficult personalities as Steve Jobs and other technology luminaries like Bill Gates, Alan Kay, and Mark Zuckerberg.

You have to ensure that disruptors can’t make money from their inventions until you’re ready to acquire them or you can win with a product of your own. You can’t stop a big-bang disruption once its unconstrained growth has taken off, but you can make it harder for its developers to cash in. Many big-bang disruptors build market share and network effects by offering their early products free. 

You can delay their profitability by lowering prices, locking in customers with long-term contracts, or forming strategic alliances with advertisers and other companies critical to your rivals’ plans.

It’s up to senior management to confront the reality that even long-successful strategies may be suddenly upended, requiring a radical re-creation of the business. To compete with undisciplined competitors, you have to prepare for the immediate evacuation of current markets and be ready to get rid of once-valuable assets.

Diversification has always been a hedge against risk in cyclical industries. As industry change becomes less cyclical and more volatile, having a diverse set of businesses is vital. Fujifilm, a perennial also-ran in the film business, has survived the transformation to digital photography by transitioning to other products and services that draw on subsidiary technologies, ranging from nanotechnology to the manufacture of flat-panel TVs.

You can’t see big-bang disruption coming. You can’t stop it. You can’t overcome it. Old-style disruption posed the innovator’s dilemma. Big-bang disruption is the innovator’s disaster. And it will be keeping executives in every industry in a cold sweat for a long time to come.

The impact of big-bang disrupters is certainly amplified for technology- and information-intensive businesses, but most industries are at risk.

The good news is that big-bang disruptions hold immense potential for those who can quickly learn the new rules of unencumbered development, unconstrained growth, and undisciplined strategy. Your current business may be replaced by something more dynamic and unstable but also more profitable. And the change will come not over time but suddenly. In other words, not with a whimper—but with a bang.

• Rule 1. Consult Your Truth-Tellers 
• Rule 2. Pinpoint Your Market Entry 
• Rule 3. Launch Seemingly Random Market Experiments 
• Rule 4. Survive Catastrophic Success
• Rule 5. Capture Winner-Take-All Markets 
• Rule 6. Create Bullet Time
• Rule 7. Anticipate Saturation
• Rule 8. Shed Assets Before They Become Liabilities 
• Rule 9. Quit While You’re Ahead 
• Rule 10. Escape Your Own Black Hole 
• Rule 11. Become Someone Else’s Components 
• Rule 12. Move to a New Singularity