Disruption theory, a concept coined by Clayton Christensen, suggests that established firms are dethroned by smaller, more innovative companies. Yet, this theory has its limitations, especially when applied to the tech industry. The industry’s giants, such as Google, Apple, and Amazon, have remained dominant for years, seemingly immune to disruption.
This phenomenon is due to the nature of the internet, which allows companies to scale at an unprecedented rate. Consequently, tech firms can reach a broad customer base quickly and cost-effectively, making it difficult for start-ups to compete.
Another factor is the shift from physical to digital goods. With digital goods, the marginal cost of production is virtually zero, leading to winner-takes-all markets. This dynamic, combined with network effects, further fortifies the position of tech giants.
Lastly, the tech industry’s agility allows it to sidestep disruption. Instead of clinging to old business models, tech giants adapt and evolve, often becoming disruptors themselves. This adaptability, coupled with their vast resources, makes them formidable entities in the market.
In conclusion, disruption theory doesn’t fully apply to the tech industry. The internet’s nature, the shift to digital goods, and the industry’s agility all contribute to the continued dominance of tech giants.
Go to source article: https://stratechery.com/2015/beyond-disruption/