Blog
Knol

applies. Here, threat entails employees potentially losing their jobs, and the rectifying trait involved is their capability to provide business value to the company. A specific company can acquire this trait, essentially producing it by hiring the right persons. However, what happens when we have a group of companies under market threat; meaning that they’re not earning sufficient profits to justify their existence? These companies are threatened just as well as their employees, who risk losing their jobs due to poor financial results that might not be of their own making. Before formalizing what happens, we need to return to the concept of sacrifice.

If we consider a group of companies faced with the threat of marketing obsolescence, the trait we consider is that of developing new business processes in accordance to new market needs. Some companies will create offspring, as General Motors did by creating its Saturn division to compete with Japanese imports. Some companies will develop the competence internally (Ford and its “worldwide” cars), and some will be absorbed (Chrysler). Alternatively, a variety of techniques are used to manipulate the definition of, and hence the applicability of, markets. One technique that is often used to effect this manipulation is the definition of a standard that governs all, or part of the relevant market. Through standards, the innovation (and hence potential divergence) within a particular market can be at least regulated, if not minimized, thus benefiting those who can most efficiently bring standard products to the market. Standardization has the beneficial effect of protecting the consumers’ investment in products; for high volume consumers that buy large numbers of various products, this can be an important benefit. This, of course has the result of creating a market for standards, driven by the typically large entities that thrive in a standards regulated marketplace. And this, in fact, is a prevalent trait of computer markets.

The first evolutionary trait exemplified by the short history of computers that one can directly observe involves the price of a mix of computing power, memory and storage. Each time a new technology has broken that price by a factor of one hundred, a new wave of products has emerged with each deploying perhaps a hundred times more abundantly. This is on par with the observation made by Clay Christensen in The Inventor’s Dilemma, which illustrated graphically by considering storage subsystems, how new waves of products first come in under the previous technology in capabilities, then improve until replacing it if their price is significantly lower and eventually boost the storage capabilities by a correspondingly order of magnitude. Following Christensen’s lead, we’ll term such technologies which drastically change the rules of the game, disruptive technologies.

The struggle around this first evolutionary trait of exploding computer capabilities played out in both synchrony (within one generation) and diachrony (across generations). From computer history, it appears that the synchronous rule is that one vendor dominates as long as the rule is not countered in anticipation. The diachronic rule is that a disruptive technology puts so much in question the functioning of the market participants, that no one company manages to dominate the new market as it dominated the previous ones. As the first dominant computer market innovator, IBM was eclipsed by Digital Equipment, so was it subsequently eclipsed by Intel and Microsoft. Now, when personal computers and later personal electronic devices came into play, the natural selection lessons around the first evolutionary trait had been learned. In particular, the synchronous rule of player domination had been well understood, and that rule in itself became a threat.

Therefore, the second evolutionary trait is related to sacrificial behavior as we described it earlier. Companies that are aware of the risk of dominance have to ponder carefully their chance to be that dominant player. In particular, should they attempt to go alone into the new disruptive technology? If enough players decide that they don’t stand a chance, they may all accept a lesser

Book available at Midori Press (regular)
Book available at Midori Press (signed)
Book available at Amazon (regular)