The Role of Assumptions in the Theory of Disruption
Steven Sinofsky, former president of the Windows division in Microsoft and currently board partner at venture firm Andreessen-Horowitz, wrote about the theory of disruption using Blackberry’s fall against the iPhone as an example in his piece “Disruption and shoulda, woulda, coulda.”
Specifically, he makes the case that it’s much easier to recognize, deduce, and acknowledge it in hindsight, when really, it’s so much harder to do so in the thick of it. Blackberry rose to prominence by introducing smartphones that were perfect for business, and was subsequently adopted widely by consumers. However, all of its assumptions, from product, business, and technological standpoints that made it extremely successful was then shattered by a new product, in this case, the iPhone, gradually, then suddenly.
He explains the role of assumptions and how significant they are when introducing new products:
When you build a product you make a lot of assumptions about the state of the art of technology, the best business practices, and potential customer usage/behavior. Any new product that is even little bit revolutionary makes these choices at an instinctual level—no matter what news stories you read about research or surveys or whatever, I think we all know that there’s a certain gut feeling that comes into play.
This is especially the case for products that change our collective world view. […]
It turns out these assumptions, implicit or explicit, become your competitive advantage and allow you to take the market by storm.
But then along come technology advances, business model changes, or new customer behaviors and seemingly overnight your assumptions are invalidated.
This is precisely what happened to Blackberry, and the interesting part, as he noted, was that the very reasons that it saw massive success and growth at an incredibly fast pace were the very reasons it plummeted in a very short time. He gives a very detailed bullet list of each assumption that was countered by Apple, making the case that disruption doesn’t happen in a single attribute (e.g. Facebook and personal identities, Airbnb and the sharing economy, Uber and mobile, etc.) but rather, challenging the status quo through a multitude of assumptions in a number of areas. In this case, Apple and Steve Jobs had assumptions about technology, business, ecosystem, and even physics, and introduced a new product that, while inferior to the incumbent product at the outset, would eventually be superior given their assumptions—both implicit and explicit—would come true.
The thing to recognize here, in my opinion, is that while it’s one thing to be cognizant about what may happen, disruption takes place by having a world view that not only fits the perceived future, but one where that new technology you want to introduce accelerates that change further because it hits on a number of advantages that coincide with the changing landscape.
That’s extremely difficult to do because it requires the ability to look forward into the future, having an instinct about what product and what attributes can change the status quo, having the conviction and audacity to build an early version of that product, and perhaps the most crucial, actually being right about all these assumptions and having the right product to match.
But in the case of Blackberry, there is an extremely important extension after this—it’s being able to do these requirements continuously and seeing it as a cycle rather than a line that ends when you get it right. And to Sinofsky’s point, it’s easy to acknowledge this in hindsight, but another to actually turn around your entire company and product lineup and worldview and your source of revenue and all the things that made you successful in just a couple of years.
Disruption happens gradually, then suddenly. We’ve seen it time and again. And what’s exciting to watch today is how the new incumbents that were once the disruptors adapt to these realities, and how new entrants attempt to introduce disruptions of their own.