The Anatomy of Disruption

 

I’ve been doing some thinking recently about the life cycle of industries. “Industries” in this context means anything that you can make a living at. If you have an idea, a new idea, something that will genuinely change the world, what happens with it? It seems to follow the old adage about every political cause (probably because political causes qualify as industries in this regard.) Let’s take a walk through it:

It Begins as a Movement

Paul Asadoorian runs a series of computer security podcasts under the brand Security Weekly. Every week he interviews a guest on his podcast, and every week he asks them a question: “How did you get your start in Information Security?” The answers to that question are always varied and interesting. This is a composite of things none of the answers contain:

I looked up the numbers for salaries by profession in my high school guidance counselor’s office, found one that matched me pretty well and went to college for it. Got the degree, interned at Black Hills Information Security, and then took an engineering job at Tenable Network Security before being poached by my current employer.

Computer Security is a very new field. The answers are always something like “Well I was eleven and someone crashed my Windows 3.1 computer remotely, so I ended up spending a lot of time on hacker BBSes looking for ways to do that and other things to my buddies.” or “I was working in IT while I was going to college for something else and I said ‘hey, this isn’t secure.’ My boss said ‘Good point. Make it secure.’ and that’s what put me on this path.” Or “They said ‘Computer Security? You’ll never make any money doing that. Networking, that’s where it’s at.”

That last one, by the way, is the best way I’ve figured out how to tell what’s a truly new idea. At the very outset the brand new ideas get the usual treatment. You don’t get sensible people at the edge of innovation. You’ve got the tinkerers who are messing with a thing because it’s fun. You’ve got the visionaries who know that this thing is the thing of the future (which is no guarantee that they’re right, mind you) and you’ve got the lucky types who happen into the right spot at the right time.That doesn’t mean it’s a useful idea; the vast majority of these things never revolutionize anything. If I could tell the useful ones from the chaff I’d let you know about it, from my solid gold Rolls-Royce.

The next step still happens while no one understands the new industry, they just know they want it. A lot of it. Innovations happen, but since nobody’s figured out the general rules yet you get all kinds of weird and wacky things that fade off as the field matures. You get wacky 90’s internet startups, and the Girandoni Air Rifle (one again, hat tip to @Arahant for pointing me at that particular fascinating bit of history)

All in all the ‘movement’ stage of any industry dies out when people figure out how to mass produce your results. These days you can find a tech school degree to get you into information security. There are established firms that deal with these things (the two I mentioned in the made-up example above are legitimate companies). The high school guidance counselor might even have numbers describing the expected salary in that career path. But the movement stage won’t be over as long as the people at the top of the industry are still the innovators who built it up from the bootstraps.

It Devolves into an Organization

This is the mass production stage. You’re no longer Apple building computers for hobbyists in a garage, you’re Apple selling the nation’s schools on your standardized boxes. You have well defined firms working in the field, and they compete one against the other. You’re no longer focused on marketing a product which people haven’t heard of before, you’re convincing your customers that your iteration of the product is better.

Innovation continues, but it’s incremental improvements on previous results. These things can be immensely important but they don’t change everything around like stuff in the previous stage. You’ve heard of Marie Curie, right? You know what her husband did? He was a physicist, and he did some important work on the interaction between temperature and magnetism. He also died by being run over by a cart — as important as his equations were when we were learning them, they got equal class time with that salacious but pointless factlet. All the fields of science are advanced by legions of nameless scientists commanding hordes of grad students doing tedious but essential work charting the territory around the exciting advances.

If you’re working at this stage your job is straightforward. The innovations are as mechanized as possible; people can be trained to do it. Your production goes to making the same thing cheaper, and with shiny new colors and features. If you’d like you can track this phenomena in battleship sizes and power before the introduction of aircraft carriers, or automobile reliability. Me, I think I’ll move on to the next stage.

And Ends as a Racket

You enter the Racket stage of Industry when the players in the game stop trying to provide a product, they’re focused on extracting the most value out of the consumer. To be sure hucksters and charlatans are present at every point of the evolution of any industry, but this is when they dominate. You have monopolists who are more concerned with crushing upstarts than in improving their product. You have cronies who spend more on lobbying than marketing.

At the start of the cycle you had innovators and weirdos doing the majority of the work. In the middle you have workers and drudges. At the end? Bureaucrats. You’ve had one too many lawsuits so now you employ more lawyers than engineers. And you need to add another three spots to the HR department because the vital work of ordering retirement cakes needs to be done. And do you have time to sit on the committee to draft a new mission statement? The old firms in the market have gotten crusty. They’re ossified with the accumulated coral of decades doing business.

This is also when innovation becomes possible again. People outside the established order either build the same thing but much cheaper (Think Harry’s Shave) or they sidestep the established order and offer a substitution better than the original. They also tend to advertise on podcasts.

But does that apply to anything other than traditional business? Sure. Aristotle first calculated Pi to 3.14 by describing the difference in area between two 96-sided polygons. After his time people got closer and closer approximations by making polygons with more and more sides, until the seventeenth century when some savant (I forget his name) ran the calculation with polynomials with something like thirty two thousand sides. Then along came Newton, who invented calculus, devised a new way to approximate Pi, and then broke the world record for digits calculated, because he was bored.

You want another one? Socrates disrupted Greek philosophy (which has ossified into a cynical, results-oriented form) by asking Athenians to examine their lives. The racketeers promptly made him drink hemlock.

Movement, Organization, Racket. Is there anything useful we can learn from all this, or is this merely an exercise in curve-fitting? Good question. So far I’ve figured out that your best chance to be truly innovative is to go where even your momma thinks you’re insane, that the easiest way to determine where an industry is ripe for innovation is to measure the cost to physically produce their good versus the cost they charge for it, and that Hegelian Dialectics remains fundamentally unsound. Let me know if you think of anything more.

Published in Religion & Philosophy
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There are 21 comments.

  1. Matt Balzer, Imperialist Claw Member

    Hank Rhody-Badenphipps Esq: This is also when innovation becomes possible again. People outside the established order either build the same thing but much cheaper (Think Harry’s Shave) or they sidestep the established order and offer a substitution better than the original. They also tend to advertise on podcasts.

    Given the similar nature of the people doing the Harry’s thing I’m not entirely certain the people are in fact outside the order.

    • #1
    • June 25, 2019, at 3:22 PM PDT
    • 1 like
  2. OldDanRhody Member

    Hank Rhody-Badenphipps Esq: If I could tell the useful ones from the chaff I’d let you know about it, from my solid gold Rolls-Royce.

    Should we be calling you, “Auric?”

    • #2
    • June 25, 2019, at 4:50 PM PDT
    • 4 likes
  3. OldDanRhody Member

    Hank Rhody-Badenphipps Esq: the easiest way to determine where an industry is ripe for innovation is to measure the cost to physically produce their good versus the cost they charge for it

    I once worked for a distributer of durable goods who bought (in large quantities) from the manufacturer at 25% of list price, sold to retailers at 75%, who then sold to the end users at 100%. Since then (oh so many years ago) there have been many innovations in distribution of goods that have been of benefit to the customers.

    • #3
    • June 25, 2019, at 4:58 PM PDT
    • 3 likes
  4. Amy Schley Moderator

    Hank Rhody-Badenphipps Esq: Socrates disrupted Greek philosophy (which has ossified into a cynical, results-oriented form) by asking Athenians to examine their lives. The racketeers promptly made him drink hemlock.

    Eh, not a good example. Socrates also managed to get caught on the wrong side of politics, and when those who hated his guts for siding against them took power, they merely trumped up an excuse.

    • #4
    • June 25, 2019, at 6:35 PM PDT
    • 2 likes
  5. EtCarter Listener

    One word: “plastics”.

     

    sorry. Couldn’t help myself. Btw, cool model you have there.

    • #5
    • June 25, 2019, at 10:55 PM PDT
    • 3 likes
  6. Hank Rhody-Badenphipps Esq Contributor

    Matt Balzer, Imperialist Claw (View Comment):

    Hank Rhody-Badenphipps Esq: This is also when innovation becomes possible again. People outside the established order either build the same thing but much cheaper (Think Harry’s Shave) or they sidestep the established order and offer a substitution better than the original. They also tend to advertise on podcasts.

    Given the similar nature of the people doing the Harry’s thing I’m not entirely certain the people are in fact outside the order.

    It’s also not a truly new innovation. When you’re breaking into an ossified market you aren’t creating the market ex nihilo; that limits both how crazy you have to be to try it and how insanely rich yo ucan get if everything goes well. “Amazon” makes Jeff Bezos. “Amazon, but for razors” will still make you money, but not richest-man-in-the-world money.

    Another thought which I didn’t get into in the body here has to do with the differences between various entrants into the new field. You can make money being a youtube star, you can even make a living at it. But odds are you won’t make Pew Die Pie money that way.

    • #6
    • June 26, 2019, at 3:19 AM PDT
    • 2 likes
  7. Hank Rhody-Badenphipps Esq Contributor

    OldDanRhody (View Comment):

    Hank Rhody-Badenphipps Esq: If I could tell the useful ones from the chaff I’d let you know about it, from my solid gold Rolls-Royce.

    Should we be calling you, “Auric?”

    Not until I can afford that Rolls, no.

    • #7
    • June 26, 2019, at 3:20 AM PDT
    • 1 like
  8. Hank Rhody-Badenphipps Esq Contributor

    Amy Schley (View Comment):

    Hank Rhody-Badenphipps Esq: Socrates disrupted Greek philosophy (which has ossified into a cynical, results-oriented form) by asking Athenians to examine their lives. The racketeers promptly made him drink hemlock.

    Eh, not a good example. Socrates also managed to get caught on the wrong side of politics, and when those who hated his guts for siding against them took power, they merely trumped up an excuse.

    I’m not seeing how that’s inconsistent with what I wrote. But I haven’t made nearly enough study of greek philosophy, so perhaps I’m wrong.

    • #8
    • June 26, 2019, at 3:22 AM PDT
    • 1 like
  9. Amy Schley Moderator

    Hank Rhody-Badenphipps Esq (View Comment):

    Amy Schley (View Comment):

    Hank Rhody-Badenphipps Esq: Socrates disrupted Greek philosophy (which has ossified into a cynical, results-oriented form) by asking Athenians to examine their lives. The racketeers promptly made him drink hemlock.

    Eh, not a good example. Socrates also managed to get caught on the wrong side of politics, and when those who hated his guts for siding against them took power, they merely trumped up an excuse.

    I’m not seeing how that’s inconsistent with what I wrote. But I haven’t made nearly enough study of greek philosophy, so perhaps I’m wrong.

     The racketeers didn’t care about his philosophy; they cared about him praising their traditional enemy of Sparta and his students going so far as overthrow the Athenian democracy and instituting the oligarchy of the Thirty Tyrants. Though his philosophy mostly consisting of “You can’t answer my questions so you’re an idiot”didn’t help matters. 

    • #9
    • June 26, 2019, at 3:40 AM PDT
    • 1 like
  10. Matt Balzer, Imperialist Claw Member

    Amy Schley (View Comment):
    Though his philosophy mostly consisting of “You can’t answer my questions so you’re an idiot”didn’t help matters. 

    Isn’t that most philosophers?

    • #10
    • June 26, 2019, at 5:50 AM PDT
    • 1 like
  11. Matt Balzer, Imperialist Claw Member

    Hank Rhody-Badenphipps Esq (View Comment):

    Matt Balzer, Imperialist Claw (View Comment):

    Hank Rhody-Badenphipps Esq: This is also when innovation becomes possible again. People outside the established order either build the same thing but much cheaper (Think Harry’s Shave) or they sidestep the established order and offer a substitution better than the original. They also tend to advertise on podcasts.

    Given the similar nature of the people doing the Harry’s thing I’m not entirely certain the people are in fact outside the order.

    It’s also not a truly new innovation. When you’re breaking into an ossified market you aren’t creating the market ex nihilo; that limits both how crazy you have to be to try it and how insanely rich yo ucan get if everything goes well. “Amazon” makes Jeff Bezos. “Amazon, but for razors” will still make you money, but not richest-man-in-the-world money.

    Right, but I was saying that the “two randos making things cheaper” model might actually be supported by the existing grifters.

    Another thought which I didn’t get into in the body here has to do with the differences between various entrants into the new field. You can make money being a youtube star, you can even make a living at it. But odds are you won’t make Pew Die Pie money that way.

    I don’t know, I think the example of the failed 90s web businesses is enough for that. The main difference is that the barriers to entry are lower.

    • #11
    • June 26, 2019, at 5:54 AM PDT
    • Like
  12. Matt Balzer, Imperialist Claw Member

    Hank Rhody-Badenphipps Esq (View Comment):
    It’s also not a truly new innovation. When you’re breaking into an ossified market you aren’t creating the market ex nihilo; that limits both how crazy you have to be to try it and how insanely rich yo ucan get if everything goes well. “Amazon” makes Jeff Bezos. “Amazon, but for razors” will still make you money, but not richest-man-in-the-world money.

    I also think the “disruptors discovering old ideas” deserves a mention here. An example being AirBnB owning real estate instead of matching owners and buyers.

    • #12
    • June 26, 2019, at 5:57 AM PDT
    • 1 like
  13. SkipSul Moderator

    There are other disruption factors and modes. You cited Newton up above as one – figuring out an entirely new way to do something within an already established framework. I’ve watched my father and others rack up patents by doing this – solving old problems in newer and cheaper ways. It’s not always working around the bureaucrats, sometimes it’s working around the other engineers who are stuck in creative ruts, and taking existing tech but recombining it into different patterns.

    • #13
    • June 26, 2019, at 8:19 AM PDT
    • 6 likes
  14. Matt Balzer, Imperialist Claw Member

    SkipSul (View Comment):

    There are other disruption factors and modes. You cited Newton up above as one – figuring out an entirely new way to do something within an already established framework. I’ve watched my father and others rack up patents by doing this – solving old problems in newer and cheaper ways. It’s not always working around the bureaucrats, sometimes it’s working around the other engineers who are stuck in creative ruts, and taking existing tech but recombining it into different patterns.

    I think that still counts as disrupting a racket, though. It might not be that the engineers are stuck in a rut, it might be that the rut has proven profitable and they have no reason to do it better.

    • #14
    • June 26, 2019, at 8:22 AM PDT
    • 1 like
  15. SkipSul Moderator

    Matt Balzer, Imperialist Claw (View Comment):

    SkipSul (View Comment):

    There are other disruption factors and modes. You cited Newton up above as one – figuring out an entirely new way to do something within an already established framework. I’ve watched my father and others rack up patents by doing this – solving old problems in newer and cheaper ways. It’s not always working around the bureaucrats, sometimes it’s working around the other engineers who are stuck in creative ruts, and taking existing tech but recombining it into different patterns.

    I think that still counts as disrupting a racket, though. It might not be that the engineers are stuck in a rut, it might be that the rut has proven profitable and they have no reason to do it better.

    A customer of mine called that “The Outhouse Mentality”.

    You try to sell them on a better way of doing things, and they balk at the cost, or are just too lazy. You then ask them “You still use an out house? Cheaper than indoor plumbing, isn’t it?”

    https://ricochet.com/363955/archives/the-outhouse-mentality/

    • #15
    • June 26, 2019, at 8:25 AM PDT
    • 6 likes
  16. Hank Rhody-Badenphipps Esq Contributor

    SkipSul (View Comment):
    You try to sell them on a better way of doing things, and they balk at the cost, or are just too lazy. You then ask them “You still use an out house? Cheaper than indoor plumbing, isn’t it?”

    That right there? That’s brilliant.

    • #16
    • June 26, 2019, at 8:27 AM PDT
    • 4 likes
  17. Matt Balzer, Imperialist Claw Member

    SkipSul (View Comment):

    Matt Balzer, Imperialist Claw (View Comment):

    SkipSul (View Comment):

    There are other disruption factors and modes. You cited Newton up above as one – figuring out an entirely new way to do something within an already established framework. I’ve watched my father and others rack up patents by doing this – solving old problems in newer and cheaper ways. It’s not always working around the bureaucrats, sometimes it’s working around the other engineers who are stuck in creative ruts, and taking existing tech but recombining it into different patterns.

    I think that still counts as disrupting a racket, though. It might not be that the engineers are stuck in a rut, it might be that the rut has proven profitable and they have no reason to do it better.

    A customer of mine called that “The Outhouse Mentality”.

    You try to sell them on a better way of doing things, and they balk at the cost, or are just too lazy. You then ask them “You still use an out house? Cheaper than indoor plumbing, isn’t it?”

    https://ricochet.com/363955/archives/the-outhouse-mentality/

    As I’ve said before, my grandparents still had an outhouse until about 1990, when their kids finally got together and bought it for them.

    Then again, as a practical matter I wouldn’t mind going outside for at least some of my bathroom trips, but the Man doesn’t always agree with it.

    • #17
    • June 26, 2019, at 8:36 AM PDT
    • 3 likes
  18. CarolJoy, Above Top Secret Coolidge

    This article’s wisdom reminds me of how the PC movement came about due to efforts by companies like NorthStar, Microsoft, and Apple.

    IBM’s top people were all: “Why would any company bother to build and promote computers for the home users? After all, there aren’t any home users.”

    • #18
    • June 26, 2019, at 12:30 PM PDT
    • 4 likes
  19. Judge Mental Member

    CarolJoy, Above Top Secret (View Comment):

    This article’s wisdom reminds me of how the PC movement came about due to efforts by companies like NorthStar, Microsoft, and Apple.

    IBM’s top people were all: “Why would any company bother to build and promote computers for the home users? After all, there aren’t any home users.”

    To be fair, until the Internet came along in the 90s most people had no use for them. They were really expensive, fairly crappy game systems.

    • #19
    • June 26, 2019, at 1:17 PM PDT
    • 3 likes
  20. SkipSul Moderator

    Judge Mental (View Comment):

    CarolJoy, Above Top Secret (View Comment):

    This article’s wisdom reminds me of how the PC movement came about due to efforts by companies like NorthStar, Microsoft, and Apple.

    IBM’s top people were all: “Why would any company bother to build and promote computers for the home users? After all, there aren’t any home users.”

    To be fair, until the Internet came along in the 90s most people had no use for them. They were really expensive, fairly crappy game systems.

    You could do 3D vector based games on PCs long before the consoles could do them. F-19 Stealth Fighter (late rebuilt and updated as F-111 Stealth Fighter), Mech Warrior, Flight Simulator, and sundry other games and sims were wonderful on the PCs of the early 90s.

    • #20
    • June 26, 2019, at 1:56 PM PDT
    • 1 like
  21. Judge Mental Member

    SkipSul (View Comment):

    Judge Mental (View Comment):

    CarolJoy, Above Top Secret (View Comment):

    This article’s wisdom reminds me of how the PC movement came about due to efforts by companies like NorthStar, Microsoft, and Apple.

    IBM’s top people were all: “Why would any company bother to build and promote computers for the home users? After all, there aren’t any home users.”

    To be fair, until the Internet came along in the 90s most people had no use for them. They were really expensive, fairly crappy game systems.

    You could do 3D vector based games on PCs long before the consoles could do them. F-19 Stealth Fighter (late rebuilt and updated as F-111 Stealth Fighter), Mech Warrior, Flight Simulator, and sundry other games and sims were wonderful on the PCs of the early 90s.

    I was thinking more mid-80s when I got my first.

    • #21
    • June 26, 2019, at 2:02 PM PDT
    • 2 likes