A Decade of Disruption

Where would we be without disruptors?

Despite the negative connotations -- after all, it sounds like something that you could be cited for -- disruption is eventually what drives progress. Where would we be without penicillin, the telephone, or the Internet?

Scott Anthony, managing director of Clayton Christensen's Innosight Ventures, wrote a compelling piece on his blog last week. After calling for nominations of the greatest disruptors of the past decade a month earlier, Anthony decided to tally the votes. He declared winners along three categories.

  • Established high-tech company: Apple (Nasdaq: AAPL  ) .
  • Established non-tech company: Wal-Mart (NYSE: WMT  ) .
  • Emerging company: Google (Nasdaq: GOOG  ) .

At first glance, I was sorely disappointed in the results. Apple, Wal-Mart, and Google command market caps of $190 billion, $205 billion, and $183 billion, respectively. When I think of disruptors, I picture significantly smaller companies, defiantly kicking the shins of elder giants.

However, then I decided to jump in the Way-Back machine to 10 years ago, and check out the starting lines. Anthony's results aren't far from the mark once you see where these companies were when the decade began.

Giving the winners some stage time
Apple was a fringe maker of premium computers when Y2K rolled around. The iPod didn't come around until 2001, and the iPhone wasn't out until 2007. It's a great pick in retrospect, especially since both of those breakthroughs created "halo effects" that helped fuel sales of Apple's laptop computers.

Even in terms of retail, Apple proved to be a trailblazer. Apple broke into the retail game just as Gateway was bowing out. A computer-branded chain seemed like a recipe for disaster, but Apple was more than just some generic PC maker. As an aspirational brand that oozes style, a mall just doesn't seem complete these days if there isn't a crowded Apple Store in its center. Even Microsoft (Nasdaq: MSFT  ) is giving it a shot these days, but I know that I can't be the only one shaking my head at that move.

Christensen's pick in the category, by the way, was the equally gargantuan Cisco (Nasdaq: CSCO  ) , given its pole position in Web-building networking equipment.

Wal-Mart is another head-scratcher at first. It was already the world's largest retailer 10 years ago. However, Wal-Mart's girth also allows it to birth retailing revolutions. When it demanded that contractors and its largest suppliers begin tagging their shipments with RFID chips in 2005, it was opening the door for a revolution in inventory tracking. Since rival chains are envious of Wal-Mart's inventory turns, cost controls, and economies of scale, it's the one retailer that everyone wants to be.

And along came Google
Google was an easier-to-understand winner -- as well as category runner-up Amazon.com (Nasdaq: AMZN  ) . Google wasn't even around until 1997, and even by the time the new decade began it seemed more popular as the company powering Yahoo! (Nasdaq: YHOO  ) searches than for the promise of its own portal.

Big G wasn't even publicly traded until the middle of the decade, appreciating several times over since its $85 IPO. However, it went on to become the world's top search engine -- and with that came the birthright to being the planet's leading online advertising platform.

Amazon certainly deserves accolades for legitimizing online retail. Its push now toward the digital delivery of its flagship media products probably makes it a frontrunner to be a top disruptor of this decade.

In the end, the most amazing thing about disruptors is that they can do so much in a decade that they seem as if they'd ruled the roost for an eternity.

They didn't. They won't. Now it's time for investors to begin sizing up the potential disruptors for the next 10 years.

What companies -- public or private -- do you think will be the great disruptors of the new decade? Share your thoughts in the comments box below.

Microsoft and Wal-Mart Stores are Motley Fool Inside Value choices. Google is a Motley Fool Rule Breakers recommendation. Apple and Amazon.com are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz is a disruptor at parties, too. Don't invite him over. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 22, 2010, at 1:15 PM, demodave wrote:

    RuleBreakers becoming RuleMakers. Who'da thunk it? So what happens to the "Dogs of the Dow" theory? ;)

  • Report this Comment On January 22, 2010, at 2:47 PM, madmilker wrote:

    More like 4......

    Remember what Lance Winslow wrote in tat article "The Flow of Trade in a Global Economy"....dang! better yet...jus take the time and read tis ...."Now let us look at Wal-Mart again; you buy a product there, 6% goes to the employees, 10-18% is profit to the company, 25% goes to other costs and 50% goes to re-stock or the cost of goods sold. Of the 50% about 20-25% goes to China, a guess, but you get the point. Now then, how long will it take at 433 Billion dollars at year for China to have all of our money, leaving no money flow for us to circulate? At a 17 Trillion dollar economy less than 40-years minus the 1/6 they buy from us. Some say that if we keep putting money into our economy, it would take forever, but if we do not then eventually all the money flow will go. If China buys our debt then eventually they own us, no need to worry about a war, they are buying America, due in part to our own mismanaged trade, so whose fault is that? Not necessarily China, as they are doing what's in the best interests, and we should make sure that trade is not only free, but fair too."

    Also, think for a moment about George Washington....yes the man tat is on the US dollar bill.... "Washington had been reelected unanimously in 1792. His decision not to seek a third term established a tradition that is now embedded in the 22d Amendment of the Constitution.

    Take the time to read his farewell address after only eight years of serving his country and than ask yourself tis....How do you think George feels being sent overseas in return for all tat foreign so-call cheap items and being left in a foreign bank because the American worker doesn't make anythig for the foreigners to buy. Cheap items didn't make tis great union of 57...oops! 50 states the greatest place on the face of tis Earth.....the American worker (union and non-union) did.

    You can't have a strong country without having a strong currency and you can't have a strong currency unless you keep it floating around within your 50 states. Tis is why the store with the star in the name puts 95% China made items in their stores in China....to keep their "yuan" in their country helping the nice people there. And with only 5% left for all the other 182 country's tat make stuff including the United States of America....tat doesn't produce very many jobs outside of China.

    Being an old person myself and knowing how it wus back in the 40's, 50's and 60's in tis union of 50 states....I look at George each time I pull him out of my billfold and make a promise to send him out for items made in America so after floating around helping each hand he touches jus maybe one day he will shake mine again.

  • Report this Comment On January 22, 2010, at 3:17 PM, langco1 wrote:

    the rout in the stock market is on!!

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