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.
