Innovation and disruption go hand in hand. In the past some of the most breathtaking innovations – Apple’s iPhone; social media; distribution systems like Netflix and Amazon – have devastated traditional business infrastructures just as they revolutionized customers’ ways of life. It is easy to take a defensive posture against the rapid pace of change by assuming that no product or technology will last for more than a few years, and focusing only on the short term in order to protect yourself. This is an overly cautious approach. Many older technologies and business practices have survived disruptive cycles. Here are just a few examples:
• Despite the advent of streaming home entertainment, the traditional box office is still a profitable sector of the entertainment business.
• Despite the advent of air transport, oceanic shipping is still viable, and has it place in the shipping industry.
• While tablets and smartphones have cut into personal computer sales, there is still a definite niche for traditional computers in many professional and personal contexts.
Taking a lesson from these examples, it’s clear that while disruptions can be destructive, adapting to them does not necessarily mean a wholesale abandonment of previous practices. While the trend may be their eventual obsolescence, it is important to realize that legacy businesses do not disappear overnight. They can serve as profit centers to drive the growth of disruptive businesses themselves, exactly as Reed Hastings used Netflix’s delivery service to fuel the growth of his streaming business.