Amazon Disruptors and the Pace of Change

I’ve mentioned #Audiblegate a couple of times, relating to the issues some authors are having with Amazon’s audiobook division, Audible. Plainly frustrated, several people have mentioned that it’s time for a disruptor with respect to Amazon.

In business, a disruptor is typically defined as a product or innovation that disrupts current markets and displaces market leaders. (I know: I committed a writing faux pas by using a word to define itself, but I think I get a pass on that one.)  An example would be the telephone. At the time it was invented, the primary means of long-distance communication was the telegraph, with the market being controlled by Western Union.  So dominant was its position that Western Union rejected an offer to buy Alexander Graham Bell’s telephone patent for $100,000.  (Western Union allegedly stated that the telephone had “no commercial possibilities.”)  Bell went on to co-found AT&T, and the rest is history.

The problem with disruptors, however, is that you rarely see them coming. Much like Bell’s telephone, true disruptors often get dismissed out of hand. Thus, when the eventual disruptor arises with respect to Amazon, it probably won’t be immediately recognized.

Of course, Amazon itself has been a notable disruptor.  Twenty-odd years ago, the company was basically just an online bookseller. That’s what it was known as and that’s how it marketed itself.  These days it sells just about everything under the sun, having upended the entire retail industry.  Moreover, companies that failed to innovate have gone under. I can name what seems like an endless stream of companies that at one time seemed like staples of American commerce that would never go away, but have now vanished (or appear on the verge of doing so): Radio Shack, Borders Books, Sears, Pan Am, Toys R Us, Blockbuster Video…  The list goes on and on. (And in a story eerily reminiscent of the Bell telephone anecdote, Netflix’s founders actually tried to sell the company to Blockbuster in 2000 for $50M and were turned down flat.  Now Netflix is a $200B juggernaut, and there’s exactly one Blockbuster Video store left on the whole planet.)

Obviously, the pace of change in the business world has increased dramatically, which in turn affects the corporate lifecycle.  In the 1950s, the average lifespan of a business was 60 years; today, it’s less than 20.  (And I’ve seen at least one recent report that says it’s only 10.)  In order to survive, companies have to innovate and occasionally reinvent themselves.  For instance, several years back, I was interested in a Chinese company called Sky People Fruit Juice. As the name implies, the company made and sold fruit juice and concentrates, and as recently as 2016 it was trading near its all-time high.  Fast forward to today, and the company now goes by Future Fintech and – according to its profile on Yahoo Finance – “operates a real-name block chain e-commerce platform that integrates block chain and internet technology.”  In essence, the company has moved into the cryptocurrency space.  How you go to that from making fruit juice is beyond me (I’d argue that you basically have to create a brand new company), but there you have it; the company has basically moved lock, stock, and barrel into an industry that didn’t even exist when Sky People Fruit Juice was founded in 2001. (The first blockchain application, Bitcoin, was created in 2009.)

In retrospect, it appears that now, more than ever, companies need to be able to pivot quickly in order to maintain any competitive advantage.  However, it seems that the bigger they are, the less likely they view threats and the more apt they are to be complacent and overconfident.  So that raises the question:  is #Audiblegate a sign of complacency on the part of the Great ‘Zon?  There are many who’d probably say yes, but whether true or not, here’s something to bear in mind:  given Amazon’s age, the disruptor to its business is probably already in existence somewhere.  However, much like the telephone and Netflix, it probably doesn’t look anything like what one would expect. Ergo, the average person won’t recognize it or see it coming.  And neither will Amazon..