With success comes many new entrants (copycats or slight innovations) that enter the market to compete (confusing the market as to benefits).įor a challenger to continue to advance then, it must continue to offer more advantage than the copycats while staying under the radar from the monopoly for enough time to gain enough scale or gain “network effects” before the monopoly takes notice.If successful, the existing monopoly will attempt to beat the innovation - either by changing their own offering, or using their existing market power to kill it, and.Harder still, it has to do this while battling two major forces:
If the challenger doesn’t have a 10x type of advantage, it becomes difficult to even be “found” through the noise of an existing market. For a company to create a new category, it has to first convince a market that its product or service is far superior to the one it is trying to replace (i.e. While a 10x advantage does not guarantee the success of a challenger, it greatly enhances its probability. Meaning that, unless a new company (the challenger) can deliver a 10x advantage to the market, it has no chance of creating escape velocity and becoming a new category leader. When creating new technology companies, a framework I use to understand if something has an ability to win is ‘the 10x advantage’. A 10x strategy - be a big fish in a small pond first. It is not hyperbole to say that almost everything changes as a result of this innovation. A world where the abundance gained from our technological progress is more widely distributed. More importantly, I believe it gives humanity its best chance for a peaceful transition to the future. I believe with what is to come, Bitcoin has a higher than average probability of overcoming all barriers and becoming a global reserve currency.
In other words, by preventing failure in economies in the short term, Creative Destruction has only moved - now to the level of our international economic system. By socializing losses and preventing failure in our economies, central banks and governments have all but ensured that the existing monetary system of the world collapses - and is replaced by something new. Unfortunately, preventing failure has been the policy makers tool for the last 20 years and it has enormous consequences.
#THE MEDIUM GAME FREE#
Why? Because by preventing failure, market incentives become warped, and in doing so, eventually put a small number of people (government/central banks) in charge of choosing who gets what, instead of the free market. And while failure is hard, preventing failure is much worse. It is all driven from a near-constant flow of innovative entrepreneurs with bold ideas and the capital backing them that go up against the status quo and are only successful, “if’’ they create value for society.įor the process to work, failure is critical! Both for entrepreneurs and the capital in them whose business doesn’t work, and for legacy businesses that get disrupted by them if their innovation brings better value to society.
New winners become so valuable that they disrupt existing market power or structures. That process and its importance is at the centre of how all modern economies have evolved and given rise to most of the benefits to society we take for granted today. That process describes “Creative Destruction” a paradoxical term first coined by Joseph Schumpeter in 1942 to describe how Capitalism works in a “free market.” Entrepreneurs innovate and “create” value for society - and that value gained by society also often “destroys” the former monopoly power. Along the way, the Blackberry died, unable to compete with the value for users, that was now increasing exponentially on Apple’s platform. It created a digital interface when that wasn’t ‘needed’ and created an entirely new platform that changed the industry as a result. Apple’s iPhone for instance, didn’t copy the market leader, Research in Motion’s Blackberry design of needing a keyboard or selling to businesses who required RIM’s security. Because most people don’t see them, breaking through an existing paradigm needs to provide enough compelling value for users to disrupt an old paradigm. Our belief of how the world should exist and operate is shaped from looking backwards, not forward, so it makes sense that new paradigms that change everything - face resistance in our minds. To change something, build a new model that makes the existing model obsolete”īreakthroughs, that step-change our lives for the better, invariably come from something that most people couldn’t see.
“You never change things by fighting the existing reality.
0 kommentar(er)
