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These breakthrough strategies have helped
GE boost growth in emerging markets.
Among incumbent companies that have
benefited from disruption, we see three pat-
terns repeat. Generally speaking, they maxi-
mize their chances of success by:
Pushing beyond core competencies. Over
the past decade Amazon.com has created
new businesses in retailing, e-readers, and
cloud computing. When we asked CEO Jeff
Bezos how he did it, he said, “If you want
to really continually revitalize the service
you provide the customer, you can’t stop
at ‘What are we good at?’ You have to ask,
‘What do our customers need and want?’
And no matter how hard it is, you better
get good at those things.” Pushing bound-
aries helps companies spot disruptive sig-
nals early—especially if they pay attention
to new competitors that serve customers
who were previously ignored.
Embracing business-model innova-
tion. Driving disruption requires moving
beyond purely technological innovation to
consider new ways of creating, capturing,
and delivering value. The clearest example
of this is Apple, whose market capitaliza-
tion has soared from $3 billion a decade
■ Microsoft came out with Kinect, the
gesture interface system that appeals to
new classes of consumers who see joystick
gaming controls as too complicated.
There seems to be something important
going on. Empires are striking back at rebel
forces. Why is this happening? And what
does it mean?
One explanation is good old-fashioned
survival instincts. After seeing so many
corporate icons toppled, companies finally
recognize that their competitive advantage
can disappear quickly. Just consider how
technology companies such as Nokia and
Research in Motion are cratering, while
Hewlett-Packard has gone through wrench-
ing leadership changes and even considered
leaving the personal-computing business.
Today’s tightly interconnected markets
make it harder for a company to be deaf
to the roar of change.
The increasing pace of disruptive threats
isn’t merely anecdotal. Turnover among the
world’s largest companies is accelerating.
Consider Fortune’s bellwether list of the
500 largest companies in the United States.
The list would seem to change slowly; after
all, in 2011 companies needed close to $50
billion in revenue to make it to the top 50
(up from $30 billion in 2001). But in the
past 10 years, 40 percent of the top 50
companies have changed. Some high-flyers,
like Compaq and Sun Microsystems, fell
off the Fortune 500 list entirely because
they were acquired, and others, such as
Enron and Kmart, essentially disintegrated.
Still other recent victims of technological
disruption: Blockbuster, Unisys, Tribune
Co., and CA Technologies (formerly Com-
Another factor attuning companies to
the power of disruption is the search for
profits in developing economies. Winning
in emerging markets often requires lower
prices and different business models—two
hallmarks of disruption.
In the General Electric example, when
the medical-equipment division charged
local teams with developing electrocar-
diogram devices to sell in rural India and
China, GE followed a classically disruptive
approach. It developed a stripped-down,
low-cost version of its established technol-
ogy, created a new distribution channel, and
arranged for local financing to help get the
devices into the hands of rural practitioners.
A NARROWING GAP?
Most disruptive technologies are brought to market by startups. But established companies are
responsible for a growing percentage. Below, we compare the origins of over 250 significant
innovations, by company type.
1876 Bell’s tele-
phone led to the
decline of Western
2007 Amazon’s Kindle
its own book business.
1982 The Mobira
Senator, an early Nokia
cellular car phone,
would be replaced by
1999 Napster dis-
rupted the music
industry with peer-
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