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What stops big companies from disrupting their own industry?

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I fail to understand why big, monolithic companies just suck disrupting their industries, as a general rule.

Let's look at Square. They're doing a great job of freaking out companies like VeriFone, etc.

Square is run by two 30-somethings. But why does Square, a company founded by young people with zero financial industry experience, have the ability to create serious havoc for VeriFone, a profitable, well-experienced, established company?

VeriFone's been around forever. They should have a marketing team with huge coffers that could understand exactly what the customer needs. If they're run by stodgy, not-tech-savvy old timers, they could easily acquire young, tech savvy talent that understands iPhone, web, etc. Money? They have alot to burn.

On paper, you could argue that all of these monoliths have everything they need to do the awesome things that 20-something hipsters from the Mission are completely undoing. The odds are *so* stacked in these established business' favors.

Is it lack of innovation? Lack of marketing and customer understanding? Lack of belief in the utility of iPhone apps and web services? Corporate greed? Red tape and hierarchy?

I know it's surely a mixture of all of the above. Apple - though I'm a bit biased, I know - is the only 'monolith' sized company that I can see that does a great job of 'disrupting shit' (tm). See: iTunes, iPad, rumored cloud based music offering/deals/architecture (I just read TechCrunch like you do...).

VeriFone v Square is just one example. Don't forget about Media Companies v Netflix + Hulu, Telephone Companies v Skype, etc. etc.

AAAaaagghhhh... my formatting is all off! Where's that feedback form...

Hahaha. Sorry Josh -- we don't support fancy formatting yet! I mean to roll that out this week. The cost of guarding against XSS before identifying the right HTML sanitizer :)

Formatting will improve soon. But thank you for posting this, Josh. It's good food for thought.

Side note, Josh: formatting should be working better now!

See? :)

We also support bold and italic formatting now.

Correction on Hulu: That's a joint venture of NBCUniversal (Comcast/General Electric), Fox Entertainment Group (News Corp) and Disney-ABC Television Group (The Walt Disney Company). So we have one example of monoliths doing it right - however collectively. (Although, you could argue their content licensing schemes can be frustratingly short sighted sometimes but that's splitting hairs, for this argument.)

So what is it that the monoliths did that led Hulu to, IMHO, a successful disruption of the content industry? Collaborative licensing deals?

The funding for Hulu (between all of those monolith cash cows... they really needed to trade equity for funding??) isn't from an exclusively tech-focused funding group, FWIW.

I suspect they did it right by spinning Hulu off as a separate company + brand, with separate management, specific, tech-savvy hires, etc.

Giving Hulu independence was key to allowing big companies to step aside and let Hulu do what was right for Hulu.

There's a book called _The Innovators' Dilemma_ that explores this phenomenon in depth. The argument essentially is that for the most part no big company wants to cannibalize existing revenue streams. More here: http://en.wikipedia.org/wiki/Disruptive_technology

The Innovators' Dilemma <3

Yay for formatting!

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