Defining an Industry

Lately, I have been spending a lot of time thinking about disruption theory. I’m writing articles about podcasting, technology, and education, in which 5by5, Apple, and the likes of The Khan Academy are disrupting the incumbents in their respective industries to superb results. 5by5 proved the viability of business based on podcasts, and explosive growth in this space ensued as the medium gained increasingly widespread recognition outside of geek circles. This growth and Dan’s business model set into motion a renaissance of sorts and provided the foundation for the advent of companies like 70 Decibels and The Mule Radio Syndicate, and many more to come.

Before the iPod, CD players and the last vestiges of the dying cassette era saturated the portable media player market. Few complained though, because at the time these devices epitomized some of the most advanced technology of the day. Many believed these devices would stay at the forefront of technology for the foreseeable future. Then Apple entered the market and revolutionized the industry with a product comparable to many devices still sold today. Apple did the same with the smartphone market when Steve Jobs introduced the iPhone, to even greater results.

Similarly, the need for education reform is no secret: many have been talking about it for quite some time while America continues to grow each and every day. As John Roderick said on an episode of Roderick on the Line, “At no previous point in history were there three hundred million Americans. You cannot educate three hundred million people the same way that you would educate twenty million people.” The manner in which to go about that reform, however, has eluded many as they cling to the “tried and true” Prussian education system, a methodology whose origins trace back to the nineteenth century. Ever so slowly Salman Khan’s The Khan Academy is beginning to make inroads in public schools throughout the nation though, providing that much-needed reform.

The consistent vein that runs through each of these brief anecdotes is that prior to the disruptor’s entrance, podcasting was a niche market filled with generally sub-par broadcasts, low-quality devices permeated the personal computing industry, and learning took place in a classroom behind a desk in front of a teacher for all but a small minority. Prior to the disruptors’ entrance these industries were reasonably clear cut and well-defined, and then that definition changed as it will undoubtedly change again in the near future.

These observations contain an important lesson for those who pay attention: you cannot absolutely define an industry. Through the wisdom of hindsight we can look back and scoff at those saying that the portable media player market is CD players, that the smartphone market is RIM, or that the portable computing market is netbooks. But at the time, the portable media player market was CD players, and the smartphone market was RIM, and the portable computing market was netbooks — those products defined their respective industries for a time. But then those definitions changed because a newcomer unbeholden to these pre-existing stigmas entered the industry and the markets were redefined.

You cannot adhere to the definition of an industry and simultaneously perpetuate success. After all, there are only so many possible innovations in a portable media player market defined as the market in which CD players are sold.