Business strategy

How Apple taught Sony a critical lesson about disruption – and how to avoid it happening to you

- January 2, 2024 3 MIN READ
Sony Walkman.
A 20th century iPod - the Sony Walkman. Photo: AdobeStock

It’s reasonable to imagine that if you’ve grown up in an industry, perhaps worked in one or two companies within it over two or three decades, and been regularly promoted into more senior roles, that you might self-identify as an industry expert.

After all, you’ve probably seen it all right? asks Adam Bennett author of Great Change – the WAY to get big strategy done.

Well, let’s turn back the clock to Friday, October 19, 2001, and now imagine that you’ve worked in consumer electronics for 30 years, you’re the executive responsible for your company’s premier electronic music device, and you’re sitting in your large office somewhere high above the streets of Tokyo.

You’re thinking about the coming weekend, not realising that by next week, your most cherished product – the Sony Walkman – is about to be blown out of the water.

That’s because on Tuesday, October 23, Apple – who you maybe didn’t even register as one of your competitors – will launch the first iPod. A solid-state device that can download hundreds of songs and has a cool interface that allows the user to select and shuffle songs and curate their own playlists.

But hang on, how did this happen? You’re an industry expert; how did this take you so completely by surprise?

Your company was the established expert for all of the iPod’s ‘ingredients’ including batteries, screens, software, manufacturing and you even had your own stable of global music artists?

The world is changing, and so too your industry

Sony fell prey to a disruptive innovation (in the words of Harvard Professor Clayton Christensen) that overnight rendered their most popular and beloved product obsolete. Unlike sustaining innovations that improve the performance of established products, disruptive innovations completely change the consumer behaviours and economics of an industry.

Our world is changing and we’re entering a time of exponential change, disruption and opportunity. Seismic forces such as artificial intelligence, climate change, geo-politics and a range of industry and regulatory pressures are changing the competitive landscape and threatening the business models of firms across many industries.

And as incumbent firms feel this pressure, they’ll typically assign a senior executive who ‘grew up’ in that industry, and task them with re-imagining and overturning the orthodoxy of the very industry they grew up in. It’s not impossible for a talented executive to do this, but it’s difficult.

In such an environment, the traditional ways of thinking, ways of working, and well-worn industry mental models can easily become a liability, as more agile, nimble and free-thinking competitors seek to cut your lunch. Or, as the saying goes, if your only tool’s a hammer, every problem starts to look like a nail.

Cultivating a transformation mindset

Now, I’m certainly not suggesting that bone-deep industry experience is not valuable in today’s changing world. Of course, it is. But relying on your existing well-worn mental models and self-identifying as an expert may prevent you being truly sensitive to the world, and developing transformational strategies.

You must therefore cultivate a transformation mindset by being curious, aware of your own ‘sacred beliefs’ and developing ‘shoshin’, a Japanese term for ‘beginner’s mind.’

It’s a mistake to enter a transformation assuming that you have all the answers or a definite view on how everything will play out. Instead, have some genuine curiosity about you. Keep an open mind and be curious about what is happening in the world around you, and what opportunities and threats this might present.

You should also recognise that we all have sacred beliefs. I don’t use ‘sacred’ in a religious sense but instead to describe those beliefs you might hold that are too valuable, fixed or sacrosanct to interfere with or challenge. These deeply held beliefs may or may not be based on deep research, facts and introspection, but regardless they represent how you feel.

History is full of people whose sacred beliefs limited their thinking. As the founder of IBM, Thomas Watson’s famous quip in 1943 that ‘there’s a world market for maybe five computers’ is one of my all-time favourites.

Additionally, cultivate ‘shoshin’, a beginner’s mind. The intellectual humility that comes from beginning something new means we’re continually in learning mode and ready to soak up new lessons without the baggage of past experience.

A little humility creates intellectual doubt and will make us open to other’s views, while simultaneously keeping our own role and experience in perspective.

In a rapidly changing world, the more senior you are the more you must guard against becoming the traditionalist who simply can’t countenance your industry or company working any differently than it does now.

Be especially aware of claiming 20 years industry experience, when what you’ve really had is one year 20 times.

Instead, maintain some curiosity, be aware of your deepest ‘sacred’ beliefs, and adopt the mindset of a beginner. This will make you more sensitive to industry disruption, and more able to imagine new and better ways your company can compete and win.