I was recently listening to the 11/18/18 edition of “On the Media” from NPR which had several segments about strange bedfellows; the Country Store, Sears Roebuck, and Amazon. The main theme that ties them all together is Disruption --- which has many definitions; some laud it while others worry about its effects. The common dictionary definition is straightforward: “disturbance or problems that interrupt an event, activity, or process.” Now that would be an example of a negative interpretation of disruption -- who wants to be disturbed or interrupted? But that’s not how it’s applied in the world of commerce according to Wikipedia:
“In business, a disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.”
The operative word here is “creates” which acts to soften the impact of “disturbed”. However, if the disruption is successful, it can lead to the destruction of the previous business model. A good example is cited by Robbins Research International is Blockbuster vs Netflix:
“When Netflix started, Blockbuster thought it seemed insignificant. Who would want to wait for DVDs to arrive in the mail? Blockbuster didn’t anticipate where the future of watching movies was going, which ultimately led to their downfall. When Netflix came to the rental giant to sell their business, Blockbuster declined...Blockbuster didn’t realize it was under threat until Netflix tapped into streaming services, unlocking the brand’s immense profitability. Then it was too late. Today, Netflix is worth billions of dollars and Blockbuster is bankrupt.”
OK, on that note, let’s consider the thesis: the Country Store was disrupted by Sears and Roebuck which in turn was disrupted by Amazon.
The Country Store served most all of the needs of rural folk. Just recall the early cowboy movies and what the inside of a country or general store looked like. Not only could you buy food but also other necessities like fabric for clothes and furniture. Except perhaps for the Trading Post which mainly dealt in animal furs , the Country Store was the first one- stop shop in North America.
The general protocol for the country store was that clerks accompanied customers, collected their wares and cashed them out. Whites were always served first (even if a black arrived before them) and clerks had the power to decide what blacks could and could not purchase. This Jim Crow policy led to an unintended consequence: It allowed anyone to purchase just about anything regardless of their color. In this way blacks could make an end run against this heinous Jim Crow policy.. At the same time it made it easier for Sears and Roebuck to disrupt the institution of the country store.
And so the country store was disrupted, indeed almost destroyed by Sears’ ability to deliver goods chosen from a huge catalog (the 1897 Sears Roebuck Catalogue was about 300 pages and when the last edition was offered in 1993 it had doubled). Choices ranged from houses ( “bungalows in a box” ) to hairpins --- you could even order opium! No need to travel into town to get your coffers filled, just order it from Sears and Roebuck then sit back and wait until it’s delivered to your door. Sears was smart enough to change with the times, evolving from a strictly mail-order enterprise into stand-alone stores to stores embedded in shopping malls. By the time Sears was declining due to other competitors like Walmart, Amazon.com entered the picture providing the the crushing blow: the disruption of Sears.
Like Sears, Amazon started with a single product (books) and expanded its offerings to other products --- lots and lots of other products. I could order parts for my lawnmower as easily as I had previously ordered books. It was a genius enterprise and I still kick myself for not buying shares earlier.
I remember the day during the mid Nineties when I nervously entered my credit card number into the Amazon.com website to purchase a book. Until then I was assiduously ripping up my carbon copies of credit card purchases to foil any would be fraudster. And there I was, sending that number over who knows what connections on its way to Amazon. For me, it took a giant leap of faith to reveal the key to a source of my current wealth. However, three days later when the book I ordered magically appeared in my mailbox, my elation quickly extinguished my previous trepidation. Yes, I did feel some pangs of guilt about not buying from my local Mom and Pop bookstore but the price was so good (plus no state tax back then), and I didn’t have to get off my butt to drive down to the store, look for a parking spot, then drive back home. Searching for a book was also easier and the genie at Amazon would even offer advice on other books I might like based on my previous book selections. These advantages easily overcame the three-day wait.
All of this is not to imply that all disruption leads to an inevitable destruction.
In the natural world we see instances of creative destruction everywhere: A tree dies and crashes to the forest floor and begins to decay providing a fertile rooting medium for future plants some of which will be a bit more suited to their environment. And so the Life cycle continues, just not the same individual life. To put a positive spin on this we could as well call this process “rebirth” instead of “disruption or destruction”. Today, many consider Amazon as the offspring of Sears.
“When Netflix started, Blockbuster thought it seemed insignificant. Who would want to wait for DVDs to arrive in the mail? Blockbuster didn’t anticipate where the future of watching movies was going, which ultimately led to their downfall. When Netflix came to the rental giant to sell their business, Blockbuster declined...Blockbuster didn’t realize it was under threat until Netflix tapped into streaming services, unlocking the brand’s immense profitability. Then it was too late. Today, Netflix is worth billions of dollars and Blockbuster is bankrupt.”
OK, on that note, let’s consider the thesis: the Country Store was disrupted by Sears and Roebuck which in turn was disrupted by Amazon.
The Country Store served most all of the needs of rural folk. Just recall the early cowboy movies and what the inside of a country or general store looked like. Not only could you buy food but also other necessities like fabric for clothes and furniture. Except perhaps for the Trading Post which mainly dealt in animal furs , the Country Store was the first one- stop shop in North America.
The general protocol for the country store was that clerks accompanied customers, collected their wares and cashed them out. Whites were always served first (even if a black arrived before them) and clerks had the power to decide what blacks could and could not purchase. This Jim Crow policy led to an unintended consequence: It allowed anyone to purchase just about anything regardless of their color. In this way blacks could make an end run against this heinous Jim Crow policy.. At the same time it made it easier for Sears and Roebuck to disrupt the institution of the country store.
And so the country store was disrupted, indeed almost destroyed by Sears’ ability to deliver goods chosen from a huge catalog (the 1897 Sears Roebuck Catalogue was about 300 pages and when the last edition was offered in 1993 it had doubled). Choices ranged from houses ( “bungalows in a box” ) to hairpins --- you could even order opium! No need to travel into town to get your coffers filled, just order it from Sears and Roebuck then sit back and wait until it’s delivered to your door. Sears was smart enough to change with the times, evolving from a strictly mail-order enterprise into stand-alone stores to stores embedded in shopping malls. By the time Sears was declining due to other competitors like Walmart, Amazon.com entered the picture providing the the crushing blow: the disruption of Sears.
Like Sears, Amazon started with a single product (books) and expanded its offerings to other products --- lots and lots of other products. I could order parts for my lawnmower as easily as I had previously ordered books. It was a genius enterprise and I still kick myself for not buying shares earlier.
I remember the day during the mid Nineties when I nervously entered my credit card number into the Amazon.com website to purchase a book. Until then I was assiduously ripping up my carbon copies of credit card purchases to foil any would be fraudster. And there I was, sending that number over who knows what connections on its way to Amazon. For me, it took a giant leap of faith to reveal the key to a source of my current wealth. However, three days later when the book I ordered magically appeared in my mailbox, my elation quickly extinguished my previous trepidation. Yes, I did feel some pangs of guilt about not buying from my local Mom and Pop bookstore but the price was so good (plus no state tax back then), and I didn’t have to get off my butt to drive down to the store, look for a parking spot, then drive back home. Searching for a book was also easier and the genie at Amazon would even offer advice on other books I might like based on my previous book selections. These advantages easily overcame the three-day wait.
All of this is not to imply that all disruption leads to an inevitable destruction.
In the natural world we see instances of creative destruction everywhere: A tree dies and crashes to the forest floor and begins to decay providing a fertile rooting medium for future plants some of which will be a bit more suited to their environment. And so the Life cycle continues, just not the same individual life. To put a positive spin on this we could as well call this process “rebirth” instead of “disruption or destruction”. Today, many consider Amazon as the offspring of Sears.
No comments:
Post a Comment