they created a market and it's economics and now they're being attacked by the next generation of market entrants who've structured their businesses to _specifically_ attack those economics
Hah, thanks! My comment was fairly blatantly stealing from the book!
It's so interesting from an incumbents internal POV (I saw it a few times during my time at McKinsey) as changing an organisations economics is often the unstoppable force that meets the immovable object of internal politics.
There's a really interesting ongoing example of this in the the UK as 'attacker' banks (e.g. Monzo, Starling) challenge the economics of incumbents. It's not quite the same, as these attackers are removing back-end cost (e.g. branch networks) from an already 'free' product (e.g. retail banking) but it's meant that big banks are looking at their balance sheets and seeing a set of gaping money pits that will require fundamental change in their operating models to be able to get rid of/compete with.
This is a good point but... Innovation without disruption tends to get underlooked, being less dramatic.
Think of the old auto companies over the years. They start off making tractor-like cars. They survive through the cars-as-fashion eras, the internationalisation of manufacturing, etc. If old auto companies emerging from the 80s were new, we'd call it disruptive innovation.
That said, both disruption and innovator's dilemma are real.
The innovator dilemmas also roughly corresponds to stuff early economists wrote about. Peak markets. Markets are great as they grow. When they reach their terminal size (eg most people already own cars), profits go down, stagnation can occur. That stagnation, especially if the market declines in size, leads to crashes and new paradigms eventually emerge. Marxists sometimes take this to a systemic extreme, with "peak capitalism" and derivative concepts. On the conservative side, you'll find these ideas at the heart of austrian business cycle theories and Schumpeter's "creative destruction."
The digital economy is cushioned by tremendous potential for growth, so far. FB, for example, knows that it's not cool anymore. They can just buy whoever is cool.
Slight historical note: most Japanese auto manufacturers started off making motorized bicycles and small utility vehicles, then pivoted up into retail cars.
That reminds me of music industry and the constant buying of smaller labels. Owning distribution is the key and facebook has a massive platform for that.
It's so interesting from an incumbents internal POV (I saw it a few times during my time at McKinsey) as changing an organisations economics is often the unstoppable force that meets the immovable object of internal politics.
There's a really interesting ongoing example of this in the the UK as 'attacker' banks (e.g. Monzo, Starling) challenge the economics of incumbents. It's not quite the same, as these attackers are removing back-end cost (e.g. branch networks) from an already 'free' product (e.g. retail banking) but it's meant that big banks are looking at their balance sheets and seeing a set of gaping money pits that will require fundamental change in their operating models to be able to get rid of/compete with.