Following from last week’s post about the theory of disruptive innovation, here’s a story that offers yet another take on the topic.
The latest issue of the Economist highlights old businesses and technologies that should, according to the theory, be dead or dying—think: mechanical watches, local bookstores, vinyl records.
Yet the Swiss watch industry is more successful than ever—this in the face of not only cheap quartz watches but the ever-present clocks on our phones that make watches completely redundant. Similarly, the number of independent bookstores is on the rise, and sales of vinyl records have increased every year since 1993. (Just last week, Jack White sold 40,000 vinyl copies of his latest release, the biggest total since Soundscan began tracking sales in 1991.)
The key to all this, the author says, lies in “redefining the product’s value and meaning. Swiss watchmakers redefined their products as status goods rather than a means of telling the time. That they are so much harder to make than digital watches added immeasurably to their desirability.”
As the story points out, however, the Swiss watch industry did almost die, and its re-emergence was due in no small part to the fact that nearly every major Swiss brand is now owned by a single company, Swatch. The winning formula was old-school craftsmanship disrupted, rebranded, and sold through very modern means. White’s new album contains innovations like songs hidden under the label and a hologram that appears when the record spins.
Of particular interest to anyone innovating in emerging economies, the author says this sort of redefinition “demands a careful balance between tradition and change. Revival businesses often need to cultivate a close relationship with their craftsmen and customers, who may see themselves as guardians of a great tradition rather than mere employees or consumers… However, while peddling their traditions and reassuring customers and craftsmen that they are holding true to them, revival businesses also need to be willing to change.”
How about you? Anyone from the frontlines of emerging-market entrepreneurship have stories to share about leveraging modern practices to build a business around older technologies?