In technology industries, the single biggest strategic maneuver one can make is to employ a “disruptive” strategy.
A disruptive strategy is one that so challenges (some would say massively threatens) the status quo how things are done in an industry that quite often it completely wipes out entire industry sectors.
* Digital movie delivery wiping out DVD rental stores
* Craigslist ads wiping out newspaper classified ads (traditionally the most profitable part of a print newspaper)
* Free gmail and google calendar accounts eroding purchase of Microsoft Exchange/Outlook (until a few years ago, the standard for paid email and calendar software)
* The Amazon Kindle and other ebook readers displacing print book sales and threatening the survival of bookstores.
In a moment, I want to share more about that last example — eBooks, Amazon, and the threatened demise of bookstores.
For most technology disruptions, you’re able to learn about them after the fact through some type of historical analysis. It is not often you get to follow a technology disruption as it unfolds in real-time.
From a strategic standpoint, it is critical you grasp the concept of disruptive strategies and innovations for two reasons:
1) So you (or your client) can pursue them yourself
2) So you (or your client) can spot and defend against them
Going back to Amazon, eBooks, and bookstore chains (like the largest U.S. bookstore chain Barnes and Noble), there is an epic battle going on right now around the disruptive innovations happening in the book industry.
As an author with many colleagues in the book industry, I have had a near front row seat to what’s going on. I thought I would share with you the play-by-play details so you could learn from this real-time case study… where the answer is being written as we speak.
So, let me start at the beginning.
1) Amazon introduces the Kindle device and the Kindle eBook format as a way to make it easier for book lovers to read lots of books easily.
2) eBook sales skyrocket, creating the fastest-growing segment of the book industry.
3) Book stores realize that when a book lover buys an eBook, there is no need for a bookstore.
4) Book publishers (largely based in New York City) now realize if they want to sell eBooks, instead of selling to thousands of stores, there is only one dominant “retailer” that sells books — Amazon with its Kindle device. Book publishers are nervous (and even merging and acquiring each other to build greater market power).
5) Amazon, concerned that the NYC publishers might be a problem someday, starts its own publishing company to sign big-name authors.
6) Publishers feel threatened by Amazon and its expansion into publishing books, not just selling them.
7) Retail bookstores feel threatened by Amazon for all the reasons above.
Let me give you my take on this massive war between Amazon and the rest of the book industry. Yes, these other parties are feeling threatened.
But, the only question that matters strategically is: “What adds the most value to customers?”
The entire book publishing industry exists for one reason and one reason only. To get great books into the hands of people who want to read them. That’s it.
As a result, there are two “customers” in this industry.
2) Book Readers
Disruptive innovations are ones that seek to deliver more value to the customers in a marketplace, often by challenging the role (and even the existence) of current industry participants.
You can hopefully see how the latter is playing out with book publishers and bookstores.
The questions traditional industry participants almost always forget to ask is: What do customers care about? What do they value?
From a book reader’s point of view, Amazon has done the following:
1) Made more book (and eBook) titles from more authors available to readers
2) Lowered the price paid for books (and eBooks in particular)
3) Reduced the time from wanting a book to being able to buy and read to seconds (instant gratification)
4) Taken the book publishing cycle time (the time it takes to get the book to readers after the author is done writing the book) from a shocking 12 months with NYC publishers, down to about 72 hours
5) Provided hundreds of thousands of authors (myself included) that were rejected by the NYC publishers, a way to get their books into the readers’ hands.
In short, to the people that really matter (the customers), Amazon has added massive value across the board.
THIS IS SMART!
Remember, at the end of the day, it is the customer that matters.
But giving customers more value is not without its consequences.
What’s the prevailing thought amongst the traditional participants in the book industry?
In a word:
In about 72 hours, you will see a major historical milestone in the book publishing industry. It will likely be the biggest strategic point in recent industry history.
Why 72 hours?
That’s because, in 72 hours, my book publishing mentor, NY Times Bestselling author Tim Ferriss (Author of The 4 Hour Work Week and The 4 Hour Body) introduces his first book under the Amazon Publishing company label.
In dramatic fashion, the largest U.S. booksellers are banning the book in the United States and refusing to sell it. Their rationale is they don’t want to give money to someone (Amazon) who is threatening their way of doing business.
(This approach is ultimately flawed. The right way to respond is to provide even more value to customers than Amazon does now — as opposed to retaliating by making life more difficult for customers.)
Here’s the real reason these bookstores are doing this.
Let me explain.
Tim Ferriss is very high profile. Every book he has published has been a New York Times bestseller. In fact, both of his books, The Four Hour Work Week and The Four Hour Body are currently on the New York Times bestseller list.
If Tim’s next book reaches the NYT Bestseller list, he will be one of only 4 authors in history to have 3 books on the NYT Bestseller list at the same time.
If he succeeds, he will be the only author to do so while having his book banned by virtually all major U.S. bookstores.
These bookstores are desperately hoping he fails. They want to make an example out of him.
They want all the other authors (myself included) who are watching this episode unfold to conclude that as an author you can’t succeed without bookstores (and traditional book publishers).
They want this to be a warning to stay away from Amazon’s vision of the future of books (which in my opinion is the only vision that is obsessively focused on making life better for authors and book readers).
They figure by banning the book… they’ll show all these authors that they need to stay away from Amazon and just go back to the way things used to be.
If Tim’s new book fails, that is exactly the message everyone will get.
But there is one possibility that I don’t think they’ve fully considered.
What if Tim’s new book succeeds wildly without any major bookstore in America selling it?
What if they prove, through their own book boycott, that they actually are irrelevant. It would only serve to accelerate the trend they fear. Other authors will see that it is possible to have a wildly successful book without being beholden to the “old guard” of book publishing.
In other words, their own boycott could totally backfire.
Such an accomplishment would be somewhat equivalent to Roger Bannister being the first human being to run a mile in less than 4 minutes — an accomplishment previously thought impossible.
After Bannister broke the “4-minute mile” record, many people followed, and breaking a 4-minute mile is routine. Everyone else in the world just needed to know it was possible.
So how will this epic battle in the book industry play out?
I don’t know, but the answer is being written as we speak and will be revealed this Tuesday, November 20. That’s when Tim’s newest book comes out.
Now let me mention my personal connection to Tim. He is a friend of a friend whom I have met on a few different occasions — the first time several years ago when his first book came out, but before it was famous.
In reading his work and meeting him, Tim made an impression on me. He is extremely unusual in how few assumptions he has about what is and is not possible.
Oh… turn a book into a bestseller while the entire book publishing and retailing industry hates you? Why not? Just because it’s never been done doesn’t mean it isn’t possible. It just means nobody has tried. Why not me?
This is how he thinks.
It’s an amazing mindset that I envy and frankly, try to emulate.
I ran into Tim last weekend in New York City.
I only spoke to him briefly but was able to ask him how he was doing with his book coming out soon.
Incredibly busy was the short answer. I guess when you’re the most hated man in book publishing this year and have become the unintentional poster child for redefining (or not) a $30 billion industry, it’s a bit hectic.
So, what is Tim’s new book about that’s causing an entire $30 billion industry to be up in arms in arguably the single largest epic battle in book publishing history?
It’s a cookbook.
All this over a cookbook. You would think it would be a manual to build a nuclear device or something…
But, to be fair to Tim, his new book, The Four Hour Chef, is not just any cookbook. He describes it as a cookbook for people who do not read cookbooks. Huh?
Let me explain.
As I mentioned earlier, Tim is the only person I’ve met who holds no assumptions about what is possible in life. One of his passions is speed learning.
You know how I always tell you to focus on the 80/20 in your client situation and case interviews? Well, Tim applies this to life and to learning new skills.
He won a world title (it might have been a national title) in one of the martial arts — with only a week or so of training (most of which was spent studying the rule book like an attorney).
He holds the world record in Tango for most number of spins in a minute.
He has an enormously long track record of learning new skills fast.
And he is very data-driven.
For example, when he was interested in learning about blood sugar and weight loss, he had several hypotheses.
What if you do 40 leg squats before eating a hot fudge sundae, does the exercise minimize the spike in blood sugar? What if you did the exercise afterward? What’s the difference between doing 15 squats versus 40 squats versus 100 squats?
These are all interesting hypotheses and most of us would just wonder and get on with our lives. Not Tim.
He decided to inject his body with a continuous glucose monitor for weeks!
Yes, he walked around for weeks with two prongs stuck into his stomach area. This way he could watch his blood sugar in real-time as he basically experimented on himself.
There are people who are curious (like me) and then there are people who are committed. Tim is committed (perhaps in more ways than one!).
Basically, he is crazy.
This is the approach Tim has taken to learning to be a master chef in less than a year.
Because Tim’s readers aren’t really cookbook buyers and are more interested in 80/20 shortcuts in life, he has integrated two books into one.
On the surface, The 4-Hour Chef is a cookbook. In parallel, the book is about speed learning and uses cooking as the case example.
If you want to see for yourself what all the commotion is about, or if speed learning or cooking interests you, I highly recommend getting a copy of The 4-Hour Chef.
A lot of people will be talking about it next week, and you could be one of the few people with the insider’s view of the whole situation.
Click here to order The 4-Hour Chef
(Disclosure: That’s an affiliate link where we earn a small referral fee if you happen to buy from Amazon. Proceeds are used to offset the costs of running this website.)
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