When Epic Disruptions Hit
Disruption luminary Scott Anthony in an interview on what AI, diapers, and McDonald's can teach us about the innovations of tomorrow.
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Today we continue our special edition series with another impressive interview guest. After my talk with David Gardner last week on how to find innovative rule breaking companies that harness and feed off tech breakthroughs, we now look at the very nature of disruptive innovation itself. How is it different to sustaining innovation? Who are the people driving it? And what are tomorrow’s breakthroughs that threaten two thirds of CEOs with imminent disruption?
I am joined by the world’s number one leading innovative thinker according to Thinkers50. Scott D. Anthony is a clinical professor at the Tuck School of Business at Dartmouth, where his research and teaching focuses on the adaptive challenges of disruptive change. He has previously spent more than 20 years at Innosight, a growth strategy consultancy founded by Harvard Business School professor Clayton Christensen. A couple of days ago Scott’s latest book (his ninth!) hit the shelves of all major bookstores. Epic Disruptions: 11 Innovations that Shaped Our Modern World is a gripping account of how breakthroughs not just changed industries, but entire societes, from the printing press to steel mills and the iPhone. He shares some of the key insights with The New Frontier.
Igor: You write about fascinating innovations like the Model T, the McDonald’s system, or the iPhone. Those were all introduced by corporate giants, despite large companies often being thought of as sluggish. So how come they are so well suited to bring an innovation to a level at which it can be truly disruptive?
Scott: I would note that we think today of Ford and McDonald’s as great big companies, but in 1908 when Ford launched the Model T or in 1954 when Ray Kroc became the master franchiser of the McDonald Brothers hamburger stand, they were upstarts! The anomaly in the group in Apple. When it launched the iPhone in 2007 it did something that most companies hesitate to do: it introduced a product that could cannibalize its existing product lines, computers and portable music players. What Apple realized is that the growth potential of an easy to use computer in your pocket—a smartphone—made any potential losses look trivial. That’s the power of disruption. When you make the complicated simple and the expensive affordable, you unlock tremendous growth.
More and more incumbents are recognizing this. They have real strengths when it comes to disruption. They have brands, access to customers, technological prowess, and, of course, cold hard cash. The key is to view disruption as a threat versus an opportunity. Then, it’s anyone’s game to play.
Igor: In “Epic Disruptions” you also look at the people behind the innovations. Steve Jobs was a perfectionist. Henry Ford was obsessed with quality and efficiency. How important is product quality when you want to disrupt existing markets and norms?
Scott: Critically important. With one twist. A disruptive innovation typically trades off performance along a dimension that used to matter in factor of providing new benefits. A disruption is typically simpler, smaller, cheaper, or easier to use. It has to absolutely nail that benefit. The trick with disruption is existing customers might view it as inferior, maybe even as trivial. The disruptive innovator has to find a market segment that is delighted with the new benefits and doesn’t care about the limitations. That’s exactly what happened with the transistor. The intent of the team behind it was to create a new way to power telecommunications networks. The problem was the transistor wasn’t good enough in its infancy to reliably do that. Where did it start? In hearing aids. The fact that the transistor was small, rugged, and didn’t give off heat were huge benefits in that market. It was, you might say, perfectly imperfect.
Igor: As you illustrate with some gripping examples, most groundbreaking innovations are driven by individual geniuses. Would you agree that all of them have also been contrarians in some way?
Scott: One caveat I would note here is while there definitely are individuals in the driver’s seat, every disruptive innovation has many hands involved. Consider Johannes Gutenberg. Yes, as best we can tell, he played a singularly important role in the development of the printing press. But he needed Conrad Saspatch, who had an innovative press. He needed Johann Fust, who provided funding. He needed Nicholas of Cusa who was an early customer. It takes a village!
Back to the specific question. Innovation is something different that creates value. Disruptive innovation transforms existing markets and creates new ones by making the complicated simple and the expensive affordable. Almost by definition, disruptive innovators have to question the status quo, looking for different and better ways to do things.
Igor: Are (dramatically) falling costs for a certain technology the prerequisite to spread and rewrite the status quo?
Scott: It’s a huge enabler. Consider a classic example of disruptive innovation: steel minimills. Bethlehem Steel built the last integrated steel mill in the United States in Burns Harbor Indiana in 1962. It took two years and cost $4 billion in today’s terms. Steel minimills involve using an electric arc furnace to melt scrap steel and turn it into finished product. Nucor’s first minimill, built in 1968, cost $40 million in today’s terms. Of course, its capacity was much lower, but per ton it was sharply cheaper. Low costs enable new business models, and new business models are the special sauce of disruptive change.
Igor: How important is the promise of profitability in how fast an innovation is adopted?
Scott: Well, I have never met a customer who cares a whit about the degree to which an innovation promises to be profitable. A customer cares about whether the innovation solves a problem that matters to them. The benefit, of course, of profitability is it allows innovators to invest to continue to improve their product. It’s important to remember that disruptive innovations start with limitations. Robotaxis sometimes get stuck. Generative artificial intelligence hallucinates. Lab-grown meat can taste funny. The promise of profitability allows the would-be disrupter to overcome these limitations and reach broader markets.
Igor: Can an innovation or technology that has once reached mainstream adoption fall out of favor again? And if yes, does this usually happen because a better technology arises or can there be other reasons?
Scott: Sure. My mother-in-law recently dug out a cassette tape and happily presented it to my wife. What are we going to do with that, we wondered? It allowed us to tell kids the journey from cassettes to CDs to MP3 players to cloud-based music services. What is interesting in that progression is it shows the two different ways that innovation can drive change. A CD is what you would call a sustaining innovation. By almost every measure it is better than a cassette. MP3 technology was a classic disruptive technology, in that it brought new benefits (easy sharing) but had limitations (lower quality, difficult to use). In classic disruptive fashion it enabled an entirely new ecosystem ranging from Apple music players to streaming services like Spotify.
Igor: The type of disruptive innovations you write about are accelerating thanks to the recursive nature of science and technology. Is this something that tech incumbents should worry about or can it be an opportunity for them?
Scott: The question nails it. They should both worry about it and realize it is an opportunity for them. It is quite a moment though. A report in 2025 by Alix Partners said about two-thirds of CEOs say they are facing imminent disruption. When I first started studying disruptive innovation 25 years ago it was a niche phenomenon. Now it is pervasive. You think and act in the right way, this is great news, because disruption unlocks markets and creates new growth. You think and act in the wrong way, this is terrible news, because disruption changes market dynamics. This isn’t Newtonian physics, so ultimately it comes down to the choices leaders make.
Igor: If you are a retail investor looking for groundbreaking innovations to participate in, could crowdfunding projects be a good place to find them?
Scott: I am not an expert in crowdfunding projects, so I would make two broad comments. First, you never know exactly where disruption is going to come from, so it pays to be looking in multiple places. There is only upside in watching what’s happening on crowdfunding platforms. Second, one persistent finding from the research is that disruption requires patient perseverance over long periods of time. For example, Procter & Gamble’s disposable diapers brand Pampers took seven years of test market failure before it found a path to success. So, be prepared to be patient and recognize that the starting point and the finishing point often bear little similarities to each other!
Igor: You also discuss recent tech like Gen AI. Which other technologies do you see radically changing our world in the future?
Scott: I had fun in the conclusion thinking of technologies that “echoed” off the case examples in the book. So Gen AI echoes the printing press. The other nine I mention (and what they echo off of) are: cleantech (gunpowder), smart health (Florence Nightingale), autonomous vehicles (Model T), drones (the transistor), new food like lab-grown meat (McDonald’s), cryptocurrency (Julia Child … she’d of course have a meme coin if she were alive today!), additive manufacturing (Pampers), robotics (Bethlehem Steel), and augmented reality (the iPhone). Whew! There’s a lot of disruption going on.
This was just a tiny glimpse into the eleven fascinating innovations that shaped our modern world. If you are serious about understanding and driving innovation or just want an entertaining read, order your copy of “Epic Disruptions” right here:
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