Looking at industries such as entertainment and retail, we see they have changed dramatically over the past decades. New winners (e.g. Spotify) and losers (e.g. CD retailers) have emerged. These shifts have been spurred on by advances in technologies, primarily digital technologies.
For many organisations, the response to this kind of disruption is operational in nature. Companies often choose to concentrate on doing what they currently do but just better, faster and more efficiently. However, such an approach fails to properly take into account the economic aspects of disruption. Economic implications are commonly underestimated, overlooked or not thoroughly understood.
In order to survive and thrive going forwards, it is critical for every organisation – regardless of industry – to turn its attention towards the economic implications of technological disruption and ensure that fundamentals are understood by senior leadership.
One of the most critical concepts to understand is zero marginal cost economics.