💥 Google and the disruptive innovator

Why the nature of chatbot competition matters

Did they really want a faster horse? Credit: Midjourney / Exponential View

Google, the firm that has done more than any other in “organising the world’s information and making it universally available and accessible for all” might face the classic “innovator’s dilemma”.

Clayton Christensen introduced this strategic concept back in 1997¹. Later, in Harvard Business Review, he described how well-managed firms could fail if they faced a particular type of technology-driven competition. By focusing on what they do well and the feedback they get, they might miss the new paradigms enabled by innovation. Those paradigms may ultimately redefine the scale and scope of the market and services that meet customer needs, leaving an incumbent high and dry. Even forward-thinking firms were vulnerable because they would rely on sustaining innovations, not the mould-breaking disruptive innovations chosen by new entrants. The chart below (from the Harvard Business Review essay) lays the concept out.

In this model, an incumbent continues to innovate through a sustaining pattern of innovation, but the new entrant (with their new paradigm) eats into their market. The chart above shows one of the two types of disruption Clay describes: low-end disruption. In this model, a competitor launches a worse product at a lower cost that nibbles at the less profitable end of the market.

But there is another type: new-market disruption, when a new entrant creates consumption where there was none. In this model, customers are underserved by the existing players.

In the era of ubiquitous internet and free-to-search Google, low-end disruption is tough. What is cheaper than free? But it strikes me that OpenAI’s ChatGPT (for one) is creating new types of consumption where there was none.²

Sure, the starting point when using ChatGPT is to ask questions that you might previously have framed as Google searches. Moving your old behaviour to a new product. And here Google seems to do rather well, as you would expect. Two decades of experiences, hundreds of billions of R&D and trillions of clicks to learn from… they are in their zone. ChatGPT, meanwhile, hallucinates: dreams up information, imagines versions of the present, gets itself in all sorts of knots while sounding as confident and authoritative as ever.

So how can ChatGPT be a disruptive entrant to Google?

What disruption means