Friday, February 20, 2009

Disruptive Innovation: The wrong tool for the job.

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John Donahoe's (EBay CEO) interjection of "Disruptive Innovation" into the Ebay business model may go down in history as one of the biggest abuses of this theory, not to mention the biggest blunder for the health of the company. At the time of this writing Ebays stock is falling at a faster rate than the whole stock market. We all agree that the "theory of disruptive innovation" can be revolutionary. For instance the invention of the digital camera has replaced cameras that use film. The firearm replaced slings and arrows. These are examples of inventions that replaced earlier inventions. These inventions were disruptive innovations. So what is different about Mr. Donahoe's assumption that this theory is good for the eBay marketplace? He overlooked the basic fact that eBay does not own the product (items) that is for sale in the first place. The product is owned first by the seller. He has also overlooked that his sellers were also his buyers. So there is no better mouse trap to replace the old mouse trap. Instead he has caused his sellers to leave, and their items. So he has replaced an old system that was working with a system of nothing for sale worth buying, and nothing to buy worth selling in this sort of system. Perhaps the most disturbing aspect of disruptive innovation interjected and imposed on eBay marketplace at this his timing. Getting everyone to buy and sell through electronic means only is arrogantly assuming that the power grid, credit, and the economics of growth, are all going to be ongoing and fluid. Of course that is absurd and completely out of his control. Indeed any one of the three that becomes absent will disrupt his "disruptive innovation" model. I am once again reminded of an old shopman's rule that you don't actually know how to use a tool until you are ready to name at least three ways it can be abused, and at least three situations where it's the wrong tool for the job! For more information on the Theory of Disruptive Innovation see Wikipedia.

This was a guide I wrote for eBay in 2008. If you have time please read all my reviews and guides at eBay and then please vote. I have risen through the top reviewer ranks over the months and am numbered somewhere around 2000 even though my icon only recognizes Top 5000. Every vote counts. Thanks CC
skymetalsmith ( 332) just click on the pencil

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