While I have written much about disruption, I haven’t mentioned the real reason why it exists. Why did Professor Christensen write about disruption? While he is a former business owner, he works in the academic field. Why ‘discover’ disruption?

When businesses fail, fingers are pointed. They were always pointed at the managers of that business. However, almost bizarrely, it became a repeated pattern that the managers were praised when the business grew and grew and scorned when the business seemingly imploded by a changing market. In Silicon Valley, where tech companies grow up and die extremely fast, Christensen began to sense a pattern. Why are all these managers being blamed for the market changing so rapidly? Scientists use fruit flies for experiments because they live and die fast. So Christensen began to look at the rise and fall of companies tech companies as they were his ‘fruit flies’ to detect a pattern other than ‘bad management’. At this point in time, innovation was considered a wild card and was something that could not be predicted. It just ‘happened’ and the markets magically ‘changed’.

Christensen’s first book, “Innovator’s Dilemma”, defends the managers of many of the failing businesses. The reason why the businesses failed was not because of ‘bad management’ but because of disruption. The managers were doing what they were trained to do. They kept doing what customers wanted. They kept making sustaining upgrades. They did everything they were taught to in business school. They were heralded as the best managers of their era and yet, their businesses went under. What happened is that the ‘game’ (Christensen’s label for it) beneath them changed. So while their business was still focusing on winning the old ‘game’, the game had changed beneath them. Think of the Wii and the PS3. PS3 was designed to win the ‘game’ which was the ‘game’ of graphical competition that has been played out for several cycles. However, a new ‘game’ was starting and Wii got in front of that.

So in the first book, Christensen identified disruption. Now we began to understand how large well run companies became gored by puny new entrants. We can see why Microsoft cannot squash Google, why Sony couldn’t stop the iPod, and how small Nintendo can run rings around Microsoft and Sony.

In the second book, Christensen fleshed out disruption and how companies can react to it. He detailed the upcoming signals of disruption and how companies can begin new disruptive products on their own. In the third book, he further grows these ideas.

So if managers aren’t the reason for blame for failing companies, then who is to blame? “Business schools,” Christensen replies. As he describes, business schools instill the mantra of ‘do this and you will become successful’ and ‘don’t do this and you won’t become successful’. They are all using examples of the past and pluck it from the context of that time.

The entire point of disruption strategy is to fix what was taught at the business schools. Disruption goes against the most common business school teachings such as advising when to NOT listen to one’s customers, when to destroy one’s core business, and to create crummy products for non-consumers. Nintendo, which is an extremely well run company and quite financially healthy, invested heavily into the disruption strategy. So did Google. So many companies have found hit successes with disruption. However, there are some that haven’t such as Vonage. And since ‘disruption’ is new, these failures added to the information of disruption and created new tools to avoid such failure (such as assymmetries of motivation and skill). The point is that once upon a time, innovation that spurred a market change was considered unknowable, impossible to predict, impossible to replicate in a continuous pattern, and generally considered ‘dark knowledge’ as it was a gap. Disruption is filling that gap. Instead of darkness, disruption is a lantern that can guide companies through innovation and change on both the disruptor and on the disrupted end.

When Innovator’s Dilemma came out, it became a huge hit in Silicon Valley. Not only was the book seen as providing light to a very dark part of the business cycle, it enthused entrepreneurs as they made Christensen their mascot. They saw disruption as the slingshot that little David the entrepreneur could sling at the gigantic Goliath the big company. Bill Gates complained that every new product idea coming to him was labeled ‘disruptive’. ‘Disruption’ entered everyday language of the Silicon Valley businesses. It has come to the point where I can’t see how any business person can be in the tech industry and not have heard of Christensen and the ‘disruption’ strategy. If there are people there that haven’t heard it, they should be fired. They are too risky to keep on without knowing this.

Christensen’s disruption spread throughout many industries as its popularity soared in the tech industry. Nintendo, who keeps track of what goes on in the tech industry, definately heard of it. It is unclear how it was first introduced to Nintendo. It could have been through Reggie or, quite possibly, Reggie was hired specifically because of his experience with disruption. We do know that Cammie Dunaway was hired from Yahoo for disruptive qualifications (read Nintendo’s press release on Dunaway’s hiring. She mentions disruption in it).

It should become clear now that the game industry is going to change (I like to refer to it as being ‘reformatted’). The ‘Core’ will go away and the ‘Expanded’ will become the new Core. This scares people because they mistakenly believe ‘Core’ and ‘Expanded’ refer to users or demographics. They don’t. They refer to processes and values. The Core is SIGHT and time sink games. The Expanded is TOUCH and pick-up-and-play. Since the Core can’t upgrade its sight anymore, as customers no longer can tell much of a difference in upgraded graphics, the Core is stuck. Meanwhile, the Expanded will march upmarket getting better and better until it cannibalizes the Core. So instead of the next Zelda being more of a time sink and better graphically, such as Twilight Princess, it will become pick-up-and-play and rely more on TOUCH such as something like 1:1 sword swinging. The dreams hardcore gamers had of the Wii when it launched will happen… it will just take some time. Motion Plus shows that Nintendo is willing to move the Wii upmarket.

This change of the Core to Expanded is not that much of a serious change in gaming. It is like the change of newspapers to the Internet. News is still news and games will still be games. But as disruption hits, those encrusted publishers, marketers, and investors who know things only of the pre-disruption ways will be hit. THEY are the ones being disrupted, the decision makers. THEY are the ones who will suddenly realize that doing the same things will no longer work. THEY will be made *gone*. Consider past disruptions from various industries such as newspapers to Internet, railroad to plane and automobile, telegram to telephone, and so on and so forth. The BUSINESS did not change. Newspapers to Internet is still news. Railroad to plane/automobile is still transportation. Telegram to telephone is still communication. What changed were those who kept trying to define their business as something else. Movie moguls who thought they were in the movie business, not entertainment business, were destroyed. Newspapers who thought they were in the newspaper business instead of the news business, are currently getting decimated. The birdmen, not seeing the disruption for what it is, drown into the new Blue Oceans that open up.

What will become disrupted is not your favorite games, not YOU the customer, not the developers, but the suits that hover above the *old* mentality. How can you tell when a publisher has the old mentality? They speak everything as demographics and get locked into sustaining notions. The suits may not be that bright but they know the language of business which is why they are there. This is why we need more developers and all to know this language so THEY can be calling the shots and owning the businesses. But ‘creative’ people think business is ‘beneath them’ so I regress…

Copycat games have always been the staple of the video game business; they weren’t invented with the Wii. When Super Mario Brothers came out, a massive barrage of 2d platforming clones appeared. When Blazing Lazers came out on the Turbographx 16, everyone said “Wow!” and the sales of that one game made tons of copycats of shooters which created a console full of shmups. Sales of Halo made publishers make FPS games on the Xbox. This is the pattern because money, like water, flows the path of least resistance. If one game sells, it is believed that other games like it will sell. Unfortunately, everyone trying to pick the same stream for gold soon end up with little left.

What is going to happen on the Wii as well as Xbox 360 and PS3 (but more likely on Wii due to its cheaper costs and larger install base) is that someone is not going to follow the circle of copycats. They aren’t going to try to replicate Wii Sports. And when that game sells big, the copycats begin to chase that game style. The DS became huge off of Nintendogs and Brain Training. With pet and training games begining to flood the market, Square Enix’s “Final Fantasy 3″ sold out so fast that it stunned the company. They began to greenlight other remakes and begin other projects. Companies began seeing the DS as a RPG platform then. Someone is going to make a game on the Wii that is not a Wii Sports  or Wii Play clone. And it will sell big. So big that other publishers notice and then they will focus their copycat behaviors on that.

Which publisher is likely to pull something like that off? It will likely come from an established company. Electronic Arts is a good candidate as is Square Enix. I, however, think Capcom is the one to watch as they seem willing to go their own route and do a good job of it. Their Resident Evil 4 port sold very well which has given the company the confidence of putting other ports as well as try other games.

The reason why RPGs sell well on the DS is because they perform the job people want their handhelds to do. What is the job people want their Wii systems to do? A good example of a possible candidate might be Conduit which appears to be doing the job of FPS on the Wii. The game could be good or not depending on execution. But there is no doubt there is a demand for a game to perform the FPS job well on the system. A bad example would be MadWorld which seems to be little more than a sum of hardcore cliches. It is done in an ‘artistic’ style, full of bad words, tons of violence and gore, but I ask what is the job the game is trying to do? “It is trying to do the job of hardcore, Malstrom! Duh!” What is the job of hardcore? It makes no sense.

Consider VC and WiiWare. Would there any role for a game to do the job of a shmup on the Wii? No, since the job of shmups can be done by numerous titles on VC and by ones coming on WiiWare. But a competitive FPS is currently lacking and could be filled in by a game such as Conduit, a FPS from Electronic Arts, or something else. RPG is another job that needs to be done.

The point of this post is that Birdmen are influenced by the market, not influencers of the market. When another hit game appears, they will likely switch directions. Years ago, people told me that it was stupid to wish for new old school games. A new 8-bit game would have been absurd. But now we have Mega Man 9, we have old franchises returning from nowhere. The point is that people get what they want even if they aren’t current customers. Maybe not for a while. But money flows the path of least resistance, and the market will have its way.