plus/minus epsilon


2 Sep 2020

Wikipedia is a classic, underrated example of disruptive innovation. They started out by serving the low-end market of people that want information immediately, for free, and are fine with that information not necessarily being high quality. This was previously a market that print encyclopedias like Britannica served with door-to-door salespeople, but while trying to grow their revenue they naturally pursued higher-margin opportunities with universities and academic researchers.

These high-value customers needed _accuracy _above all else and Britannica implicitly started investing more in their product’s accuracy than its distribution channels, abandoning their mission to be the “household reference of choice” and letting their low-end customers languish. As Wikipedia developed, it accumulated a broad array of rapidly-updated and increasingly trustworthy information. This slowly made it a better choice for more and more use-cases, than any print or highly-curated online encyclopedia.

In the end, Britannica eventually did have to adopt a lot of Wikipedia’s practices to satisfy their chosen customers, but only after they permanently lost the vast majority of their addressable market. If they had continued to defend their low-end customer base they might be a colossal business today, but a need for short-term growth meant they happily surrendered any avenue for long-term growth.

Business Disruption