Complacency and a wave of disruptive innovation

Now living on the California coast, I am being introduced to surfboards and surf culture. I know that surfers are a tightly knit group, but I hadn’t thought surfing would provide insight into some of the disruption that we’re facing today.

For decades, Gordon Clark and his company Clark Foam held an almost complete monopoly on the surfboard blank market … Due to environmental costs, Clark suddenly shuttered his business in 2005 with virtually no warning.

Hackaday ran a piece entitled “Surfboard Industry Wipes Out, Innovation Soon Follows” where Bryan Cockfield recounted the story of the surfboard industry, which had become complacent and almost catastrophically collapsed when its near sole supplier of surfboard blanks closed shop in 2005. The disruption resulted in market upheaval but rather than complain about regulations, there was an explosion of innovation. A sector dependent on a single manufacturer transformed itself into an industry of multiple innovators, creators and suppliers.

From transportation and media to food and education, we’re experiencing both a consolidation of and shrinkage in providers and component suppliers. At scale, it has become almost too easy to depend on a single source for a good or a service. For example, most consumers think that Amazon is the end-all, be-all of online shopping, period. What it is, in fact, is a consolidated consumer shopping middleman that took advantage of complacency in traditional catalog-based retail and engaged in disruptive innovation. It came along at exactly the right time, survived the big box wave (unlike Webvan), and filled the void left by Montgomery Ward, JC Penney and Sears to achieve a market dominance in our contemporary consumer model. Now, many consumers have come to depend on Amazon thinking there’s not an online shopping alternative (hint: there are many and far better options out there).

To some, retail consolidation into Amazon is thought of as a good thing, but simplicity comes at a cost. Let’s reflect on Takata, a company that provided nearly the entire planet’s supply of automotive airbags. When a fundamental flaw was discovered in its airbags and put at risk tens of millions of people, there were no viable alternatives. One supplier was the de facto provider and the entire automotive industry was in crisis. There was not another option and everyone needed a solution now. The automotive industry had become (once again) complacent by depending on one source for an essential component with no option.

By analogy, there appear to be fewer and fewer “surfboard blank makers” and in some sectors, we may not know how to innovate anew. Every industry should be wary of unintentional complacency as it can lead to undesired loss in knowledge and skill with serious consequences. Case in point, traveling to the moon isn’t a “wash, rinse, repeat” endeavor. We lost most of the knowledge and skills that we gained over the course of the Apollo missions, and need to start again. Fortunately, consolidation has lead to disruptive innovation and a commercial space race is on. We need to relearn how to go to the moon, but at the very least there’s a thriving industry for rocket scientists and engineers again.

Market dominance by and dependence on a handful of suppliers creates a risk of stagnation and potential industry collapse when something unanticipated happens. I’m not advocating that we abandon consolidation – on the contrary, we need both expansion and contraction in order to continue to grow and innovate. We need to be wary, however, of becoming myopic and forgetting the ecosystem that’s needed to support growth in each and every industry.

In other words, surfing can’t survive without surfboards and surfboards can’t be made without surfboard blanks.