In nature big fish eat little fish, but in business the opposite is often true: the small destroy the large.  Small, nimble, clever, aggressive startups with nothing to lose are able to undermine staid, clumsy behemoths burdened by overhead, bureaucracy and legacies.

Hmm. Are we thinking of any small, nimble industry in particular? Of any staid, clumsy behemoth industry in particular?

Clayton Christensen is a student of the rise and fall of big companies, and he’s coined a wonderful phrase to describe the cycle: Disruptive Innovation. He describes it as “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors.”

In the space of a decade we have seen the digital book industry (that is the small industry you were thinking of, isn’t it?) soar from novelty to dominance, absorbing in the process a far larger publishing business like a snake unhinging its jaw to consume a sheep.

But there’s a corollary to the rule of disruptive innovation, for, after battening on its huge prey, the smaller company itself becomes fat and soft and susceptible to the predations of the next generation of hungry young businesses.

A recent New York Times editorial, Remember Microsoft?, exemplifies the concept. “Technology upends companies in different ways,” itl stated. “It allows new firms to deliver better products and services in a more efficient way; it also creates new goods and services for consumers to want. Eastman Kodak, the fifth-biggest company in the S.& P. 500 in 1975, was almost destroyed by digital cameras and is no longer in the index. General Motors, fifth biggest in 1985, was hobbled by rivals that could make more fuel efficient cars. Microsoft still rules the PC desktop. But that will matter less and less as users migrate to tablets and more computing takes place in ‘the cloud.’”

Which brings us back to e-books. It’s hard to imagine that they may simply be a bridge to a far larger media world, but if Christensen’s theory holds up, a day may come when the hegemony of giants like Google, Amazon and Apple becomes vulnerable to a fast-moving aggressor, and the cycle begins all over again. Don’t believe it? Just yesterday we wrote about powerful new programs like ePub3 and HTML5 that will make e-books look positively Gutenbergian.  Let’s hope we’re all around to see the day.  Or maybe some of us would rather not.

Read Disruptive Innovation and watch the video.

Richard Curtis