Ed Wallace

The Disruption

By Ed Wallace

It seems to me that “disruption” has become the pejorative du jour to describe everything that is currently happening. Of course, many believe that change is not only happening quite quickly, but is accelerating in its pace. However, for a moment we should suspend that belief; we need to take the long view to see if in fact anything has really been disrupted at all, or if it’s just part of the normal evolution of science, tech and our economic society.

Years ago I made the statement that it’s hard to find anything “new”— anything that isn’t a variation on an invention that was already in place by 1958. Even our smart phones — their flat panel displays are all connected to the Aiken Tube display created in the early Fifties, while the computer aspect came even earlier. The microchip can be dated back to work done by Siemens in the late 1940s, and digital cellular technology also is a variation of many previous broadcast inventions. That’s right, all of these so-called modern inventions are simply variations on something that evolved long ago; and production costs and size dropped enough that those items could be put together for the modern smartphone.

Looking closer, we can see that “disruption,” as we use the term today, is not accurate in any way.

Rip van Winkle, Call Your Agent

First, pretend you went into a coma in 1970 and awoke from it last week. The world you returned to after 49 years does not look like any movie of the future you might have seen. No, if you drive by DFW International you’ll still see the same Boeing 747s landing as did the year you checked out for decades. Come to think of it, the Rolling Stones are still out on tour, although you would wonder how they are still a thing, given their lifestyle in their younger days.

Walking through the average home you’ll see that, although they aren’t Avocado Green or Harvest Gold, the appliances are the same ones you saw before; today’s ubiquitous microwave was around back then, but they weren’t common. The TVs may be better and thinner, but they are still recognizable as TVs. Same goes for the automobiles and trucks on the road; certainly the styling and features may have changed, but from a distance modern transportation looks remarkably the same as it did before your long sleep.

Actually, if one of the first things you needed to do was to go out and purchase a new car, that would be an identical experience to what you might have done all those years ago. Drive down any freeway until you see a group of dealerships, which may be larger than you remember but are still highly recognizable as dealerships, and see if there’s any difference between purchasing a car today and having done the same in 1970. OK, credit approval comes much faster — and you don’t transmit a credit application on a 300 bps Fax modem anymore — but other than that, nothing has changed there, either. True, there are more vehicles to choose from; and, after a nearly 50-year sleep you’re shocked that the discount on a Ford F-Series truck is more money than your old annual earnings; but again, from dealerships to the process of selecting and purchasing a vehicle, nothing has changed.

Now, some may quibble with that because of the Internet and online communications. But that’s just pricing vehicles online, the way weekend ads used to be in the newspaper, or finding a dealership the old-fashioned way of using the Yellow Pages; emailing someone is just a less personal replacement for a phone call. But again, even if you’ve been disconnected from everything for a half century and don’t know about the Internet yet, you could easily bypass all the new variations on old tech and still buy a car the exact same way you did in 1970.

The reality is that you may question what’s really happening today based on supposition and speculation of what’s happening in car sales vs. the facts you see in front of you. After all, Americans purchased a little over 10 million new cars in 1970 and just over 17 million last year, yet we read constantly that the automakers and those in technology say car ownership is a dying business model. If it is, the numbers don’t show that.

Nor is there any indication today that the public is looking forward to purchasing self-driving cars or huge volumes of alternative fuel vehicles. Admittedly, that could happen in the future; but if it does it will come from a massive shift in basic economics leading to mass inability to afford vehicles or lack of the fuel to propel them.

Remember, we went through a decade of being told that Millennials had given up on the dream of personally owning new cars; but once they moved up to better paying jobs they started buying new cars in the same percentages as Baby Boomers did at the same age.

So, here’s the real question. If you were the person that’s been out of it since 1970 and awoke this year and did not buy a smart phone, a personal computer, or an iPad, could you work and live a normal life as if it were still 1970? Of course you could live well and do so rather easily.

Which takes us back to the original discussion. How has anything we’ve done really disrupted anything else? After all, what is Amazon today but a computerized version of the old Sears catalog? About the only difference is that we don’t have to clear-cut a forest to send out a Sears catalog to everyone in America twice a year anymore; the downside is that Amazon’s use of electricity is creating a different kind of environment damage.

So instead of going to the back of that Sears catalog to use the index to find what you are looking for, you type what you are looking for into your browser at the Amazon website. But the retail concept of one place to buy anything you might need is the same. Just as today’s iPod is the same as the old Sony Walkman or a transistor radio. It’s just a variation on small portable music; and that’s not disruption, either. That’s evolution.

Evolving Takes Time

When things evolve, most don’t do so very quickly. For example, the first demonstration of microwave cooking took place in the Westinghouse display at the 1933 Chicago World’s Fair; it simply took another 40 years to bring the size and cost down to where it started becoming a standard kitchen appliance.

Often when I’m out in dealerships, talking with management or members of the sales staff, many tell me how much the business has changed. But gauging change requires age and memory; being told how it used to be is not the same thing as having lived through it.

One huge difference today is that manufacturers dictate far more of the sales process via their endless and ever-changing incentives. But that’s not technology disruption, it’s just uncalled-for disruptive behavior. Another is that the mark-up from the original invoice price to MSRP has shrunk so much that in most stores it no longer covers the cost of sales. So, those huge discounts that are real are based more on manufacturers’ incentives than anything else.

Even when the dealership is discounting a new vehicle by more than their markup, it’s typically because the dealer is chasing a manufacturer’s incentive for volume or customer satisfaction, or is remodeling the store. But the actual buying process is the same: Customers find information on a vehicle they might want to purchase, try to get an idea what their current car is worth, go out and drive the vehicle they like to make sure its value is what they hoped it might be, and negotiate until they feel they’ve reached a fair transaction price.

Again, if you had never heard of the Internet or owned a smart phone, iPad or personal computer, and you wanted to purchase a new car today, knowing nothing more than how it was done 49 years ago, could you successfully do that? Absolutely. So, where’s the “disruption” to that industry? It’s only in your mind.

There’s a lot to be said for modern times. Things are faster, simpler, easier, cleaner and more satisfying for those who demand results immediately. But we could have said the exact same thing in 1969 if we compared that year to doing business in 1920.

Next time you read or hear that something is going to “disrupt” an industry, try to think of any device today that isn’t a variation on some technology from 1958 or earlier. Then ask yourself, if I had never bought it, used it, or rented it, could I still live the exact same quality of life I had before? If your answer is yes, then it’s not as disruptive as claimed. And the correct term is still “evolution.”

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: edwallace570@gmail.com

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