G Suite and Disruption
If we were to believe every headline we see, in aggregate, every industry has been disrupted roughly 20 times since 2015.
Catchy as it may be, the concept of disruption is thrown around too loosely in TechCrunch and influencer circles. It's not a big problem – language evolves over time* – but it dilutes the powerful teachings of the theory of disruption, developed by Clay Christensen of Harvard Business School in the 1990s.
Christensen famously studied the disk drive industry, then several others, and observed consistent patterns of incumbent industry leaders making rational decisions to maximize profits, only to be unseated by upstarts whose values and strategies did not initially represent competitive threats. Why did this happen?
Incumbents seek to maintain their leadership status by incrementally improving their products, to the point where they "overserve" their customers – for example, by continuously making disk drives smaller than the previous iteration. New entrants, meanwhile, seek to offer something that's "just good enough" on one vector of performance – for example, disk size – while offering an improvement in another vector – for example, price.
As with most 25 year-old theories, Christensen’s disruption has been questioned over time, in this case fueled by massive changes in technology. The most notable change has been the Internet's role in the creation of new business models, specifically software businesses with zero marginal costs and heavy user-data-product network effects. One realization has been that the original theory's insights are more tightly linked with B2B and enterprise sales models than B2C and consumer sales models. Ben Thompson does an excellent job explaining this on Stratechery.
Disruption du jour
Alas, it's hard to persuade crowds, especially in technology, viewing trends from purely theoretical or didactic perspectives. Let's look at one of the most ubiquitous examples in our compute-heavy lives: Google’s G Suite.
I spent the first five years of my career as a huge promoter of Microsoft Office. Whether the task required mouse-lessly whizzing through spreadsheets or formatting the perfect slide deck**, I'd often think "man, someone at Microsoft really nailed this."
Excel, PowerPoint and Word** are the corporate analyst's power tools. And they (generally) get better with each new release, though the improvement is (generally) less meaningful each time – which is totally normal for a mature product.
When I started using Google Docs, Slides and Sheets after moving from corporate life to a startup, I panicked at first. Those tricks and shortcuts that had been embedded into my brain and fingertips were no longer available. But as I started using the tools, I had two major realizations:
To do my job well, I didn't need to operate at 100% hotkey speed. This was a benefit of Microsoft's tools, but in a sense I was being overserved on the performance vector of speed. Friends in heavy-finance roles will rightfully object to this, but for most professions I believe it to be true.
Google's products offered such an immense improvement over SharePoint or Office 365 from a collaboration standpoint – a separate, but highly valued performance vector – that they actually have allowed me to be more productive overall.
The end result (simplification acknowledged) is that Google's productivity tools outperform Microsoft's familiar counterparts. Given how highly startups value collaboration and speed, it makes a lot of sense they prefer to go with G Suite over Office. Anecdotally, it seems like 95% of startups use G Suite.
To be sure, Microsoft has such a dominant lead right now that Google probably won’t catch up for at least a decade. According to a 2018 review of public email server data by Reuters, “just 15 companies listed in the S&P 500 currently have Google’s business tools”. The advantage of being an incumbent IT provider should also not be understated – why change if you don't have to?
However, as Christensen documents in the Innovator's Dilemma and the Innovator's Solution, we've seen the giants fall.
As the talent, values and attitudes of startups and technology companies permeate into Corporate America, I'd expect Google to more seriously challenge Microsoft in the enterprise.
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*That "flammable" and "inflammable" mean the same thing, haunts me to this day. Surely it could not have been intended from the onset…
**The more I type these examples, and the more genuinely passionate I realize I am about them, the more I wish I became a professional soccer player.
***I'd throw OneNote in there, too, but it's a weird exception because I personally still prefer OneNote over Evernote or any Google product.