Digital Transformation

33 minute read

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This lesson is from Digital Transformation by BCG & University of Virginia

Disruption

Introduction

  • digital transformation in one form or another has been around for at least 50 plus years.

  • Watch industry

    • Swiss watch makers for centuries were one of the leading makers of mechanised watches
    • Japanese manufacturers such as Casio, took over the market in late 50s and the Swiss watchmaker struggled in the wake of this new technology.
    • Now the good news in this story, is that they reemerge in the 1980s emphasizing style and design leveraging the new technology.
  • Typewriters

    • For over 100 years, typewriters were a dominant technology in offices throughout the world. Remington typewriter in particular was the market leader in many industries and in many markets having 80 percent market share, for example, in New York City.
    • Then along came the IBM Selectric in 1962 and then word processors in the 1970s, and by the 80s and 90s Remington typewriter goes out of business.
    • IBM was also a maker of typewriters going back to their roots as a maker of business machines.
      • They pivoted to computing and obviously were an early leader in personal computers.
  • Photographic imaging

    • Kodak was one of the world’s best firms, a market leader in film production.
    • Kodak as early as 1980 began investing in the digital transformation yet they weren’t able to make the transition.
    • On the other side, we had a company like Nikon who also was a leader in cameras on the film side, but saw the kind of transition coming and
      • was able to make the transition by emphasizing their expertise in lens manufacturing.
  • Telecommunications

    • We saw the rise of cellular technology in the 1990s, and
    • this ushered in a quick rise and fall of a number of different companies like
      • Motorola and Nokia, BlackBerry, Palm
    • But it really wasn’t until the iPhone came along that we had a true game changer
      • that redefined the dominant design in the industry and led to a competitive shakeout.
  • Bookstores

    • Bookstores historically tended to be local enterprises around the community.
    • Then came in the 60s and 70s larger companies who tried to roll up the market,
    • companies like Borders and Barnes and Noble, and then
    • we had obviously the Internet and online sales and Amazon raising triumphed and
    • many of these companies going out of business such as Borders.
  • Record stores

    • independent record store give way to big box stores like Circuit City.
    • Then the late 1990s we see the rise of first Napster and
    • various types of digital files sharing then
    • digital distribution pioneered by iTunes and then
    • yet another disruption with streaming services like Pandora and Spotify.
    • This has had an impact not only on record stores and retailers
      • but is it fundamentally changed the business model for
        • musicians, producers, record labels and
      • it’s also fundamentally impacted how we as consumers consume music.
    • Taking an industry in which
      • we might all listen to the popular songs on the radio,
      • to now each being able to get on demand the music we desire whatever our specific taste or niche that we fill.
  • Entertainment industry and movie rentals

    • Blockbuster was the leader in North America on movie rentals had 60,000 stores in their hype in 2004.
    • First came along Netflix with a DVD by mail business model,
      • then came along streaming and on demand and the long and short of it blockbuster now has gone bankrupt.
    • It’s interesting to note that while Blockbuster wasn’t able to make this transition, Netflix actually made a significant transformation
      • from being a DVD by mail business
      • to being one the leaders in streaming and online demand content.
  • Retailers

    • Take Sears for example. Sears was the leading retailer for a good part of the 20th century in America. They had what was called the bible of retail was their wholesale catalog business.
    • Then came first Walmart who leveraged information technology to innovate the supply chain, and
    • of course later Amazon who really innovated across the whole customer experience around online retail.
    • Sears is still in existence today
  • Livery services, taxis, limos.

    • Uber and Lyft have entered those markets and fundamentally transform them.
    • What’s interesting about this story is they’re leveraging mobile technology for sure, but they’re not necessarily changing the fundamental technology.
    • You’re still getting into a car and going from point A to point B.
    • Using media, using social media, they’re able to redefine the experience for users and create new value and disrupt the market.
  • Automobiles.

    • Automobiles have had a century of stability where internal combustion engines have been the dominant technology and
      • we’ve had a fairly stable set of players who’ve been dominant within that industry.
    • Now it’s being disrupted by electric vehicles and autonomous vehicles
      • we’re seeing entry by companies like Tesla, Google, Uber,
      • we’re seeing transformation of companies like BMW and Volvo who are being heavily invested in electric in autonomous vehicles.
    • It’s hard to say how this will play out, but the interesting thing is we know a lot about in general how these types of disruptions play out over time.
  • In the World Economic Forum of 2016, they called this type of digital transformation the fourth industrial revolution.

  • Rise of new next generation digital technologies such as

    • artificial intelligence, machine learning, Big Data, robotics
    • promising to perhaps accelerate digital transformation even more
    • promises to be even more disruptive to existing business models and markets, this also creates an opportunity.
  • Each disruption

    • creates an opportunity
      • for new business,
      • for new markets,
      • for new innovation and
    • those are available not only to
      • upstarts and new entrants
      • but also for established businesses as well.
  • So partly what we’re going to do, is think through how you as a business can survive and thrive in the face of these disruptions.

Disruption is not new

  • Digital transformation has the potential

    • to disrupt numerous markets and industries, but this disruption should not be surprising.
  • Disruption is nothing new

    • is arguably a natural product of market economies.
      • would lead to new innovations
      • to new technologies
    • which better the quality of life for humans
    • It’s this birth and renewal, that is important for our market economies.
  • Disruption shouldn’t be feared but rather it should be embraced as a good thing, an opportunity for bringing in new ideas and new technology.

  • Disruption with technology

    • Digital watches were a fundamentally radically different technology than what came before it, which were mechanized wind-up watches.
      • While one was based on minute workings with springs and gears, the latter was about electronics and new dealing with quartz technology.
    • Similarly, digital cameras replaced film based cameras.
      • Film was really almost a chemical industry in terms of its roots in science.
      • Digital cameras come along and they’re more of electronics industry. So once again, these are both examples of radical changes in the fundamental technology within an industry.
  • Architectural innovations or architectural disruptions.

    • Sony Walkman
      • The Sony Walkman came about not with any fundamentally different technology, they were really just utilizing existing technology that existed in different types of cassette players and the like.
      • But they redefined the form by shrinking it and making it a portable player that you could wear on your side while you’re walking around or going for a run.
      • So, while the underlying technology didn’t change, the value proposition and the way they organized it did change very much.
    • You might also think about what we sometimes call business model innovation or business model disruptions.
    • Take Airbnb
      • Since the dawn of civilization, people have been renting out their homes or renting out for others to use their homes.
      • Airbnb comes along and they leverage technology as a way to create market efficiencies in there.
      • And as a result, redefine the market, redefine the value proposition and create new opportunities for others to participate in those exchanges.
    • Zipcar
      • is another example of redefining a business model.
      • Rather than a traditional rental car model where you go to the rental car agency and rent your car, they create a world in which you can walk on the street, put in a code, and enter a car and use it for a couple hours.
      • Once again, leveraging technology changing the business model.
  • Disruption from the consumer side.

    • High-end disruptions
      • like the iPhone which came in with a completely different set of features at the high-end of the market, arguably three, four times the expense of some of the other phones that were on the market at the time.
    • Low-end disruption
      • Nintendo Wii.
        • We had two dominant players leading up to that in
          • Microsoft with their Xbox and
          • Sony with their PlayStation.
        • Then comes the Nintendo Wii.
        • Both Sony and Microsoft were competing on the idea that the winner would be those who offer the most highly technical new gaming system.
          • The one that had the most processing power that allowed for the most sophisticated games.
        • Nintendo came in with arguably a much, much technologically simpler machine
          • one that cost a fraction of the cost of the other players, but
          • had an innovative game control that allowed them to do some creative things with games that resonated with the marketplace.
        • So, it entered in at the low-end and then ended up disrupting the whole market, and in that generation became the market winner.
      • Wikipedia.
        • Wikipedia is arguably not of the quality of an Encyclopaedia Britannica,
        • but its new model of using crowdsourced information allowed them to have a very low cost entry, obviously a free entry for usage by individuals.
        • While it didn’t have necessarily the same quality, it still provided enough value that it could penetrate the market and take over large parts of the Encyclopedia market.
    • New market disruptions
      • Word Processor
        • disrupting the typewriter industry.
      • Automobile
        • redefining transportation and putting harm to the horse-drawn carriage industry.
      • Smartphones
        • redefining whole sets of different industries including cameras, mapping, and maps, and the like.
      • Value chain disruptions.
        • Craigslist.
          • Craigslist really innovated around classified advertising and how that’s delivered.
            • Yet this had a huge impact over the value chain to newspapers.
          • Now while, Craigslist wasn’t competing directly with newspapers
            • newspapers primary income stream came from the selling of classified ads.
          • So, a disruption in one part of the value chain ended up impacting a whole another industry in another part of the value chain.

Five domains

by Dave Rogers of Columbia University that we should particularly pay attention to.

Data; Innovation; Competition; Value; Customers

Data

  • Data is now ubiquitous in a world of social media and mobile technology.
  • We have huge amounts of data that are available to consumers, but also to companies to leverage to advance the products that they offer.
  • Waze
    • is an app that leverages people’s cell phone data to determine when there are traffic jams.
    • And also uses social media to allow users to express maybe the traffic jam is due to an accident, or maybe it’s due to some debris on the road.
    • By leveraging that data, they’re able to create unique value, and that we see across any number of different sectors.

Innovation

  • In a world of a digital economy, we’re seeing the ability to do quick testing
    • with innovation in ways we’ve never been able to see before.
  • Speeding the innovation cycle
    • allowing companies to run real time experiments with their products, and run prototypes in a very inexpensive way.
  • Facebook
    • offer new features and new offerings on their platform in a way
    • that allows them to experiment and learn in real time.

Competition

  • One of the truisms of digital transformation is
    • it often eases entry by other players within an industry.
    • Because of that, we would expect increasing competition in any number of domains where digital transformation is having an impact.
  • One of the things this does is
    • it starts to blur the boundaries between different industries.
  • Companies that were once partners are now increasingly rivals.
  • One only need to look at
    • Google and Apple and Amazon as they increasingly compete in various domains within the larger digital technology space.

Value

  • Value that’s created for customers.
  • And what we’re seeing are new ways to deliver value in creative ways, leveraging digital technology.
  • Uber
    • leveraging social media and leveraging mobile technology to offer a new value proposition to customers looking for traditional livery services.

Customers

  • The customers themselves are evolving.

  • The ubiquity of information allows customers to be highly informed.

  • It also seems to tend to allow them to be less loyal than they were in the past.

  • Best Buy

    • Best Buy suffers from the fact that many customers will come to their stores, sample their various products, and then, even while in the store, pull out their cell phone, look on Amazon and purchase the product then and there.
    • So, customers are becoming more sophisticated, and they’re becoming less loyal to their home brands and products.
    • What this means at the end of the day is that the old sources of competitive advantage are largely disappearing.
  • Things like natural monopolies formed through resource scarcity, while they’re still important today, and the old adage in real estate that location, location matters here is still true, but in many industries, place and space are becoming less important.

  • The obvious example is retail.

    • As retail goes online, those positional advantages, the geographic advantages become less and less important.
  • Another area of traditional competitive advantage under threat, is scale or economies of scale.

    • The idea that the more production you have, the lower your production costs, and that can provide you a competitive advantage.
    • What we’re seeing is that scaling in a digital environment, it can often be quite easy and quite costless to scale.
  • Facebook.

    • Facebook went from two guys in their Harvard dorm room to a billion dollar business in a matter of a couple of years.
    • The ability to leverage digital platforms to scale your business, and scale your technology, are greater than they’ve ever have been before.
  • A third area which was a traditional source of competitive advantage were learning curves.

    • This idea that over time as you learn to deal with a new technology, you improve your understanding of it, and that in and of itself can be an advantage over others.
    • And while clearly learning curves still do exist, the ubiquity of information provided by the internet and other data sources is making those learning curves less and less pronounced, and allowing others to catch up relatively quickly, by having access to valuable information on how to deliver, let’s say a new product or service.
  • The fourth thing we want to think about is vertical integration.

    • Vertical integration

      • is a strategy whereby a company owns or controls its suppliers, distributors, or retail locations to control its value or supply chain.
      • Vertical integration benefits companies by allowing them to control processes, reduce costs and improve efficiencies.
      • However, vertical integration has disadvantages, including the significant amounts of capital investment required.
    • So historically, large industrial companies might vertically integrate as a way to create value, but also serve as a deterrent to others trying to compete with them in their marketplace.

    • While digital technology is making it easier and easier for people to disintegrate the vertical supply chain, and specialize in different components of it.
  • So now, you see things like contract manufacturers.

    • student entrepreneurs who historically let’s say, developing a new product, a new physical attribute would have to figure out how to manufacture it, how to get access to distribution channels.
    • There was a lot of capability development that was necessary for them to bring a product to market.
    • Now, they can go online, contract with the manufacturer in China, use online as a distribution channel, never actually touch the product that they’re designing, yet still have massive distribution potential throughout global markets.
    • And this really highlights a broader impact that digital is having.
    • Which is that as digital becomes more ubiquitous, transaction costs start to drop.
    • So transaction costs are those costs incurred when you have parties selling goods and services.
    • This is everything from contracting that needs to take place to even things like transportation of goods and services.
    • 20 years ago, the biggest companies were largely in the same industry, doing the same thing.
    • Today, smaller players have the opportunity to remediate that value chain.
  • Financial services industry.

    • What you see is it’s not being disrupted as a whole.
    • It’s not like someone is entering in and trying to compete head to head with Bank of America across all their different businesses.
    • No, rather what you’re seeing are companies like PayPal, Venmo and Bitcoin all entering in, and taking various pieces of the overall financial services pie.
    • This is what we call FinTech and FinTech right now is really having a disruptive potential in the broader financial services industry.

Four underlying drivers that try to drive digital economies and have this disruptive potential.

  • Network externalities.
    • the idea that a good or service might improve in value as others consume that good or service.
    • Telephone
      • Having to be the first person to own a telephone is not very valuable. Who are you going to call? As others begin to buy telephones, the value to you of owning a telephone, starts to go up.
    • Facebook
      • As more and more people use Facebook, the value to you goes up as a consumer who uses Facebook.
    • Operating systems
      • We see similar dynamics for example in operating systems, as more and more people use the same operating system, it makes exchange easier.
      • Also it makes it more likely to develop other apps and software for that operating system. And it’s for this reason you see companies, like Microsoft dominating in the personal computer industry, and a battle going between Apple and Google in terms of mobile operating systems.
  • Winner take all markets
    • These various network externalities that we tend to observe in digital economies, tend to create winner take all markets, where there might be one dominant player within an industry.
    • Facebook, Google, Amazon, Apple have all in various ways leveraged network externalities to create, in essence, quasi monopolies where they have advantages of a winner take all markets.
    • these four players are also increasingly competing with one another.
  • Platform technologies
    • The internet is the prime example here.
    • An underlying technology that has great value across a wide number of sectors, and allows different companies to plug in in different ways.
    • Mobile is very similar. Cloud computing as well. All are examples of platform technologies.
    • Now, of course, this isn’t limited to just the digital.
    • If we think about the automobile and the advent of the automobile a hundred plus years ago, it had a similar impact in the sense that a whole set of suppliers and services grew up around the automobile industry to support that.
    • And it’s interesting to think as the automobile industry goes through a disruption again through autonomous vehicles and electric vehicles, that we might see a similar kind of shift in the underlying platform technology, that will give rise to a whole number of different players and business models in that space.
  • Complementary capabilities
    • Complementary capabilities are other ways of delivering value.

    • In a world in which we have

      • network externalities and
      • winner take all markets, and
      • the emergence of these platform technologies,
    • the way in which you might need to compete is by offering some specific capability that allows you to leverage these platforms to your advantage.

    • Perhaps it’s

      • manufacturing capability or
      • a great customer service that you provide.
    • But you’re going to need to find that specific way in which you can uniquely deliver value, given these, ubiquity of these different platforms and technologies.

    • So in summary, when you think about digital transformation and potentially the disruption it might have on your industry, you want to think about these underlying drivers and how they might impact ultimately, the way the industry evolves, and how you might compete.

Environmental Analysis and Competitive Life Cycle

  • Digital transformation

    • can be scary
    • but the good news is, we have seen and observed common patterns of how transformation and disruption impacts industry over time.
    • This results into what we like to call the competitive life cycle.
  • Competitive life cycles

    • are similar to the idea of a product life cycle
    • but they’re viewed at the industry level rather than the individual product level.
  • The first observation we have with the competitive life cycle is

    • what we call the S curve.
    • The S curve refers to the common pattern in sales or revenues that we see over time.
    • Early on, things are being figured out about a new technology or an emerging industry.
    • Eventually, hopefully, you hit a sweet spot where the technology takes off and that’s the steep part of the S curve.
    • And then eventually, maybe you tap out the market and that S curve starts to curve off as you maybe hit a sustainable level of sales.
  • So, we think about cumulative of revenues, we’ll see this S curve over time. We could break that S curve up into a set of phases.

  • That first phase

    • where people are still learning about the technology and it hasn’t quite diffused yet is the emerging phase.
    • Sometimes, the emerging phase can take decades to occur as we’re seeing, for example, in electric vehicles which actually had existed even back at the early stage of the automobile industry.
    • In other industries, the emerging phase can happen relatively quickly or quite quickly as a new hot technology comes into the market.
  • The second phase

    • is the growth phase and this is the sweet spot of the S curve where we really see a lot of growth in sales.
  • And then eventually, we enter into a mature phase

    • where, again, growth starts to decline, we reach a more stable level of sales, and a lower level of growth within the industry.
  • We can also think about three different phases that a technology goes through:
    • annealing,
    • shakeout, and
    • disruption.
  • So, let’s talk about annealing.

  • Annealing
    • is this idea that over time, there’ll be a coalescing around what we call the dominant design of the technology.
    • Basically, figuring out how will the technology look moving forward.
  • Shakeout
    • refers to what happens to the number of competitors within the industry.
    • So, let’s look at that. If we turn our attention to the number of firms within an industry, we very often see the following pattern.
    • Early on, a few intrepid entrepreneurs or incumbent firms enter into the industry.
    • As the market starts to grow and take off, others come in as well seeing a market opportunity.
    • More often than not, we eventually get over competition, too many players within the market, and we get a shakeout occur, in which we see firms either going out of business or firms merging and acquiring with one another limiting the overall number of firms within the market.
  • Now, one of the interesting questions is, how severe will this shakeout be?

  • We’ve talked before about winner-take-all markets, and a winner-take-all market, obviously, we’re left with one last standing firm.

    • In other industries, they might support multiple firms within the market.

    • So, one of things we want to think about is, what’s the likely outcome of this competitive life cycle for this particular industry that we’re interested in?

    • Last but not least, we want to think about what happens with margins.

    • Margins are probably the most questionable piece of this and that there’s a lot of variability.

    • In many industries early on, margins might actually be negative.

    • In fact, there might be no profits being made within the industry. But hopefully, as the industry starts to grow, we’ll see margins improve.

    • But as we discussed before, we also see increased competition, and as that competition increases, it’s often the case that margins might get compressed.

    • Where they end up, once again, that’s an open question and there’s lots of factors that we can discuss that will impact whether this is a profitable industry or not.

    • Automobile industry

      • And what you see here is that automobiles in the late 19th century begin as an industry to take off and we see massive entry by hundreds of different competitors within the industry.
      • Then, over a roughly 20-year period, we have this competition ensuing that eventually leads to a shakeout.
      • In the United States, we were left what we called the Big Three auto manufacturers of
        • General Motors, Ford, and Chrysler.
    • We saw similar patterns in other countries across the world as well. And then, that structure dominated for decades after that.

    • So overall, we have this idea of a competitive life cycle evolving over time

      • as revenues increase and following S curve, as we might see a shakeout, and then the open question about margins within the industry.
    • Digital music players.

      • We had, in the mid 1990s, an established industry of portable CD players led by Sony and a number of others in that marketplace.

      • Now, many of you are probably familiar with the iPod, but the iPod, in fact, was not the first entrant for digital music players.

      • That honor goes to a company called Río who is an entrepreneurial startup within the industry.

      • There were then hundreds of others who offered products including the Microsoft Zune, Dell, HP, many others who came into the market with their own digital music player offerings.

      • The iPod was actually a relatively late entrant into the industry but when it did enter, it established what we call the dominant design.

      • It became the dominant form function, form factor, that we would see within the industry.

      • Now, it’s interesting to note that the iPod itself was effectively disrupted by the iPhone just a few years later as many of those music functions were incorporated into our smartphones.

      • And in fact, now, the iPod is a very small part of Apple’s overall sales.

      • So, the competitive life cycle is a common set of patterns that we see across many different industries and understanding those patterns are going to be very important to try to understand how digital transformation might impact your industry.

Competitive life cycle

  • Early competitive life cycle

    • we have what we might even refer to as the Era of Ferment.
    • This is the idea that early on things are largely exploratory.
    • Innovation focuses on
      • different product features and
      • different underlying technology
    • that might eventually become the dominant form within the industry.
    • small entrepreneurial firms enter in the industry, in many cases pioneering the industry.
    • Profits are made
      • made more through differentiation and niche placement
      • for example, a low cost structure within the industry.
  • Automobile

    • 100 years ago when it first emerged from the remnants of the carriage industry.
    • When the automobile industry first appeared we had lots of different competitors, hundreds of different competitors, in fact.
    • We saw incumbents moving in to the industry.
      • Studebaker brothers in fact were the largest most successful makers of horse-drawn carriages in the United States.
        • upwards of 60% market share in the United States.
      • They saw this transformation occurring and they made investments to make this transition into the automobile industry.
    • We saw others come from examples like the bicycle industry.
      • Many other just entrepreneurs who were interested and got into the industry.
    • What was fascinating about the early phases of the automobile industry, there were lots of different drive trains within the industry.
      • We had the Stanley Steamer using steam power.
    • numerous electric vehicles early on in the automobile’s history.
    • kerosene-powered engines
    • gasoline internal combustion engine.
    • All competing to be the dominant technology within the industry.
  • Dominant design start to emerge

    • We see, not necessarily one technology, but in many cases of limited number of technologies emerge, that become the dominant form factor we see within the industry.
  • Now, as we see this occur, innovation begins to shift from innovation and experimentation around different form factors to things like

    • manufacturing, processing, delivery, service.
    • And this is where a shakeout typically occurs, where we might be left with just a few large efficient firms.
    • And interestingly enough, many of the pioneering firms might actually wither away.
  • Think again about digital music players and the Rio.

  • So it’s not guaranteed that being the first mover or the first entrant into this new technology or new industry is going to guarantee long term success.

  • Automobile again

    • So eventually as we all know, the gasoline internal combustion engine becomes the dominant technology.
    • It’s interesting to note this may take a long time.
    • In fact, even as late as the late 1930s, 1940s, there were electric vehicles throughout different cities throughout the world.
    • In New York City, they actually had a fairly significant market share for delivery vehicles.
    • But over time, we eventually settled in to the internal combustion engine being the dominant technology.
  • It’s interesting to note that it’s not necessarily that the best technology wins.

    • In fact there’s lots of factors that might drive why one technology dominates over another.
    • In the case of the automobile industry in the United States, eventually companies like Ford would enter in and compete more on efficiency of production, for example through the assembly line process.
    • Than it was necessarily through the innovations of the technology of the automobile itself.
    • Eventually we were left in the US once again with the big three of
      • General Motors, Ford and Chrysler.
  • General Motors

    • in particular was interesting, is that they in essence rolled up the industry through acquisitions.
    • They bought up a lot of different players to create the General Motors company.
    • All the while, other companies were going out of business.
    • Studebaker brothers made a good go for it for a couple of decades, but they eventually are now a footnote in history and have gone away.
  • So, when we think about this process, we eventually want to think about the renewal of this process through a new disruption.

    • So once we reach that dominant design and the market matures,
      • this actually creates the seeds for future disruption to occur.
  • That disruption might be exogenous

    • it might be driven by a technology change, what we sometimes refer to as technology push.
    • It could also be driven by the market itself, as consumer preferences shift,
      • what we often call demand pull.
  • The same S-curve that we talk about in terms of cumulative revenue, we can also think about in terms of technology performance.

  • And it’s often the case that there are some potentially, even physical limit to how well the technology can improve.

  • Automobile example

    • We are in the midst of another disruption in the industry driven by electric vehicles and autonomous vehicles.
    • This after nearly 100 years of stability within the industry.
    • Why is this occurring now? Well we can speculate.
      • One is underlying advances in the technology, the technology push concept here.
      • Some of it driven by digital transformation itself, making these technologies more viable.
      • Some of it also is being driven by consumer demand.
        • For example, consumers demanding low emissions vehicles, leading to the prevalence of electric vehicles in the market.
      • We see, obviously, a lot of incumbent firms competing and offering vehicles along these lines.
      • But we also see new entrants, like Tesla, making significant inroads.
        • In fact, by 2017, Tesla actually had a higher market capitalization than General Motors.
    • Meaning basically, that the market thinks that Tesla will be a larger, more significant player in the future.
    • We see companies like Volvo, an established player in the market, pledging to go all electric by 2020.
    • So once again, we don’t know how this will exactly play off, but we have a pretty good idea.
    • We’ll probably see entry into the industry. We’ll probably see competing designs here in terms of what the dominant design technology might look like.
    • And we’ll probably eventually see a shakeout and a coalescing around a common form factor for the industry in the somewhat near future.
    • So again, diving into the details of the competitive lifecycle, gives us a greater understanding of how competition unfolds when we have these disruptions taking place.