What can Meta learn about Metaverse as a Disruptive Technology

What can Meta learn about Metaverse as a Disruptive Technology

Twenty-six years ago, Professor Clayton Christensen published the bestseller book “The Innovator’s Dilemma”, which was often rated as one of the top business books of all times[1]. In the book, Christensen told us why incumbents often failed to capitalize on the disruptive technology despite its rich resources in money, talents, and market share. Instead, the war on disruptive technologies were always won by startups. What happened?

Well, you will have to read the book to find out. Christensen offered a lot of data in the book and came up with his own conclusions of the mystery and what established companies ought to do if they want to avoid repeating the history. This book was mind-blowing to me and a lot of business leaders. Even after many years, the theories in the book still apply to the business world today.

When I was reading the book, I kept thinking what disruptive technology might be emerging in the world today, and what are the incumbents doing with it. I came up with two things: ChatGPT and Metaverse.

ChatGPT is, in my opinion, a sustaining technology, not a disruptive one. Christensen described sustaining technology as improvement of performance in existing technology. I see ChatGPT as a performance improvement (a huge leap) in current search engine technology. People no longer need to consolidate and make sense of the search result – ChatGPT does it for us.

Who will win the ChatGPT war? According to Christensen, incumbents always win in the sustaining technology. There’s a huge upside in the first mover advantage. Congratulations to Microsoft!

Metaverse, on the other hand, might arguably be a disruptive technology. Though it doesn’t fit all the criteria of disruptive technology according to Christensen, it would be interesting to see what insight the Innovator’s Dilemma might give us (and Mark Zuckerberg).

First thing first, what is Metaverse? I asked this question in ChatGPT and here’s the answer it gave:

The metaverse is a term used to describe a hypothetical future version of the internet that is much more immersive and interactive than the current internet. It is often described as a shared virtual space that is persistent and interconnected, allowing people to interact with each other and digital objects in real-time.

In short, it’s an immersive version of online platform where people interact.

In this article, I am describing Metaverse as a potential disruptive technology and mainstream social media such as Facebook, Instagram, TikTok, as sustaining technology.

Is Metaverse a disruptive technology?

It is arguable but I tend to believe it is. But let me first tell you why it may NOT be a disruptive technology.

According to Christensen, disruptive technology usually emerges when there is a performance oversupply in the current technology, i.e., the product’s current performance level far exceeds the need of the customers. Think of the smart phone on your hand right now. Can you really make use of all its performance attributes? I doubt it. In this case, there may be a space for disruptive technology to enter, which is usually smaller, simpler, and more convenient to use.

Is there a performance oversupply in social media? To some people such as myself who use social media for personal and to some extend business purpose, there may be a performance oversupply (I don’t use all the features available and certainly don’t engage in all the major platforms). But for some people such as internet influencers, they may tell you there isn’t a performance oversupply in the current world of social media.

Next, does Metaverse fit into the attributes of smaller, simpler, and more convenient to use? Not exactly.

That’s the arguments why Metaverse might not be a disruptive technology.

Now, I am going to argue why it is a disruptive one.

The first thing to note about any disruptive technology is its performance level – current and future. At the moment, the metaverse is not easily accessible by Average Joe. Therefore, the performance level of the metaverse is below the current performance level of its alternative – social media. However, it is totally sensible to expect the performance trajectory of the metaverse to intersect and surpass the performance trajectory of existing social media. In this sense, the metaverse can be expected to disrupt the social media technology.

Next, can’t metaverse be used in the mainstream market now?

The short answer is no. Although some companies are developing some kind of virtual worlds that might be considered part of the metaverse, such as Minecraft by Microsoft, the full version of metaverse has not been realized and used by the mainstream market, at least not yet.

In the Innovator’s Dilemma, Christensen suggested that disruptive technology should be framed as a “marketing challenge”, not a technological one. What he meant is that companies that harness the disruptive technology should find a new market outside of the current mainstream market. Trying to sell the disruptive technology with performance level not comparable to that of the sustaining technology to the mainstream market is a recipe of failure. The weakness of the disruptive technology in the mainstream market might be the strength in a niche market. Startups that sell the disruptive technology in the niche market can continue to refine and upgrade the technology so that one day, it might take over the sustainable technology in the mainstream market.

That begs the question to Zuckerberg – if the current metaverse concept is not usable by the mainstream market, what niche market can it be tailored to instead? Gamers? Trading platform of virtual assets? Virtual interactive learning platform? Once Zuckerberg has answered this question, he should instruct his teams to stay agile and test out different ideas in the market. In many instances described in Christensen’s book, the very first and often deliberate strategy pertained to the disruptive technology rarely worked out, but the revised, emergent strategy might prove successful. For example, Honda intended to sell fast and powerful motorbikes in the US market in 1950s but to no avail. Unintendedly, the US market was very much interested in their “Supercub” – a small delivery bike, to be used in off-road dirt biking.

In order to “test your way out” in the niche market. You need to do two things, according to Christensen. First, don’t spend all your resources in your first trial. Leave some resources for the second and third try. We see that Meta has heavily invested in the Metaverse from the get-go and now need to do massive layoff. Only if Zuckerberg reads Christensen’s book…

Second, spin-off an independent company to work on the disruptive technology. Christensen observed one pattern among incumbent companies who succeeded in disruptive technology – they didn’t incubate and market the disruptive technology in its mother company but to spin off an independent organization to work on it. He argued that small organizations are usually more failure-tolerant than big organizations. Startups don’t need to handle the inevitable skepticism within the company and constantly need to prove why they should stay in the business. A few small wins are enough to pay the bills and sustain the enthusiasm.

The other reason Christensen suggested incumbents spin off an independent unit for the disruptive technology is that the processes (formal and informal ways of doing things) and values (standards by which employees make prioritization decisions) in incumbent organizations usually don’t work well with disruptive technology. Readers who are interested in this are recommended to read the book for detail. The question for Meta is whether the Metaverse project exists in the mother company (Meta) as opposed to a spun-off organization? I suspect it is the former, though I am not 100% sure. Zuckerberg might consider Christensen’s suggestion to spin off an independent unit to work on the Metaverse project instead of housing it in the mother company.

In this article I have argued why the Metaverse might be a disruptive technology and what Meta can learn from it. My intend is not to teach Zuckerberg a lesson (Actually, I admire a lot his vision and commitment) but to illustrate the concepts Christensen wrote in the book as a case study. I hope readers find this educational and inspiring. Metaverse is still in its infancy today and there will surely be twists and turns along the way. If Meta and other technology companies can learn the lessons from The Innovator’s Dilemma, they may save a lot of money and potentially speed up the growth of the Metaverse.

[1] https://www.thewaystowealth.com/make-money/best-business-books/