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Understanding
Unbundling.
How the Internet evaporates the Middle.
Dominant market power used to come
from “bundled” sets of services, often called
vertical integration. Classic example: IB...
Dominant market power used to come
from “bundled” sets of services, often called
vertical integration. Classic example: IB...
The PC is an example of “unbundled” functions,
allowing a shift to horizontal integration - allowing
companies like Micros...
The PC is an example of “unbundled” functions,
allowing a shift to horizontal integration - allowing
companies like Micros...
The PC is an example of “unbundled” functions,
allowing a shift to horizontal integration - allowing
companies like Micros...
The PC is an example of “unbundled” functions,
allowing a shift to horizontal integration - allowing
companies like Micros...
Then came the Internet
(the ultimate “unbundling” layer).
The first industries to be impacted were
media businesses.
Music.
Newspapers.
Magazines.
Media companies were also “bundled,” vertically-
integrated businesses.
As they became unbundled, new players were
able to establish themselves.
As they became unbundled, new players were
able to establish themselves.
As they became unbundled, new players were
able to establish themselves.
As they became unbundled, new players were
able to establish themselves.
But once an industry has become unbundled, the
combination of technology and globalization has a
consistent impact.
But once an industry has become unbundled, the
combination of technology and globalization has a
consistent impact.
The In...
Think of markets as pyramids, with large, multi-
national organizations at the top, and small, niched
businesses at the ba...
Think of markets as pyramids, with large, multi-
national organizations at the top, and small, niched
businesses at the ba...
Think of markets as pyramids, with large, multi-
national organizations at the top, and small, niched
businesses at the ba...
In between, there is a healthy food chain of
mid-sized companies.
But the combination of technology and globalization
have suddenly made it very difficult to maintain a
mid-sized company i...
With technology+globalization, there is often reduced
friction at the base, so it’s relatively easy to create
small, niche...
And the “winner takes all” nature of
unbundled markets means that those at the top
are very difficult to dislodge.
And the “winner takes all” nature of
unbundled markets means that those at the top
are very difficult to dislodge.
But for several reasons, it’s very hard to build and
maintain a midsized company.
Of course, every industry in the past has gone
through phases of consolidation.
Of course, every industry in the past has gone
through phases of consolidation.
But this time it’s different.
Of course, every industry in the past has gone
through phases of consolidation.
But this time it’s different.
Today, Clay ...
Of course, every industry in the past has gone
through phases of consolidation.
But this time it’s different.
Today, Clay ...
Of course, every industry in the past has gone
through phases of consolidation.
But this time it’s different.
Today, Clay ...
Paranoid companies don’t want midsized companies
to sneak up on them and eat their lunch.
Paranoid companies don’t want midsized companies
to sneak up on them and eat their lunch.
And they’re far better positione...
In the past, investment money was
relatively evenly distributed.
But as fewer (mid-sized) companies go public,
investors need other ways to recoup their
investments. So there’s a lot more...
Think of sea turtles.
The mother sea turtle crawls up on
the beach, and lays thousands of eggs.
The mother sea turtle crawls up on
the beach, and lays thousands of eggs.
They hatch, and start crawling down the beach.
The mother sea turtle crawls up on
the beach, and lays thousands of eggs.
They hatch, and start crawling down the beach.
S...
The mother sea turtle crawls up on
the beach, and lays thousands of eggs.
They hatch, and start crawling down the beach.
S...
The mother sea turtle crawls up on
the beach, and lays thousands of eggs.
They hatch, and start crawling down the beach.
S...
Startups are the sea turtles.
Startups are the sea turtles.
If they gain “traction,” they get some more
nourishment (money) to go farther down the beach.
Startups are the sea turtles.
If they gain “traction,” they get some more
nourishment (money) to go farther down the beach...
If they make it to the water… who’s waiting for them?
If they make it to the water… who’s waiting for them?
Google. Facebook. Amazon. Traditional incumbents.
If they make it to the water… who’s waiting for them?
Google. Facebook. Amazon. Traditional incumbents.
As a result, very ...
So:
Technology+globalization are unbundling virtually
every industry.
Together, the result is that they often evaporate
Th...
Transportation.
Manufacturing.
Finance.
Higher education.
The very nature of work.
The Middle Class.
Learn more.
Unbundling Media.
Unbundling Higher Education.
Unbundling the Middle Class.
Unbundling Work (coming soon).
-Ga...
Acknowledgements:
Unbundling: John Hagel
The Long Tail: Chris Anderson
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Understanding Unbundling: The Internet Evaporates the Middle

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Why have the power dynamics of industries changed to rapidly and dramatically? Technology+globalization have "unbundled" them - and the result is that The Middle has evaporated.

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Understanding Unbundling: The Internet Evaporates the Middle

  1. 1. Understanding Unbundling. How the Internet evaporates the Middle.
  2. 2. Dominant market power used to come from “bundled” sets of services, often called vertical integration. Classic example: IBM.
  3. 3. Dominant market power used to come from “bundled” sets of services, often called vertical integration. Classic example: IBM.
  4. 4. The PC is an example of “unbundled” functions, allowing a shift to horizontal integration - allowing companies like Microsoft to establish dominance.
  5. 5. The PC is an example of “unbundled” functions, allowing a shift to horizontal integration - allowing companies like Microsoft to establish dominance.
  6. 6. The PC is an example of “unbundled” functions, allowing a shift to horizontal integration - allowing companies like Microsoft to establish dominance.
  7. 7. The PC is an example of “unbundled” functions, allowing a shift to horizontal integration - allowing companies like Microsoft to establish dominance.
  8. 8. Then came the Internet (the ultimate “unbundling” layer).
  9. 9. The first industries to be impacted were media businesses. Music. Newspapers. Magazines.
  10. 10. Media companies were also “bundled,” vertically- integrated businesses.
  11. 11. As they became unbundled, new players were able to establish themselves.
  12. 12. As they became unbundled, new players were able to establish themselves.
  13. 13. As they became unbundled, new players were able to establish themselves.
  14. 14. As they became unbundled, new players were able to establish themselves.
  15. 15. But once an industry has become unbundled, the combination of technology and globalization has a consistent impact.
  16. 16. But once an industry has become unbundled, the combination of technology and globalization has a consistent impact. The Internet evaporates The Middle.
  17. 17. Think of markets as pyramids, with large, multi- national organizations at the top, and small, niched businesses at the base.
  18. 18. Think of markets as pyramids, with large, multi- national organizations at the top, and small, niched businesses at the base.
  19. 19. Think of markets as pyramids, with large, multi- national organizations at the top, and small, niched businesses at the base. (Or, think of markets as Power Curves.”)
  20. 20. In between, there is a healthy food chain of mid-sized companies.
  21. 21. But the combination of technology and globalization have suddenly made it very difficult to maintain a mid-sized company in many industries.
  22. 22. With technology+globalization, there is often reduced friction at the base, so it’s relatively easy to create small, niched, targeted businesses.
  23. 23. And the “winner takes all” nature of unbundled markets means that those at the top are very difficult to dislodge.
  24. 24. And the “winner takes all” nature of unbundled markets means that those at the top are very difficult to dislodge.
  25. 25. But for several reasons, it’s very hard to build and maintain a midsized company.
  26. 26. Of course, every industry in the past has gone through phases of consolidation.
  27. 27. Of course, every industry in the past has gone through phases of consolidation. But this time it’s different.
  28. 28. Of course, every industry in the past has gone through phases of consolidation. But this time it’s different. Today, Clay Christenson is trumped by Andy Grove.
  29. 29. Of course, every industry in the past has gone through phases of consolidation. But this time it’s different. Today, Clay Christenson is trumped by Andy Grove.
  30. 30. Of course, every industry in the past has gone through phases of consolidation. But this time it’s different. Today, Clay Christenson is trumped by Andy Grove.
  31. 31. Paranoid companies don’t want midsized companies to sneak up on them and eat their lunch.
  32. 32. Paranoid companies don’t want midsized companies to sneak up on them and eat their lunch. And they’re far better positioned to avoid this, because investors behave very differently today.
  33. 33. In the past, investment money was relatively evenly distributed.
  34. 34. But as fewer (mid-sized) companies go public, investors need other ways to recoup their investments. So there’s a lot more money at the base.
  35. 35. Think of sea turtles.
  36. 36. The mother sea turtle crawls up on the beach, and lays thousands of eggs.
  37. 37. The mother sea turtle crawls up on the beach, and lays thousands of eggs. They hatch, and start crawling down the beach.
  38. 38. The mother sea turtle crawls up on the beach, and lays thousands of eggs. They hatch, and start crawling down the beach. Sun, bugs, birds… Not many make it to the water.
  39. 39. The mother sea turtle crawls up on the beach, and lays thousands of eggs. They hatch, and start crawling down the beach. Sun, bugs, birds… Not many make it to the water. Then, in the water, fish are waiting.
  40. 40. The mother sea turtle crawls up on the beach, and lays thousands of eggs. They hatch, and start crawling down the beach. Sun, bugs, birds… Not many make it to the water. Then, in the water, fish are waiting. Only a tiny percentage of the baby sea turtles makes it to adulthood.
  41. 41. Startups are the sea turtles.
  42. 42. Startups are the sea turtles. If they gain “traction,” they get some more nourishment (money) to go farther down the beach.
  43. 43. Startups are the sea turtles. If they gain “traction,” they get some more nourishment (money) to go farther down the beach. If they don’t, they die. Or they get “acqui-hired.”
  44. 44. If they make it to the water… who’s waiting for them?
  45. 45. If they make it to the water… who’s waiting for them? Google. Facebook. Amazon. Traditional incumbents.
  46. 46. If they make it to the water… who’s waiting for them? Google. Facebook. Amazon. Traditional incumbents. As a result, very few startups will ever become mid- sized companies.
  47. 47. So: Technology+globalization are unbundling virtually every industry. Together, the result is that they often evaporate The Middle. Now that you understand the dynamics, it should be relatively easy to predict what’s next.
  48. 48. Transportation. Manufacturing. Finance. Higher education. The very nature of work. The Middle Class.
  49. 49. Learn more. Unbundling Media. Unbundling Higher Education. Unbundling the Middle Class. Unbundling Work (coming soon). -Gary A. Bolles, gbolles@gmail.com
  50. 50. Acknowledgements: Unbundling: John Hagel The Long Tail: Chris Anderson

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