INNOBLOG

When people in established companies hear the phrase "disruptive innovation" their immediate reaction is to feel some kind of threat. It is crucial to remember that every wave of disruption creates unanticipated opportunities in its wake.

The music industry serves as a great example of this principle. It was obvious for music executives to see the threat poised by the digitization of music. People could rip songs from physical medium, turn them into bits and bytes, and throw them out onto the Internet for anyone to download.

It is impossible to argue that music labels have lost at least some business as people around the world have downloaded MP3 files. But companies have created considerable growth categories as well. Apple's iPod is the obvious one. There are other pockets of success as well. Ringtones have turned seemingly overnight into a huge, and hugely profitable business for music labels and mobile phone carriers. In fact, in the UK the number one single at the moment is a ring tone by "The Crazy Frog," which has outsold a single by the megagroup Coldplay by a four to one margin. Describing the ringtone and associated animation is somewhat difficult. A Google search for crazy frog ringtone produces 644,000 results, so finding a sample on the Web is easy enough.

No one predicted the rise of the Crazy Frog and his ilk a decade ago. But every disruptive threat has its corresponding opportunities. Companies prescient enough to sense the opportunity when it begins to arise tend to count their success all the way to the bank.