He explains how all companies consist of a PRODUCT, TECHNOLOGY, and DISTRIBUTION.
Every company sells a PRODUCT by DISTRIBUTING it to customers using TECHNOLOGY. Companies use technology both in creating the product and distributing it. So in essence, it's the technology that changes but the simple act of offering a product to customers stays the same. Therefore the "disruption" is in new technologies.
Sears Roebuck was the Amazon of the 20th century. In the 1890's and early 1900's it distributed products to people in rural and remote areas via a printed catalog. Eventually, they built stores in major cities, but the initial revolution was distribution to small towns. Wal-Mart did it better by building big-box stores in those small towns and then distributing to those stores. Then customers didn't have to wait to get products. Sears and Wal-Mart were both operating as retail stores, but the evolution in technology was through distribution. Today because of the distribution of Amazon, customers receive products faster, cheaper and easier than by driving to Wal-Mart's big-box stores. Amazon is doing the same thing, only better.
Uber uses technology to make going from Point A to Point B faster, cheaper and easier than using a traditional taxi service. A person using Uber doesn't have to hail or call a taxi, he doesn't have to give directions, or exchange currency, and he can follow the route the taxi is taking on his phone. This is especially helpful when traveling in a foreign country where language is a barrier.
Amazon sells products to customers in a new way and Uber offers a taxi service to customers in a new way. But these companies didn't start as behemoths, they started on the fringe. Being on the fringe leaves a lot of upside. If you had asked 100 people in 2001 if they wanted to buy household products over the internet and have them shipped to their house you would have had about 3 people say yes. Same for hailing a taxi cab in 2009 via an app on a phone.
Amazon had 97 customers to gain in 2001, Wal-Mart had 3 to gain. It makes a lot of sense for Amazon to try and gain those customers, but it doesn't inherently make much sense for Wal-Mart to try and steal back those 3 customers from Amazon because doing so would require diverting resources to a new untested system. It's not worth Wal-Mart's time or money. As Christensen explains, that is the innovator's dilemma.
Meanwhile, Amazon and Uber continued to improve their technology.
Christensen explains how "disruptive" technologies (ie. Amazon or Uber) are different from "sustaining" technologies (ie. Wal-Mart or traditional taxis):
"When they first appear, they almost always offer lower performance in terms of the attributes that mainstream customers care about. But disruptive technologies have other attributes that a few fringe (generally new) customers value. They are typically cheaper, smaller, simpler, and frequently more convenient to use. Therefore, they open new markets. Further, because with experience and sufficient investment, the developers of disruptive technologies will always improve their products’ performance, they eventually are able to take over the older markets."We can take this idea of a company creating cheaper, smaller, simpler products, and apply it to two music companies.
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Over the last few years I toured with a band that was "breaking", they had a song that went up the radio charts and that sent our schedule into overdrive. It became often times hectic and confusing. I started as tour manager / FOH engineer. Our machine grew over time and we hired more crew but at the beginning it was the band and me.
The TM / FOH role is the first touring crew position hired by most bands because it's the most utilitarian. He or she gets the band where they are supposed to be on time, and makes them sound good. Not optimally but with relative effectiveness.
As bands grow they hire more crew. The reason bands travel with crew is because they want consistency. Consistency is comfort but is also necessary for the complexity of shows as they grow over time. Crews grow organically based on what is needed on tour and what the band can afford. As the machine grows in number each role becomes more specialized. For example, eventually you have a tour manager and a FOH engineer rather than one person filling both roles.
As crews grow so does the amount of gear a band travels with. Traveling with the same gear offers more consistency. Therefore, consistency is achieved on tour by traveling with crew and gear. Until bands can afford to travel with their own crew and production gear, they use what is provided at venues. That includes the gear and crew for audio, lighting, and all other technical aspects.
Part of the audio system is monitors. Every band needs a monitor system so they can hear themselves while performing. The average concert-goer doesn't realize a band-member hears something completely different (his monitor mix) than the audience (the front-of-house mix). Because there are different mixes, there are two audio consoles: one at FOH and one on stage next to the band. This also necessitates two audio engineers, one at each console.
The monitor engineer has one of the most difficult and thankless jobs imaginable. He or she mixes what the band hears and gets the full brunt of the "artist temperament" in the heat of the moment if it isn't perfect.
Until a band can afford to travel with a monitor engineer, they use the engineer at the venue. A crew person traveling with, and working directly for a band is highly incentivized to do a good job. A monitor engineer working at a venue is hardly incentivized to do a good job as he will work with the band once, and then probably never again. He also doesn't know the band's music or personalities. Therefore, mixing what the band wants to hear is difficult.
Add to this equation the pressure of creating a mix very quickly due to the highly optimized and efficient nightly schedule of the concert BUSINESS (because that's what it is), and you can begin to visualize how difficult it is for a young band to walk on stage and perform. Playing an instrument well takes years of practice. Playing an instrument well while not being able to hear yourself properly is something else. Doing that with bright lights shining in your eyes and hundreds or thousands of people watching is more than most people could take, but part of the struggle. I've seen the struggle.
When I was working as a FOH mixing engineer I could describe my ideal workday (that also would match most other audio engineer's ideal day). It would involve something like more than enough set up time in a clean, quiet, well-lit workspace combined with plenty of sleep the night before, and being well fed.
The reality is that over the past few years our schedule was hectic and confusing and each day was something quite different. We had frantic set ups in loud, dark corners, sometimes in extreme temperatures, working on little sleep and fast food. That was the reality of the situation.
Doing my job, I had to deliver based on what was happening in reality. The band had to deliver a performance to the audience based on what was happening in reality. We both had to delivery consistency without having consistency ourselves. And if we wanted to continue to do it for the long-haul, we had to over-deliver on that consistency every day. Any gear we could find that would help us do that was something we really and truly needed. That is where the Behringer X32-RACK console came in. We used it to mix the band's monitors every night.
The X32 is a portable audio console that is quick and easy to set up and doesn't require a dedicated engineer. It's not the "professional" solution for mixing monitors. The professional industry standard is to use a large format console and a dedicated monitor engineer.
It would have been better to use a professional-level console with our own engineer. But the band couldn't afford that. It was a luxury we didn't have. Using a venue engineer each night was difficult because they didn't know the band's music well enough or have enough time to dial in mixes properly.
Therefore, we learned that using the Behringer X32 was better because we got the consistency we were looking for. It wasn't great, but it was good enough.
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Behringer is a music company founded by Uli Behringer that manufactures and sells audio gear and digital instruments. The company was founded on his ingenuity; he constructed his first synthesizer in the late 1970's when he was 16. He was born near Zurich, Switzerland but moved to Germany in the early 80's to study classical music. It was there, in Dusseldorf, where he began making digital gear and instruments for fellow musicians.
He started by disassembling premium gear on the market and figuring out how to re-engineer the circuitry to build his own. The emphasis from the beginning was to offer truly affordable products to everyone. His mantra was “Double the Features at Half the Price”.
The products were originally manufactured in West Germany with components from China. But in the early 90's all manufacturing moved to China to improve efficiency and save on costs. Uli moved to Hong Kong himself to be near the production.
Through the 90's and into the 2000's the company continued to offer more products. They began making audio consoles and DJ equipment in the 90's, and eventually guitars, amplifiers, digital pianos, PA equipment, and lighting gear.
Their products were polarizing because they were cheaper than similar products on the market, sometimes 1/3 the price.
In 2002, they completed their own factory in Zhongshan, China, which allowed them to consolidate and accelerate manufacturing. Therefore, over the years, they had increased efficiency and expanded their product line, but always maintained their goal of offering affordable gear. They didn't make gear for the professionals, they made gear for the everyday musician.
They also bought other music companies. This beget Music Group, a holding company of a dozen companies that each operated independently. This allowed for synergy among the companies. Ideas were shared, and Behringer gained access to new technologies.
In 2009, Music Group bought Midas and Klark Teknik, two highly venerated manufacturers of audio consoles and studio gear. By doing this, two things happened. First, they gained access to some of the latest technology in the audio field. This technology was based on the obsessive quality control that Midas and Klark Teknik were known for.
Second, they expanded into a higher-end market. Midas, in particular, a manufacturer of live audio consoles, had a history of working with the biggest artists in the world. Midas and Klark Teknik made gear for professionals, not the everyday musician.
In 2012, with the help of Midas' technology, Behringer introduced the X32 digital audio console. It was an immediate success winning numerous industry awards in it's class for "Best Mixing Console".
In 2014 they introduced the X32-RACK, a smaller version, which many young bands began to use. In particular, bands began using it for their monitor mixes at live shows. For the first time there existed a console small enough that it was truly portable. This was the console we used, and it was small enough to carry onto airplanes.
Today in 2017, the X32-RACK is ubiquitous among young touring bands.
Despite the "success" of Behringer's expansion over the years I've never once heard anyone say anything good about a Behringer product. Behringer targets the budget-friendly. Their products have a track record of being cheap and fragile. But artists use them because the "professional" alternative is out of their price range.
Their gear isn't robust enough for higher-stakes environments. Having a piece of gear fail in your bedroom or at a small show is one thing. But having a piece of gear fail at an arena with ten thousand people isn't acceptable when more robust gear is available on the market from companies that have a better track record. And at that level, price is less of an issue. Therefore, I saw lots of Behringer gear in small clubs, but once I started to mix in larger venues I never saw it again.
The X32-RACK we used for mixing monitors was cheap. It wasn't as good as having our own monitor engineer mix monitors on a pro console. But we couldn't afford that. It was better than having venue monitor engineers who don't know the band or music mix each night under high-pressure situations.
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Midas manufactures audio consoles for live concerts. It was founded in London in the early 1970's when the concert industry was nascent, and it established a foothold in a corner of the market. They manufactured electronic gear to power and process the signal (sound) through loudspeakers.
Working with other companies they developed gear for large-scale touring operations. Through the 1970's they worked with some of the biggest groups in the world including Pink Floyd, Elvis Presley, the Beach Boys, and Billy Joel. Their mantras included "The Professional's Choice" and "Dedicated to Excellence."
Into the 80's they continued to develop consoles which featured an expanding set of features and larger work surfaces, and their name became synonymous with first-class professional gear.
In 1987 they ran into financial trouble bringing a new line of console to market and were acquired by Klark Teknik, another British audio company that had gone public a few years prior. Klark Teknik provided funding and allowed Midas to continue to develop their products.
Through the 90's, Midas increased their dominance in the niche market of A-Level live concert audio consoles. It set the benchmark and was spec'ed for use by the biggest acts in the world including Metallica, the Rolling Stones, Aerosmith and many others.
They continued to set the bar. Into the early 2000's they had near total dominance of the major-tour concert business. The highest grossing tours in the world used almost exclusively their Heritage 3000 mixing console.
Meanwhile, Klark Teknik, its parent, went through a series of acquisitions and mergers over the years until 2009 when both companies were purchased by Music Group (aka Behringer.)
If you fast forward to today there is less hegemony at the mixing positions at concerts. In other words, Midas lost market share. It started around the mid-2000's when digital consoles came onto the market. Midas was famous for their analog consoles. And the same way the best turntable manufacturer doesn't thrive in a digital player world, an analog console manufacturer isn't going to survive in a digital console world.
The concert industry also changed. The internet disrupted major record labels, and opened doors for lesser known acts. Clubs surged in popularity along with "Indie" bands and labels. At the club level, time and space is a big issue. Therefore they needed smaller, cheaper and simpler consoles.
Midas had to pivot, which they did but lost market share along the way. Digital consoles offered more features in less space. In 2003 Midas was manufacturing analog consoles that cost as much as a house and were the size of an automobile. In 2015 young bands were paying 1/100th the price and carrying digital consoles onto planes and sticking them in overhead space. Throughout that time, there was a disruption of new technologies in the console world.
In live audio there is the debate over analog vs digital. It's the same as in recorded sound or playback. Most people would probably agree that listening to music on a turntable sounds better than streaming an mp3. But streaming an mp3 is far more practical most of the time in today's world. It's the same in the world of analog vs digital consoles. In the same way, a digital console is far more practical. It takes up less space and has more features.
So if the argument is which sounds better: analog or digital? In a world where time and space aren't an issue, maybe analog. But in a place where time and space is an issue, digital.
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Up until the mid-2000's Midas was an example of a company who's clientele sat at the top of the value chain where time and space weren't as much of an issue. The venues were large and there was plenty of time and labor each day.
They were manufacturing for the highest end of the industry, clients with the most money and highest standards. Therefore their gear had to be robust and sophisticated, and they had to maintain an immaculate track record. If they wanted more customers the only direction they could move was down market toward cheaper and less sophisticated products.
Behringer made goods for customers at the bottom of the value chain, the lowest end of the industry. Their products had to be cheap and offer only the most basic features. If they wanted to expand they had to move toward more expensive and sophisticated products.
It was harder for Midas to pivot because their products were expensive to bring to market, therefore expensive to change. Behringer on the other hand produced cheaper products with less features. It was easier for them to change features, or try new products. They were making very many cheap products while Midas was essentially making one really good one.
Midas was pushing the limits of signal processing. Behringer was copying products already on the market, and selling a cheaper, more fragile, less sophisticated version.
Traditional reasoning might say "do one thing and do it well." But the second half of that statement is tricky. Doing something "well" may not be good enough. I would say you have to offer a service to people that they need, and over-deliver on that service. And you can never stop offering the service people need, or over-delivering.
As the concert and live entertainment industry changed, what people needed was a smaller, cheaper and more efficient console. There was still a market for large sophisticated analog consoles but that market diminished as the concert business overall changed. There was a surge of "indie" bands and labels. Therefore, there was a surge in people wanting to see those bands live. Those bands played in clubs where time and space was an issue. Therefore, there was a surge in need for digital consoles.
That allowed other companies to come onto the market and create digital consoles. Midas lost hegemony. Today, Behringer is at the forefront of cheap digital consoles. They make them the cheapest and the smallest.
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People say Behringer is "bad" because it's cheap. Indeed many contract riders of professional touring bands explicitly say “NO BEHRINGER GEAR!”. It is mocked by professionals.
But it could be said that Behringer is creating the most valuable products because it allows new and young musicians to create. A musician doesn't need a really high-end product to create. He or she just needs the bare essentials. High-end products are a luxury that come with success. Creativity comes before success.
We needed our Behringer X32 to make it through the day. In that way, Behringer was a building-block to success. It was something we really needed. And because Behringer created something we really needed, it provided a service.
So in essence, a product that allows a young musician to create a piece of music, which starts a career, which powers an industry, is a valuable product to the whole. Despite the fact that a product has a cheap market price, it has a high intrinsic value. It is a valuable company to the industry as a whole. A company creating "cheap" products is the most valuable company of all.
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The idea of a musician "needing" a product comes down to human psychology. There is a hierarchy of "needs". First we need air to breathe, water to drink, food to eat, shelter from weather and then interaction from other humans (love). Once we have that, we continue to "need" to do things to fill the time.
Musicians create music because its inherent in their makeup as humans. Some people wake up in the morning and all they want to do is play music. It's a compulsion driven by physiological functions in their brains.
Did an early Blues musician in the post-Civil War south, who was poor, black, and disenfranchised, sitting on his porch alone in the Mississippi Delta sing because he wanted to? No, he needed to. There was something inside that needed to come out. He was bearing his sole. It's human nature.
Does a young musician today writing songs in her bedroom alone do it because she wants to? Does she passively write a song, play it over and over again, change it slightly over time, and hone it into a "finished" song, because she wants to? She does it because she needs to, it's what comes natural.
And that instinct comes before success. Success allows musicians to purchase higher-end gear over time, but in the beginning a musician will make due with whatever they have around, using whatever money they can afford to exchange for gear.
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In June of 2016 we played Glastonbury Festival, the most famous contemporary music and arts festival in the world. It takes place annually in June on a farm in the southwest of England, and draws approximately 135,000 people.
Like most gigs for us around that time, it was an adventure getting there. The day prior we were doing a private event for the NHL in Las Vegas. We went from the gig to the airport, and flew to London where our tour bus picked us up at Heathrow airport. From there, the bus drove over night and we woke up at the festival.
When we woke up, our bus was in a holding lot. We needed to get to stage to start setting up our gear. Typical of anything in the UK, it was a bureaucratic process to get to stage. We had to talk to a guy who had to talk to another guy who would have our bus escorted in. And that took time. Eventually after we made it to the stage we were behind schedule. We needed a few hours, but we now had about ninety minutes.
We were under pressure to set up in half the time we normally needed.
My job was basically to set up the drums and the X32. I went through my normal routine but quicker. As I was setting up the X32 I noticed it wasn't passing audio signal. I didn't think much about it at first because the set up process involved patching several dozen cables. I did this every show. So usually if something was wrong it was because I had forgotten a cable or two.
As I continued, from what I could tell it was all patched correctly, but still not passing audio. I ran through my mental check-list. "It should be working" I told myself.
We were on the changeover now. We had twenty minutes to showtime. The stage manager kept yelling out how much time we had. "15 MINUTES!"
I did the universal quick-fix for any digital machine and turned it off and back on. It takes a few minutes to reboot so I went off to do other things. "10 MINUTES!!"
I set the drums, and came back. It still wasn't passing audio. I ran through all the cables again triple-checking everything. It wasn't working.
So now I had to zoom out and look at the issue from a higher level. The X32 gets individual inputs from a network of cables. It then processes all those signals. So for instance, someone sings into the the lead vocal mic. A cable carries that signal into a box on stage. Which funnels it to a box off stage. Which connects into our mic splitter, and then into the X32 console. So there's a chance the issue was somewhere along that network.
I bypassed all of that and stuck a mic directly into the console. It didn't work. "2 MINUTES!!"
The guy was screaming in my ear. I looked at him and said, "you don't have to yell, I know how much time we have." If someone is screaming at you and you can turn and look them in the eyes and say something very directly and calmly it will knock them on their heels. That's the effect it had on him, and he turned to someone on his team and said, "this guy doesn't seem to care." It's not that I didn't care, it's that I knew much more about the situation than he did. And at this point I knew we were basically screwed.
There were 10,000 people at our stage and we had traveled 5,000 miles to be there. I was working on no sleep and no food, but I knew the console wasn't going to work, and we weren't going to be doing a set.
Our FOH guy was calling me on the radio, "what's wrong, can we do a line check?"
I came back, "it's not working."
"What ... what do you mean?"
"It's broken, it's not working."
"What's not working?"
"The X32 is broken. It's not working. It's not going to work."
The band was standing side-stage with their manager and agent. I went to them and explained the situation. "The X32 is fucked. It's something with the electronics inside the machine, and it's not passing audio."
This was our black swan moment, and we didn't have a redundancy solution.
The stage manager thought it an opportune time to yell again at me that we were eating into our set time. I assured him that I was well aware of the situation. In fact, we had eaten into our time substantially at that point. We scrambled and were able to do one song acoustic and the crowd loved it. They seemed empathetic.
After the show our bus had to leave straightaway because we had an eighteen hour drive to the next gig in Germany. I brought the X32 on board to troubleshoot. Sure enough there was an issue somewhere with the electronics. Something must have happened behind the scenes at the airport. It had been dropped or shaken.
Under normal circumstances prior to a show, we still would have had to deal with the issue. The fact that our setup time was cut in half because we couldn't get to the stage exacerbated the problem. Either way we needed a new one tomorrow. I called the audio company at the next gig in Germany and they arranged to pick one up at a local music store.
We tossed the old one in the garbage. Or maybe we gave it to the audio company, I don't remember. It wasn't worth the trouble. It wasn't worth fixing for us because the time and effort it would have required to send it back to the manufacturer wasn't worth the price of the machine at that point.
A few months after that gig we started to travel with a monitor engineer and large-format console because we needed the more professional solution. The stakes became too high and we needed something more sophisticated and robust. We couldn't fly around the world only to have a $1000 piece of gear stop us dead in our tracks.
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The X32 was a stepping stone. It could only take us so far. We couldn't use it today because it would lack the sophistication and robustness that is necessary for the complexity of our stage setup. It would break, or wouldn't have the features, or would lack the quality of signal processing the band have become accustomed to, or the engineer wouldn't be able to process actions as quickly as the band expects because of it's small format. There are many reasons why it wouldn't work.
Today, we would use a Midas console because we need a professional-level solution. As Christensen explains in the Innovator's Dilemma, we as the clientele, were on the fringe looking for an innovative solution to a problem. We started out looking for a smaller, simpler, cheaper solution, and over time we moved up the value chain towards a larger, more sophisticated, more expensive product.