How Big Tech threaten the very ecosystem that spawned them
Consolidation can stifle systemic disruption and disincentivize bold new ideas.
In the early days of Silicon Valley, innovation and disruption were king. Visionaries, optimists, and risk-takers focused on big, paradigm-shifting ideas.
The internet was exciting new technology in the 1990s, and smartphones followed in the 2000s, ushering in an entirely new ecosystem of digital products, services, and markets.
However, as markets saturate, products mature, and companies consolidate, risky new ideas are less incentivized. Instead, we’re seeing homogeneous product portfolios and smaller, more iterative feature improvements proliferate.
Small, nimble startups succumb to tech behemoths
For decades, Silicon Valley was synonymous with startups, innovation, hustle, and opportunity. However, today’s small startups face an uphill battle against more entrenched, capitalized, and dominant companies.
The tech giants — Google, Amazon, Facebook, Apple, and Microsoft — now threaten the very ecosystem that spawned them:
“This could alter the course of technological development, not just corporate structures. Quantitative research suggests that big companies do different kinds of R&D than their more modest counterparts. Instead of coming up with new products, they come up with process improvements.
‘If the nature of innovation is distorted toward selling to an incumbent, you’re going to get more feature-driven innovation rather than systemic disruption.’”
As the tech behemoths consolidate control and influence, their reach continues to expand, with COVID and lockdown only bolstering their pockets and power.
Despite fewer untapped ideas and markets, they still need to increase their profits each quarter. In response, we’ve seen a convergence of product portfolios.
In an effort to develop all-encompassing digital ecosystems, suck up as much user data as possible, and obtain massive competitive advantages, companies have resorted to copying each other.
The copy cat frenzy begins
Big Tech tout very similar portfolios of phones, laptops, cloud services, music services, payment systems, advertising services, and more.
This copycat frenzy suppresses breakthrough innovation. Consolidation and market dominance create less incentive to invest time and money developing brand new products, markets, and business models.
Instead, companies can simply riff off others’ work and deploy their vast resources to recreate and adapt it.
Being first only buys you a few months of lead time before competitors notice and churn out their own versions. This leads to an emphasis on smaller, feature-driven improvements, instead of riskier large-scale innovation.
Example #1: Stories
Snapchat’s signature short video format has since been copied, and adapted, by Facebook, WhatsApp, YouTube, and LinkedIn. “Obviously, we’d rather be genius and invent first, but if you can’t, then copy first and then iterate.”
Former Instagram CEO Kevin Systrom acknowledged the striking similarities between the respective Stories, noting Snapchat deserves credit, but that it “Isn’t about who invented something. This is about the format, and how you take it to a network and put your own spin on it.”
LinkedIn CEO Ryan Roslansky admits that Stories are not new, but LinkedIn “took the time to understand how Stories fit in the professional context”. They argue that adding Stories to LinkedIn allows people to replace water cooler conversations, especially in a remote-first COVID-19 world.
The imitating companies iterated and adapted the basic feature, but that’s the bare minimum. When companies focus their efforts on feature enhancements, it leaves less time for exploration of bigger opportunities.
Example #2: Social Audio
Clubhouse, a year-old audio social media app, recently hit a $4 billion valuation, despite having no revenue and only being in beta. Riding the tailwinds of COVID-19 lockdowns and rampant zoom-fatigue, Clubhouse enjoyed surging user growth, and other companies noticed.
Facebook, Spotify, Twitter, Apple, LinkedIn, Discord, Slack, and Reddit have all announced their own versions of “social audio”.
When Twitter announced their version, Spaces, they marketed it as a more inclusive and inviting space, ensuring women and marginalized groups’ needs are considered.
They seized on gaps in Clubhouse’s initial offering and sought to improve upon them. While iterative improvements are beneficial and necessary, we don’t want them to become the sole focus.
While Big Tech does invest heavily in R&D, having a handful of large corporations dominate the market can stifle competition, curtail the diversity of ideas and perspectives explored, and disincentivize pursuing bold new ventures, encouraging startups to focus instead on developing complementary offerings and feature-based improvements that may enable a swift and lucrative buyout.
What does this mean for Design?
The “innovator’s dilemma” is the choice companies face between focusing on existing markets by doing the same thing slightly better or seizing new markets through new technologies and business models. Consolidation can weaken incentives for the latter.
Design can advocate for and drive efforts in both disruptive and sustaining innovation. We’re well-versed in understanding needs and using both diverging and converging thinking to explore moonshot ideas as well as practical improvements.
Be conscious and strategic in expending your time and effort
Across companies, Designers use the same basic patterns (i.e. icons, interactions, basic flows, etc).
This aligns with a common mental model and makes products feel more intuitive and familiar. But Designers should spend the time, energy, and creativity they save on the basics to really innovate on larger features and explore totally new ideas, audiences, and markets.
Ideas for generating new ideas:
- Think about the problem from a new perspective— how would Oprah, a local business owner, or a 6-year-old understand and approach the problem?
- Make a list of assumptions and then challenge each of them— who’s your audience? What’s your product? Who are your competitors? What’s possible?
- Focus on jobs to be done — what are current and potential customers looking to “hire” a product to achieve? How might you address their problems in totally new ways?
- Consider forming a dedicated team or setting aside specific time to explore new ideas — generate moonshot ideas without rigid concerns around business models, timelines, or profits. Then investigate, test, pivot, and refine the most promising ones.
Don’t reinvent the wheel, but uncover and challenge assumptions
When starting a new project, it’s common to do competitive research to understand how others approached the problem. This can save time and rework, but it’s just the start. After seeing what exists currently, consider:
- What need are they addressing?
- What assumptions are they making?
- How else might you address this need? Is there a completely different, better way?
- What audiences or additional needs aren’t considered or addressed?
It’s fine to explore competitor’s approaches, but don’t let their solutions constrain your creativity. Identify assumptions and challenge yourself and your team to think differently.
Understand the underlying need
After getting a baseline understanding through competitive research, invest in foundational and exploratory research to really understand the underlying needs — don’t assume others have created the perfect solution.
- What are they trying to accomplish?
- What’s painful or frustrating for them?
- What can’t they do currently?
If it’s an unmet need, explore how you can build something entirely new to address it. Explore a range of ideas initially, and then narrow them down to the most viable options.
If it’s an existing need, how can you address it in new ways? How can you solve it better, faster, or more holistically than your competitors?
When Big Tech dominate the ecosystem, hoard user data, and outspend rival startups into oblivion, it kneecaps the opportunities for other companies to grow and succeed.
“Left unchecked, concentration will destroy innovation.” Recently we’ve seen a surge in copycat functionality, with Big Tech’s product portfolios becoming more similar and overlapping.
While they do invest heavily in R&D, an increasingly consolidated market encourages small, feature-based improvements instead of system shifting change.
As Designers both inside and outside Big Tech, we need to champion breakthrough innovation, not just copying and iterating on our competitors.
We need to understand when and how to strategically deploy our time, resources, and creativity to explore new ideas, audiences, and business models, so we can make giant leaps forward, not just small steps.
As a User Researcher and Strategist, I help companies solve the right problems and build more relevant, efficient, and intuitive products. I started my UX career at a Fortune 500 company, and I've since helped established the research practice at three B2B startups. I'm currently a Senior User Researcher at Unqork, the leading enterprise no code platform.