Idea in Brief
The Myth
Many people believe that technological disruption will destroy most old-economy companies, with Big Tech and unicorn start-ups ultimately taking over the world.
The Reality
When you look at how the makeup of the Fortune 500 and the Global 500 has changed since the rise of the internet, that story doesn’t hold. Only 17 of the companies in the 2020 Fortune 500 didn’t exist in 1995. The picture is similar internationally.
The Lessons
Industry transformation happens very slowly, and incumbents can successfully respond to disruptive challenges in one of four ways: retrench, fight back, double down on existing assets, or diversify into new businesses.
The prevailing narrative in business today is one of ever faster change and creative destruction: Big Tech companies are taking over, the number of unicorns (start-ups worth $1 billion) keeps growing, the average tenure of old-economy companies on the S&P 500 is plummeting, and incumbency has never been worth less. The message to established firms—play catch-up or die—is bleak.
