Apex/Dominant Predator Strategy

• Apex Predator theory basically says when anything gets commoditized, you lose requisite variety in the system
• The system becomes perverse and that’s where something new can come into play.

Industry example: IBM

• Dominates the early history of computing because it repurposes punch card technology (exaptation)
• That gives it first mover advantage
  • Customers flock to IBM
  • Competitors get eaten
  • Suppliers serve the predator
• While basking in growth and glory, IBM doesn’t see that new hardware technology has emerged
  • Personal computers challenge mainframes
  • Due to competency-induced failure. IBM misses the “Moment of Choice” to enter early into the PC wave
• When IBM finally realizes what’s happening, it’s too late
  • In the “yellow bubble”
  • Suffers almost catastrophic failure because all hardware is similarly priced
  • Computers become a commodity rather than value-add
  • Changes at great cost to offer IBM PC
• Then Microsoft takes over and that’s repeated until software becomes a commodity