Winning by Changing the Rules of Business

How to Know When a Company Represents a Paradigm Shift
Think of the difference between evolution and revolution.
Bloomberg, March 14, 2018.




Thomas Kuhn, the American physicist and philosopher, is perhaps best known to the public for the phrase “paradigm shift.” In his book “The Structure of Scientific Revolutions,” he describes the differences between ordinary scientific problem solving — what he termed “normal science” — and scientific revolutions. His concept of nonlinear evolution became so widely adopted by popular culture and business that today the phrase he coined has become a cliche.

That is a shame because, despite its well-worn status, it is still a very useful construct. Every so often, a business totally upends its industry and the phrase is wholly applicable. Beyond mere iterations or gradual progress, these companies completely change how they and their competitors do business, from what they sell, to how they generate a profit.

Apple Inc., Inc., Alphabet Inc. (Google) and Uber Technologies Inc. certainly qualify. Other companies, such as Netflix Inc., Tesla Inc. and WeWork Cos., might be doing the same.

Let’s consider a few of these companies. Perhaps we might discern a pattern that investors might find useful . . .


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