The Master Switch: The Rise and Fall of Information Empires by Tim Wu

Important History All Entrepreneurs Should Know

I read this book when it first came out back in November 2010 and I’ve been catching myself referencing it ever since.

From describing to my colleagues what a “Cycle” meant to engaging in long debates about what constituted a sustaining versus disruptive innovation in the context of the projects we’re working on. One story I find myself relaying whenever I get a chance is the one about how the telegraph was rendered obsolete with the introduction of the telephone and how that represented a typical “Cycle.”

Tim Wu does something very powerful in this book; he defines a cyclical business pattern, calls it a “Cycle,” explores its history and explains the one we’re going through right now and its probable outcomes. He relies on history to understand the present and foretell the future, which makes the book a very entertaining read if you’re a history buff.

The book is rife with accounts of industries that have gone through the “Cycle.” They rose to success, conquered the competition, became a closed system, declined slowly and invariably fell. Tim says:

History also shows that whatever has been closed too long is ripe for ingenuity’s assault: in time a closed industry can be opened anew, giving way to all sorts of technical possibilities and expressive uses for the medium before the effort to close the system likewise begins again.

This oscillation of information in industries between open and closed is so typical a phenomenon that I have given it a name: “the Cycle.”

Business owners and senior executives must be aware of the “Cycle” and the stage of the Cycle at which their business lies in order to make informed decisions about the future and continuity of that business. Understanding the Cycle and preparing for it is prudent if not absolutely crucial to the survival of a business.

Tim argues for openness and innovation as two key elements to tempering the effect of the Cycle. He puts innovation in two buckets:

Sustaining innovations are improvements that make the product better, but do not threaten its market. The disruptive innovation, conversely, threatens to displace a product altogether.

For businesses to avoid being completely disrupted, they need to continue disrupting their own industry. That only happens with openness, collaboration and some serious risk tolerance.

Will your business survive the Cycle? Read the book to understand the tools that could help you stand a chance.

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