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Comment by marcosdumay | Hacker News Reader

I like the term "market destruction".

I'm sure there's a name for that somewhere on The Innovator Dilemma, and if somebody finds it I'll gladly change my usage. But yes, calling it "value destruction" is stupid.

Anyway, It does not change anything on the overall idea, but your last paragraph is not really correct. If the company added no value at all, it wouldn't be able to sell the product. It may add value in distribution (yes, there is such a thing), or even just branding, but it better add more value than the price of the product, otherwise, people just won't pay.

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If you can create "value" by creating a market, what happens to that "value" when that market is destroyed?

When trepanation went out of style, it destroyed the market for skull-drills, and destroyed the market for hole-in-skill-drilling service providers. While you can argue that there was value to the consumer in not having a hold drilled in their head, it was still a net loss to any shareholders in companies that provided trepanation products and services.

You create value by creating something people want.

If doing something people want creates a market, value went up. If doing something people want destroyed a market, value went up.

If you destroy a market by bribing a government and prohibiting a product people want, value went down.

> I like the term "market destruction".

You're not destroying the market either. You're making the market bigger, because at lower prices there is usually more volume. What you're destroying is margins, but that's generally considered good by anyone other than the party whose margins they are.

> If the company added no value at all, it wouldn't be able to sell the product.

It depends how far you're willing to stretch the notion of value. It's possible that you can sell $1 items for $10 because you've paid off the government or are in bed with the Mafia and anyone who tries to compete with you gets thrown in jail or has their shop burned down, but it requires a strange notion of value creation to call it that.

And this happens to a lesser or greater degree every time a corporation buys a law.

I don't think the razor market grew at all. Or, at least not enough to compensate the prices reduction. How could it? It's pretty much bounded.

Making a market bigger by reducing prices is something completely different. It also goes by the same "disruption" name. That's why I started using that term.

About that second line, yes, any kind of coercion is an exception.

> I don't think the razor market grew at all. Or, at least not enough to compensate the prices reduction. How could it? It's pretty much bounded.

Sure, it probably only grew a little, e.g. because of a few people who used to use blades past when they were dull and now replace them sooner. But not growing very much (or even not at all) is not being destroyed. It's the margins that are destroyed, not the market.

> About that second line, yes, any kind of coercion is an exception.

The trouble is, for high margin businesses, it's the rule rather than the exception.

Without some statistics to back it up and a solid definition of "razor market" it's hard to determine.

For example, we could consider electric razors, disposable razors, and replaceable head razors as three separate markets. They are substitute goods, so as the price for replaceable head razors fall that market grows. In response the market for electric razors and and disposable razors contract.

"Market Destruction" is so much more accurate, yes. I suppose though, that in the sense of there being value in a company that Does 'X' for a high premium is lost when another company does 'X' without that high premium.

Still, that's a secondary effect brought on by the "Market Destruction" as you say.

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