Decoupling revenue from cost
NVIDIA is doing something remarkable, selling silicon chips at prices unimaginable a decade ago. Artificial intelligence has decoupled demand from cost for a company built from the start to be nimble, outsourcing the heavy infrastructure of manufacturing. For now, it commands breathtaking margins at the intersection of unprecedented demand, constrained supply, rapid innovation, and a technology wave the world is scrambling to ride. But history warns that disruptors must keep moving fast to stay ahead of market forces.
Technology has often broken the tight link between cost and revenue, a process best called decoupling. Every time it happens, a few players enjoy extraordinary pricing power. That power does not come from better factories or cheaper inputs; it comes from shifting the rules of the game. And in those first years or sometimes decades, the gap between value delivered and cost is wide enough to drive enormous value to the owners of the new technology. The story is the same whether it is an assembly line churning out Model Ts, a digital platform selling classified ads, or a GPU maker charging premium prices. Yet in each case, the market eventually closes the gap, restoring the old balance between cost and revenue. At the end of the process, both the businesses doing the disrupting and those being disrupted often look nothing like they did before.
In the eighteenth century, textile mill owners achieved a huge labour advantage by building revolutionary machinery, turning manual processes into mechanised production that delivered substantial profits. A century later, Henry Ford’s moving assembly line transformed car-making, slashing unit costs and allowing him to sell vehicles at prices ordinary families could afford while still earning outsized margins. For a time, this gave Ford extraordinary pricing power, but as competitors adopted the same methods, the advantage narrowed and profits returned to normal levels.
In the digital age, Craigslist and its imitators disrupted newspapers’ multi-billion-dollar classifieds business, triggering rapid decline and inspiring a wave of online challengers that collectively reshaped the industry. In each case, the pattern repeats: early movers feast on the gap between old cost structures and new realities, but competitors, regulation, and market saturation eventually pull them back to earth.
Every business navigating disruption faces a strategic decision: is your true value in how you do business, or what you deliver? That choice determines whether you double down on your method and make it world-class, or pivot entirely to protect the relevance of your output. With so many changes possible through AI and other accumulated technologies, it is hard to argue that any business can ignore this question.
When digital photography swept away the film market, Kodak tried to reinvent itself as a photography company, shifting from film to digital. It decided the what, photography, mattered more than the how, chemical film. Ironically, Kodak failed to adapt despite inventing the very technology that disrupted its business.
Fujifilm made the opposite choice. It saw its core value in the how: deep expertise in chemistry, materials, and imaging processes. Instead of clinging to film, it redeployed those capabilities into new arenas such as digital imaging, medical systems, pharmaceuticals and even cosmetics. By staying nimble and translating its strengths into fresh markets, Fujifilm turned disruption into diversification and thrived long after the film era ended.
Amazon’s success demonstrates the power for some businesses of focusing on the how over the what. The company began with books, expanded into a wide range of retail categories, added a third-party marketplace, and ultimately launched cloud services with AWS. Each step extended the what Amazon delivered, but all were powered by the same how: mastery of logistics, data, and scalable infrastructure. By continually applying its core capabilities to new domains, Amazon transformed itself from an online bookstore into a retail platform, a marketplace, and eventually the backbone of the digital economy.
As a consultant, I have faced this type of disruption throughout my career as access to knowledge and even skills has been steadily disintermediated. Anyone in my profession who isn’t constantly reinventing the what of their business and improving the how risks the fate of many specialist advisors of the past. While the how must continue to evolve, the fundamentals of consulting remain the same. With each new wave of technology, business models, and regulatory shifts, consultants need to guide clients as they absorb the change and build their own internal capabilities. More often than not, the biggest and most enduring evolution of consulting is in the what.
This experience is being repeated in every industry as AI supercharges already disruptive technologies from additive manufacturing to space-based Earth observation. Sectors from automotive and retail to mining, energy, and education have already faced disruptions over the last twenty years, and the cycle is beginning again. Every single one of them needs to rediscover the what they deliver and modernise the how.
Disruption does not respect legacy. It forces leaders to choose, and the wrong choice can lock a business into the wrong side of history. In every cycle, those who see their real value clearly, whether in method or in output, are the ones who navigate the reversion to equilibrium without losing their place in the market.