“The Innovator’s Dilemma” The Innovator's Dilemma - Wikipedia covers this kind of issue in detail. Companies can innovate with new technology, but have a hard time dealing with a new kind of value to the customer. All the rewards to employees and managers go to those who are improving things in recognizable ways - while a small company is finding a dissatisfaction that hasn’t yet been recognized. So the Blockbuster manager making great deals to get the latest movies on their shelves at low prices, or to accurately predict how many copies of Kickboxer 4 is needed at each store to satisfy the customer, or starts selling popcorn at the checkout counter is innovating (and probably making the company a lot of money) in the recognizable DVD market - while Netflix is appealing to a few people who live out in the country, or hate crowded stores, or like the kind of obscure movies that never show up at Blockbuster - but Netflix happens to be setting itself up for the next growth industry, by having a business model that naturally can grow into a streaming service.