The term “paradigm shift” was first coined by American philosopher Thomas Kuhn in his 1962 book The Structure of Scientific Revolutions. A paradigm shift describes a fundamental change in the basic concepts and experimental practices of how something works or is accomplished.
Understanding a paradigm shift
The term “paradigm shift” was first coined by American philosopher Thomas Kuhn in his 1962 book The Structure of Scientific Revolutions.
Kuhn used the term to articulate his views about how science changes over time, arguing that it does not evolve gradually toward a truth.
He was inspired by psychologist Jean Piaget, who described children’s development as a series of discrete stages punctuated by transitional periods.
As a result, Kuhn put forth two kinds of scientific change:
- So-called normal science, which Kuhn argues is scientific work done within the bounds of an existing paradigm theory. Examples of these theories include electromagnetism, Darwin’s theory of evolution, and Newtonian physics.
- Scientific revolution, or periods of rapid development within normal science but resulting in paradigm shifts.
Although once confined to the scientific discipline, paradigm shifts have made a seamless transition to popular culture, technology, manufacturing, and finance.
What causes a paradigm shift?
Kuhn noted that for a paradigm shift to occur, scientists must first be working under a paradigm theory.
This encompasses normal scientific work, including solving problems, collecting data, and making calculations.
However, normal scientific work sometimes uncovers anomalies that cannot be explained by the current paradigm.
Once a certain number of anomalies have been detected, individuals begin to question the paradigm resulting in what Kuhn calls a “crisis”.
In the 18th century, the fact that some metals gained mass during combustion contradicted the phlogiston theory – or a belief that combustible metals contained a substance called phlogiston that was released via combustion.
This contradiction led to a new theory being developed that combustion actually required oxygen.
In the 19th century, scientists failed to detect an invisible medium called ether which they thought explained the behavior of light and gravity.
This crisis resulted in the eventual formation of the theory of relativity by Albert Einstein.
Paradigm shifts in business
Paradigm shifts in business can be seen in many contexts and are usually caused by rapid advancements in technology and society.
Here is a look at some notable paradigm shifts in a business context:
Historical marketing efforts focused on reaching as many people as possible through TV, print, radio, and billboard advertising.
Although a more personalized form of marketing was proposed in the early 1990s, technology has only very recently allowed companies to market to individuals.
Spotify and Netflix have set a high standard with their personalized content recommendations.
Consumers now expect more brand humanity from the organizations they do business with.
Stalwarts such as Macy’s and Adidas lost the trust of consumers due to a lack of transparency and data breaches.
The role of trust in consumer expectations has been made doubly important in the wake of the COVID-19 pandemic.
Companies such as Amazon, Google, and many food delivery companies were held in high regard for adapting their products and services within a pandemic framework.
Cultural and technological change
Brands that resist or ignore paradigm shifts associated with cultural or technological change are doomed to fail.
Blockbuster, Nokia, and BlackBerry are all prime examples.
The same can be said of horse and cart operators before the automobile attained critical mass in the early 20th century.
The pandemic has also caused a paradigm shift in the way we work. Companies like Zoom have benefitted tremendously from the need for remote communication capability.
Perhaps more to the point, remote work is now seen as a viable alternative to working in an office in many industries.
From sales funnels to flywheels
Before the web was a primary way to distribute a product and service, companies focused on so-called sales funnels.
While sales funnel are still extremely useful, especially to prioritize sales activities.
Digital business models are primarily built on top of flywheels—the classic example of Amazon’s flywheel.
Today successful business players have learned to switch their paradigm from linear funnels to non-linear feedback loops and flywheels.
Indeed, while the flywheel seems to follow linear logic, in reality, it creates momentum.
In contrast, the result of following processes skewed toward a flywheel unlocks, over time, non-linear growth!
From linear to platforms
In a linear business model, you build a product, sell it, and get more nad more customers.
In a platform business model, which represented a paradigm shift of the last twenty years, you need to enable a business ecosystem to flourish in order to make money.
Platform business models like Airbnb, Uber, eBay, and Amazon all make money as a result of the transactions happening on top of the platform/marketplace.
From economies of scale to network effects
Another paradigm shift, when going from physical to digital business models is the move from economies of scale to network effects.
Indeed, in the physical world, as the theory goes, as a companies scale, it can take advantage of the achieved scale by lowering the cost to further grow. the business, which is known as economies of scale.
When it comes to digital business models, instead, growth and scale can be achieved – through a paradigm shift – called network effects!
- A paradigm shift describes a fundamental change in the concepts or best practices of a way of operating. It was first described in the context of scientific development by Thomas Kuhn but applies to many other industries.
- A paradigm shift is precipitated by anomalies that cannot be explained by the prevailing paradigm theory. Multiple anomalies cause a crisis and subsequent shift in thinking.
- For businesses, paradigm shifts are apparent in personalized marketing, consumer trust and expectations, telecommunications, and cultural or technological change.