We Share 99% of our DNA with Chimpanzees

In business, as in biology, sometimes it is just the 1% that is different that matters, and you can ignore the 99% that is the same. It doesn’t matter if we share 99% of our DNA with chimpanzees, because the difference is all in the 1%.

Successful entrants often only change a tiny percentage of the business model. Netflix produces video entertainment in much the same way as cable networks did for decades, it’s just that

they deliver it on-demand over the internet. Still, an on-demand model is better than scheduled linear programming across every dimension, so we have mostly shifted our consumption of scripted entertainment from linear cable networks to on-demand streaming providers.

This phenomenon is everywhere. New airplane models and engines might differ from the old ones by slightly improving capacity and fuel efficiency, and are otherwise identical; still, that is often enough to render the old models fully obsolete.

Note that this only holds if the 99% is actually the same. Many (if not most) new technologies are worse across some important dimensions. Planes are fast and fuel efficient but are only suitable for longer trips because they require going to an airport, enduring a long boarding and takeoff process, and then doing the reverse on the other end. Despite being slower and more expensive on a per-mile basis, trains are better for shorter trips because they are quick to board and leave and you start and end at stations in the city.

Nevertheless, people get hung up on the idea that two products need to be drastically different to generate meaningfully different outcomes. If a new product is 99% similar to an existing product X, people immediately exclaim: “X. You invented X.”

In our ride-hailing example, skeptics make much of the fact that ride-hailing is mostly the same as taxis, and devote much attention to proving this; they both use drivers, cars, fuel, etc. The difference is in using software to manage dispatch and improve the user experience. No one denies the other 99% is the same; in fact, that is a key selling point!

The Midwit Trap