THERE'S a certain irony in the mad rush by retailers to exploit the new iPhone launch.
Take JB Hi-Fi. Its stores will be trying to entice shoppers to splash out on the shiny new iPhone 5 when it goes on sale next Friday. Last year it even hoped for a lift in sales when the latest model iPhone was released. Yet at the same time, JB Hi-Fi is seen as one of the companies that is most vulnerable to rapid growth in online shopping, a trend the iPhone is encouraging.
By selling ever more smart phones, ''bricks and mortar'' retailers are helping to perpetuate a trend that's eroding their profits. But they have little choice but to keep on selling these big-ticket items that bring people in the door.
Department stores face a similar dilemma in their battle with online competitors.
Myer, for instance, makes less than 1 per cent of its sales online. But it clearly can't ignore the lower prices being charged by overseas clothing websites. To win back the online shoppers, Myer must be competitive on price. But every cut in prices makes its real stores - which still bring in the lion's share of profits - less profitable.
These examples aren't meant to make you feel sympathy for retail barons. Far from it. Instead, they show how established businesses facing huge technological change can get caught in all sorts of traps - thanks to something known as the ''innovator's dilemma''. The idea was developed in the 1990s by an American business guru, Clayton Christensen. In a nutshell, it explains why large companies often struggle to deal with revolutionary changes in technology.
It goes a long way to understanding why so many companies at the sharp end of the digital revolution - media and retail in particular - are going through such upheavals. It's also a lot more helpful than much of the public discussion of companies' handling of technological change, which often falls into one of two categories.
On one hand, companies that innovate successfully are often surrounded by a type of mythology, with much of the credit going to an ambitious or brilliant chief executive. The popular tale of Apple's late boss, Steve Jobs, seems to fit this mould.
At the other end of the spectrum, there are the stories of stubborn failure to change. When Kodak filed for bankruptcy this year, for instance, the narrative was that it refused to embrace digital cameras until it was too late.
It's all very well to blame management brilliance for success, or incompetence for failure. Good managers undoubtedly make a huge difference. But it also seems too easy.
Kodak, for instance, invented one of the first digital cameras in the world in 1975. An internal report in 1979 predicted the shift to digital photography by 2010, The Economist reported.
So what went wrong?
Kodak clearly wasn't asleep at the wheel. But it made the common mistake of mistiming its leap in response to what Christensen dubbed a ''disruptive technology''.
Kodak thought digital photography would develop gradually, and it could extract more profits from selling film in the meantime. Instead, digital cameras wiped out virtually all profits from film in the 2000s. It was a ''big bang'', and Kodak was ill-prepared.
How to cope with such a big bang is the critical challenge facing online-exposed businesses today. Just like digital photography existed for several decades before finally taking over, Christensen argues that disruptive technologies often lurk in the background before they become dominant. But when they do take off, they do so rapidly. And large, established businesses tend to struggle to adapt.
But why do big companies tend to find it hard to respond to a disruptive technology?
For starters, the priority of big business is often sustaining established profits rather than exploring ideas that may be profitable later. As well, large corporations have a natural conflict in dealing with truly disruptive changes, because these changes often hurt their existing business. Executives at Myer, for instance, may baulk at diverting shoppers to their online store out of fear it will mean fewer people visit their real stores. Newspapers around the world have also been reluctant to ''cannibalise'' high-yielding print advertising profits in favour of less profitable digital ads.
This is the essence of ''the innovator's dilemma'' in big business. While small start-ups can throw themselves into some new industry, big companies often have a vested interest in maintaining the status quo. When seen in this light, the upheavals taking place in companies on the digital coalface make more sense. And few industries are more exposed to the digital big bang than media and retail.
According to a report by Deloitte last week, these two sectors will experience changes of more than 35 per cent in key metrics, such as revenue or cost structures in the next three years due to the digital revolution.
This is hardly news to shareholders or workers in these sectors, who have been buffeted by digital disruption for years.
But strange as it may seem, the messy changes in response to technology leave the economy better off overall. Why? Because they lift competition, which makes the economy more productive.
Just like cutting tariffs in the 1980s put competitive heat on manufacturers, digital technology is now exposing other industries to more competition. Before online shopping, setting up a retail business required renting an outlet and considerable expense promoting the business. Now a small retail business can be started from home, and online advertising can be much more aimed at shoppers.
The result from all that extra competition tends to be lower prices for shoppers. There are also benefits you can't measure in dollars, such as the extra choice available, or the time saved by online shopping.
So although the digital disruption is causing plenty of angst for individual companies and their workers, the economy is better off as a result.