l09 the innovator's dilemma
TRANSCRIPT
LECTURE L09THE INNOVATOR’S DILEMMA
OPPORTUNITYTHREAT
Source: (Christensen, 2000)
The Disruptive Innovation Theory
New organisation can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents
Source: (Christensen, 2000)
Organisations successfully tackle opportunities
When they have the resources to succeed, when their processes facilitate what needs to get done, and then their values allow them
to give adequate priority to that particular opportunity in face of all other demands that compete for the company’s resources
The RPV Theory
Founded in 1880 Noted for their pioneering technology
“You press the button,we do the rest”
By 1975 they had 90%of firm and 85% of camera sales in US
Eastman pioneered dry plate technology when others use wet plate
Introduced the Brownie camera in 1900
Used film rolls
Camera for $1, then sold films
The picture quality was inferior to begin with, but consumers loved the convenience
In 1935 Kodak introduced Kodachrome,the first colour film
The picture quality was inferior to begin with, but consumers loved colours pictures
Initially available as 35 mm slides
Form the Economist article
Economist article: The last Kodak moment?
Kodak is at death’s door; Fujifilm, its old rival, is thriving. Why?
1. WheredidKodakfail?2. WhatdidFujidodifferently?
Kodak
Kodak knew that digital cameras would take over
In 1981, a team inside Kodak assessed the threat
The report said:* The quality is not there* The device is too expensive* Consumer’s desire for print cannot be replaced
Source: Decisive
Kodak
Culture
“suffered from the mentality of perfect products,rather than the high-tech mindset ofmake it, launch it, fix it.”
One company town
No criticism, changing leadershipFailed to capitalise on pharmaceutical assets
Source: Economist
Fuji
Plan: to squeeze as much money out of the film business as possible, to prepare for the switch to digital and to develop new business lines
Brutal reorganisation
Launched a line of cosmetics and sold it
Source: Economist
Kodak’s Lack of Tripwire
The report said:* The quality is not there -> We will act when more than 10% of public is pleased with
digital images
* Consumer’s desire for print cannot be replaced* The device is too expensive -> We will act when more than 5% of public has some kind of viewing system
Source: DecisiveSource: Decisive
Van Halen’s Brown M&M
They demanded M&M back stage but without the brown M&Ms
Source: Decisive
Technology is one of the major
factors in change
Surviving Technological Change
What is it that kills successfulcompanies?
Surviving Technological Change
Business models of the 21st centurymay not support the organisational
structure of the 20th century
The Innovators Dilemma
Should we focus improving our products to make them higher margin, with more performance or look at this new technology that is low performance with low margins?
Firms thatsucceed in one generation of innovation almost inevitable become hamstrung by their own success and thus doomed to lose out in the next wave of innovation
Source:(Christensen,2000)
The Innovators Dilemma means
The Innovator’s DilemmaClayton Christensen
professor at Harvard Business School
Source:Yang,Harvard
Traditional Concept of Good Management
Focus on your best customersFocus on your highest margin products
Reason for Failure?
If you become wildly successful because you do everything right,
you're doomed
Disruptive Innovation
Disruptive Innovation
Resources, Processes and Values Theory R e s o u r c e s (what a firm has), p r o c e s s e s (how a firm does it´s work), and v a l u e s (what a firm wants to do) collectively defines an organisation’s strengths as well as weaknesses and blind spots
Source:(Christensen,2000)
The RPV Theory
WHENPLATFORM
SHIFTS HAPPEN, COMPANIES FIND
IT HARD TO MOVE TO NEW
GENERATION OF TECHNOLOGY
ImageSourcePage:http://www.teach-ict.com/wp/archives/264
Only ONE established firm managed the transition from one
generation to the next
Why did they fail?
They listened to their customers
Case Study
Betware transformed from custom software
development to product development
– from technology to service
“If I’d asked my customers what they wanted, they’d have said a faster horse”
- Henry Ford
We tend to view technology based on
past usages but not the future potential
The Resistance Corollary
Even outdated things thatshould “disappear” don’t
due to supposed importance
The hardest things when you are trying to affect change
Steve Jobs Insult Response, WWDC 1997
Source:Yang,Harvard
Traditional Concept of Good Management
Leads successful companies to ignore disruptive innovations with deadly
consequences
Source:Yang,Harvard
Traditional Concept of Good Management
“In the history of business, things happen only once” - Peter Thiel
Source:Yang,Harvard
Traditional Concept of Good Management
"The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t
make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these
guys, you aren’t learning from them." - Peter Thiel
“We listen to our best customers”
The Innovation Trap
“Our customer is asking for the new product, but we don’t have it and its to late the enter the market”
The Innovation Trap
“Our customer are starting to ask for our new product.”
The Innovation Trap
It is very difficult for incumbent companies to disrupt themselves, so
usually others will do it
“Markets that do not exist cannot be analysed”
- Clayton Christensen
Adjacent Possible...a kind of shadow future, hovering on the edges of
the present state of things, a map of all the ways in
which the present can reinvent itself
StevenJohnson
NextThe Broadcast Century