Clayton Christianson (writer of the Innovator’s Dilemma) claims that concentrating on customer needs and profit maximisation can ruin a successful company (Landley, 2000, p1). This is because a disruptive technology can come along, initially unwanted by consumers and initially worse than existing solutions, but with the potential to outgrow and outperform the existing solution. It’s not seen as a threat, but over time it can overtake a business’s core market. While this may be true of some new technologies the majority of them are failures, regardless of how much potential they have. So businesses need to introduce them in a controlled way, without investing too much time and effort and without (initially) affecting their core business.
Innovation often goes unrewarded when new products are introduced and managed in the wrong way. “The bones of pioneers who started too early often paved the road for others who started at the right time” says (Wesley, 1996, p8). He goes on to say, “You may wait so long to begin an inevitable transformation that it’s impossible to catch up”. This means that if companies stagnate and wait too long to introduce new technologies that they may well “miss the boat”. Conversely, companies cannot just be “visionary” or driven by change – they need to find a balance between introducing disruptive technologies too quickly and resisting those technologies for too long.
Change is essential, but people are generally too busy to change (Wesley, 1996, p11) so they tend to rely on older systems that perform up to current expectations. But these systems are often performing at their peak and can’t adapt to newer technologies or handle additional load. Companies often invest in sustaining technologies (those that improve existing products) rather than taking a risk on disruptive technologies.
(Christensen, 2000, p1) Has determined that there are 3 factors, which affect a company’s ability to be innovative – there are:
1. Resources (equipment, staff, cash, etc.) – these are flexible
2. Processes (How the above resources are used) - mostly inflexible
3. Values (e.g. A company generally does not concentrate on large and small customers) - mostly inflexible
When a disruptive technology comes along a company generally needs to change its business processes to accommodate it. Larger companies will also tend to concentrate on the larger revenue generating customers rather than the small ones; but it’s the smaller customers that are more likely to use the disruptive technology. So, companies should not ignore disruptive technologies, but they should not quickly change their core business each time a new threat comes along. They should manage newer technologies in relative isolation to their more established ones, investing more, over time into new, distinctly separate business channels.
The exception to the hypothesis is the case where an organisation is a new start-up company; the best choice for these companies is to embrace a disruptive technology, so that one-day they can be a market leader when that technology becomes a sustainable technology (Silverthorne, 2002, p1).
Many companies ignore the emergence of a new technology, misread the market, or jump head-on into the new technology without considering the market realities before doing so. Here are some examples:
· Xerox is an innovator, but they consistently mismanage disruptive technologies. (Wesley, 1996, p8) cites an example, Xerox made some of the most early personal computers; they lacked a proper approach to marketing and companies like IBM had taken over the market by the mid 80’s. Other examples include the Model A Copier, which caused them huge losses during the 50’s, and their loss of the mouse and associated GUI to Apple in the 80’s (although (Mcalister, 2000, p1) disputes this as a myth, referring to amongst other things, Douglas Englebart’s trackball/GUI demonstration in the 1960’s).
· (Silverthorne, 2002, p1) in an interview with Clark Gilbert (Harvard business school) examines the impact of the Internet of the Newspaper business. Gilbert says that most Newspapers initially tried to fit their existing advertising model (their main revenue generating mechanism) to the Internet. This didn’t work as Internet advertisers generally seek a more interactive approach that directly targets individual consumers.
The gradual introduction of disruptive technologies makes more sense, for example, the Newspaper businesses that eventually separated their print and Internet channels are now more successful than those that invested early by fully integrating both channels, disrupting their core business in the process.
(Wesley, 1996, p12) mentions research by Kotter and Heskett which states “A strong culture in a successful company first prevents traditional adaptations to shifts in the external environment, then smothers efforts at major change to catch up with the times”. These companies tend to try to minimize risk and enforce corporate conformity – which severely limits their exposure to disruptive technologies. This may seem like the wrong approach but caution can be rewarded. (Silverthorne, 2002, p1) says that Minicomputers were launched in the 1967 (a disruptive technology), but they did not outperform mainframe sales until the late 80’s. Both markets grew for some time after the introduction of the new technology.
FUTURE
DIRECTION
The Internet is rapidly impacting all areas of industry, as a disruptive technology it has the potential to pervade almost every business channel. It’s hard to predict the affect of increased bandwidth and connectivity on specific channels, but the resulting management issues are going to be more complicated. An organisations inability to pinpoint the future impact of emerging Internet technologies may seriously damage its competitiveness. (Igbaria, Shayo, Olfman, 2000, p3) propose that the very way we work and interact now is set to change; virtual work with virtual teams break down cultural and geographical barriers and may change existing business processes. Software that allows virtual teamwork, collaboration, knowledge sharing, and remote access is a disruptive technology that threatens the traditional “9-5 at the office” model.
REFERENCES
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Leading Your Organization through Change, 1996 Doug Wesley
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Computer Myths and Folklore: Apple's raid on XEROX
PARC, 2000 Jon Mcalister http://bigmac.stanford.edu/myths/myth2.html
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Read all about it – Newspapers lose the Web War, 2002 Sean Silverthrone http://www.manyworlds.com/index.asp?from=TL&firstname=Sean&lastname=Silverthorne
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Motley Fool reviews “The Innovator’s Dilemma”, 2000 Rob Landley http://www.fool.com/news/foth/2000/foth001002.htm
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Measuring the Future 2: Navigating the New Economy, Keynote “The
Innovator’s Dilemma”, 2000 Clayton Christensen http://www.cbi.cgey.com/events/pubconf/2000-10-4/session/keynotes/innovator.html
· On becoming Virtual: The Driving Forces and Arrangements, 1999 Magid Igbaria, Conrad Shayo, and Lorne Olfman