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From Luddites to Fruit Flies (Part 2 of 2)

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Title: From Luddites to Fruit Flies (Part 2 of 2)


1
From Luddites to Fruit Flies (Part 2 of 2)
  • IEM5010 Summer 2003
  • Paul E. Rossler, Ph.D., P.E.

2
The Innovators Dilemma
  • the logical, competent decisions of management
    that are critical to the success of their
    companies are also the reasons why they lose
    their positions of leadership. (Christensen, p.
    xiii)

3
A technological mudslide?
  • neither the pace nor the difficulty of
    technological change lay at the root of the
    leading firms failures. The technology mudslide
    hypothesis was wrong. (Christensen, pp. 8-9)

4
ruled out poor management as a root cause (p.
97)
  • sensible resource allocation processes were at
    the root of companies upward mobility and
    downward immobility (Christensen, p. 80)
  • to expect the processes that accomplish these
    things also to do something like nurturing
    disruptive technologies (p. 98)

5
Disruptive technologies
  • Result in worse product performance, at least in
    the near term
  • Bring different value proposition
  • Attributes that make them worthless in mainstream
    markets become strongest selling point in
    emerging markets
  • Tend to be simpler, cheaper, and more reliable
    and convenient than established products

(Source Christensen, p. xv, 190)
6
Sustaining technologies follow conventional
technology S-curve
Source Christensen, p. 40
7
Disruptive technology S-curve defined by
different y-axis
Source Christensen, p. 41
8
Different value propositions and therefore
metrics of success
  • The performance of the first backhoes was
    measured differently from the performance of
    cable-actuated equipment. (Christensen, pp.
    66-67)
  • The organization was free to succeed along
    metrics of success that were relevant (p. 110)
  • played havoc with the accustomed metrics (p.
    111)

9
Response of established firms
  • Established firms confronted with disruptive
    technology typically viewed their primary
    development challenge as a technological one
    (Christensen, p. 191)

10
A tendency exists toward northeast migration
Source Christensen, p. 66
11
A different response by entrants
  • The firms that were most successful in
    commercializing a disruptive technology were
    those framing their primary development challenge
    as a marketing one (Christensen, pp. 191-192)

12
A basic problem for established firms moving
down-market
  • the problem established firms seem unable to
    confront successfully is that of downward vision
    and mobility, in terms of the trajectory map.
    (Christensen, p. 24)

13
Value networks affect perceptions of innovation
Source Christensen, p. 33
14
Three barriers to downmarket mobility
  • Three factors the promise of upmarket margins,
    the simultaneous upmarket movement of a companys
    customers, and the difficulty of cutting costs to
    move downmarket profitably together create
    powerful barriers to downmarket mobility.
    (Christensen, p. 87)

15
Along with pressure for quarterly results
  • Building such markets entails a process of
    mutual discovery by customers and manufacturers
    and this simply takes time. (Christensen, p. 131)

16
And management philosophies
  • Philosophies such as management by objective and
    management by exception often impede the
    discovery of new markets because of where they
    focus management attention. (Christensen, p. 157)

17
Allocation innovation two sides of the same
coin (p. 103)
  • disruptive projects stalled when it came to
    allocating scarce resources among competing
    product and technology development proposals.
    (Christensen, p. 42)

18
Increasing the level of difficulty
  • Every innovation is difficult. This difficulty
    is compounded immeasurably, however, when a
    project is embedded in an organization in which
    most people are continually questioning why the
    project is being done at all. (Christensen, p.
    134)

19
Matching innovation requirements to capabilities
Christensen, p. 177
20
Senior managers may have less control than they
think
  • the organizations middle managers play a
    critical but invisible role in screening these
    projects. (Christensen, p. 82)
  • In practice, it is a companys customers who
    effectively control what it can and cannot do.
    (p. 101)

21
Resources, processes, and values influence
response
  • Yet, resource analysis clearly does not tell a
    sufficient story about capabilities.
    (Christensen, p. 163)
  • This means that the very mechanisms through
    which organizations create value are
    intrinsically inimical to change. (p. 164)
  • Clear, consistent, and broadly understood values
    , however, also define what an organization
    cannot do. (p. 165)

22
Pressure to succeed influences decisions made
  • Projects that fail because technologists
    couldnt deliveroften are not (necessarily)
    regarded as failures at allBut projects that
    fail because the market wasnt there have far
    more serious implications for managers careers.
    (Christensen, p. 82)
  • Rightly or wrongly, individual managers in most
    organizations believe they cannot fail. (p. 155)

23
Core competence probably not the answer
  • In practice, however, most managers have found
    that the concept is sufficiently vague that some
    supposed competence can be found to support a
    bewildering variety of innovation proposals.
    (Christensen, p. 162)

24
Tried-and-true tools and techniques fall short
  • Markets that do not exist cannot be analyzed
    Suppliers and customers must discover them
    together. (Christensen, p. 143).
  • It is simply impossible to predict with any
    useful degree of precision how disruptive
    products will be used or how large their markets
    will be. (p. 154)

25
The end result Performance oversupply attack
from below
Source Christensen, p. 16
26
The basic pattern
  • Disruptive technology first developed within
    established firms
  • Marketing then sought reactions from lead
    customers
  • Established firms step up pace of sustaining
    technological development

27
  1. New companies formed and markets for disruptive
    technologies found
  2. The entrants moved upmarket
  3. Established firms belatedly jumped on bandwagon
    to defend customer base

(Christensen, pp. 43-48)
28
Three potential strategies
Christensen, p. 197
29
A priori, who knows for sure?
  • Experts lined up on both sides of the question,
    offering HP extensive advice on which technology
    would ultimately become the printer of choice
    (Christensen, p. 116)
  • what is obvious in retrospect might not be at
    all obvious in the thick of battle.
    (Christensen, p. 196)
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