Innovator’s Dilemma

English: Disruptive Technology Graph
English: Disruptive Technology Graph (Photo credit: Wikipedia)

Been reading the book Innovator’s Dilemma by Clayton Christensen. There are a couple of graphs in the book that really resonate with what is going on with the Mobile Device market. If you have not read this book, I highly recommend it. Clayton Christensen used the Hard Disk Drive Market to study a fundamental questions that were bugging him… the questions were:

  1. Why is success so difficult to sustain?
  2. Is successful innovation really as unpredictable as the data suggest?

It is fascinating to see how the evolution of the Hard Disk Market has been following the path that he wrote about 15 years back, the only thing that is different is that his prediction of disruptive technologies has just accelerated in their adoption in the market and making a number of “successful” of even “great” companies fail in the market place. I re-tweeted

@karaswisher: It’s Official: The Era of the Personal Computer Is Over http://dthin.gs/RT6rmo  long live the PC

You read the article and it shows the slow decline in the demand for Personal Computers and the explosion in demand for devices that are Smart (read has a micro processor), Connect (read wifi enabled) and Portable (light and can be carried anywhere). These devices are distributing the work one used to do only on their Personal Computers. I believe Mobile First, Web Second paradigm which to me was first introduced by Fred Wilson through his avc.com blog is so relevant and crucial for the survival of many the currently successful software as a service companies. However, I am sure that the “currently successful” companies will face the same challenges as the previously successful companies did. There are 5 principles that is given in the book are a given they don’t change over time and if companies i.e. managers of companies ignore these principles, it will definitely lead to them loosing in the market place. The principles are:

  1. Companies Depend on Customers and Investors for Resourceskey take away for startups and managers is that they DO NOT control the resources
  2. Small Markets Don’t Solve the Growth Needs of Large Companieskey take away for a large company manager is not to wait until a market is “large enough to be interesting” but invest in smaller companies that are going after these small markets
  3. Markets that Don’t Exist Can’t Be Analyzedusing proven market research and business planning to understand disruptive technologies leading to new markets have a dismal record of predicting the trajectory. Key take away for established organizations is don’t waste time in trying to analyze the market, adopt a lean startup or customer development approach or invest in companies that are doing that
  4. Organization‘s Capabilities Define Its Disabilitieskey take away an organizations capabilities resides in two places, its PROCESSES and VALUES. The very processes and values that constitute an organization’s capabilities in one context, define its disabilities in another context.
  5. Technology Supply May Not Equal Market Demandunderstanding the difference between Sustaining and Disruptive technology adoption in the market is key to understanding the technology supply to market demand interaction. Established companies are moving so high up the value chain that they underestimate the new market at the lower end of the spectrum thereby giving rise to disruptive incumbents.