I keep coming back to Clay M. Christensen’s work on The Innovator’s Dilemma. I think the wave of technological changes that is happening as I type this post is quite dramatic. It is interesting to note that HP and DELL both reported earnings where the PC market is declining worldwide at a dramatic phase. HP’s PC business fell by 8% actually all of the business line’s top line revenue fell but of course the headlines in the media reads “At Last, HP Beats Street in Q1 Earning Report“, it only takes a simple look at the year over year trend to see that HP beat the projections of Wall Street analysts by cutting costs and laying off people, I am not sure how you can call this a turn around? anyways, I digress… if you look at DELL’s earning report it is even more dramatic, 31% decline in profits and 24% decline in Consumer business. I really think both Michael Dell and Meg Whitman need to read the book by Clay Christensen, maybe they have and as it states in the book, good well managed companies fail precisely because they have well grounded, established management practices as Clay Christensen puts it
If good management practice drives the failure of successful firms faced with disruptive technological change, then the usual answers to companies’ problems-planning better, working harder, becoming more customer-driven, and taking a longer-term perspective-all exacerbate the problem. Sound execution, speed-to-market, total quality management, and process reengineering are similarly ineffective. Needless to say, this is disquieting news to people who teach future managers!
all the things that the leadership in DELL, HP and to a large extent in Microsoft are doing is futile because they continue to look at the world as a sustainable technological improvement which is incorrect. Maybe Microsoft is doing things a little differently and maybe so is DELL and HP, but the rhetoric coming out of the PR machines in these companies is so passe.
So what is this difference between Sustaining vs Disruptive Technology you ask?
Sustaining technologies improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued. Most technological advances in a given industry are sustaining in character. On the other hand Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, and, frequently, more convenient to use.
- The Innovator’s Dilemma: Is Apple A Sustainer Or Disrupter? (seekingalpha.com)
- Clay Christensen: First the media gets disrupted, then comes the education industry [GigaOM] (gigaom.com)
- Hewlett-Packard sees sales fall 6% (bbc.co.uk)
- Information Technology’s Failure to Disrupt Healthcare (lawprofessors.typepad.com)