"Markets that do not exist cannot be analyzed: Suppliers and customers must discover them together"
How does one change the game for an industry if it is yet to be discovered? When does it call to stay within the trends or leap ahead to fix a gap that a market doesn’t realize they need yet?
Clayton M Christensen takes these very questions to deliver answers around the world’s greatest innovators: the ups and downs parallel with theory of disruptive technology within a specific market. Encouraging us to focus on these specific concepts, Clayton advises when it makes sense to:
- Listen to customers
- Invest in developing lower-performance products
- Pursue small markets at the expense of larger ones
The Innovator’s Dilemma challenges the fears that companies to this day face in ever changing technology: How do we stay ahead of the curve? How do we cater to our customers? What key factors are needed that won’t tip the scale? Through the detailed look of specific industries (e.g. The Disk Drive Industry and Mechanical Excavator Industry) we are able to visualize that while two companies can follow the exact same recipe, it doesn’t always churn out the same results. The reader is forced to revisit this notion of disruptive vs. sustaining technology to come up with the decisions of what will be the balancing factors needed to assist the growth of their company and have it complement the growth of their customer’s needs.
The Big Idea
Understanding failure with disruptive technologies
"Generally disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler in prior approaches"
While companies may have the resources to deliver these changes, it is back to the balance of understanding trends of the market: when is it the right time to make a change between the vision of a company vs. the reactions of a customer’s needs? To understand this, we must consider a couple things when dealing with disruptive technology. These points are:
- Is it straightforward and does it solve a problem consumers already see?
- Does it provide a tool that consumers never thought were feasible?
When does it makes sense for a company to achieve a similar concept that delivers better performance or provides something new that wasn’t previously possible? Or how much control do the consumers that are able to influence certain trends have? By taking these points, not only does failure occur on a technology standpoint but also on an economical.
While we may not be the next innovators within the disk drive industry or create a new piece of machinery for CAT or John Deere, we can still put these practices into play within our own workforce and come up with new initiatives to propel ourselves forward. With what we want to create and engage – whether it to be ourselves, colleagues or consumers – how do those factors come into play? Will it have an impact? And if it does, how?
"Organizations will survive and prosper only if their staff and systems serve the needs of customers and investors by providing them with the products, services and profit they require"
Another balance to the scale is determined around the % of resource allocation that occurs within a company; how much of it is met based off of a customer’s demands vs. a company’s idea. The success of companies and innovation drives around the simplicity of balance between how much a company gives back to the demands of a customer. Tailor the technological innovations to resource dependence: customers need the company’s product in order to survive, but also have companies fine tune those resources to reflect the demands that customers deserve.
An example that you can use to take action immediately is to think about what it is you’re providing for your consumers and how it impacts them. Then think about what resources are available to make sure that your idea is properly executed. Is the right information being communicated properly? How is the staff adapting to the information provided? Is it enough to give back to the consumer or will it get lost? How will it impact the consumer who receives?
Appraising an organization’s capabilities and disabilities
"Managers who face the need to change or innovate, therefore, need to do more than assign the right resources to the problem. They need to be sure that the organization in which those resources will be working is itself capable of succeeding"
To follow through with the balance of disruptive technology and demands from the customer, the book offers a framework for companies to reflect upon themselves by understanding their own advantages and disadvantages. Will the disadvantages cause a disturbance and prohibit them from achieving their successful ideas? Clayton provides an “Organizational Capabilities Framework” companies to utilize when facing a shift within an organization’s model. The breakdown of the three categories are:
- Things or assets that can be physically brought into a company. Examples include new hires with desired skills, acquired products, new equipment/brand/designs and relationships built around the company.
- A series of patterns and steps taken to fine tune and transform the way a company provides its product to consumers.
- Steps include multiple different factors such as technology, communication, information, people who ensure that a task is executed frequently with minimal mistakes.
- Prioritize the way a decision is made based on what is important for the company. This can be based on a technical, economical or social priority.
These three categories overlap but pose a great exercise for leaders to take into consideration when constructing and reviewing their business model. Going back to that initial idea and concept that leaders wish to convey to their consumers, it is important to refer to the “Organizational Capabilities Framework” and applying these three categories. What disadvantages come up? How can they be resolved?
While this book is tailored to challenge leaders within an organization, it provides thought-provoking concepts on how we can influence the actions and behaviours of our customers. By understanding the balance between sustaining and disruptive technologies, The Innovator’s Dilemma encourages us to not only reflect on the reactions caused by our direct customers but challenge ways in which we can be proactive within our own organizations as well.