It’s hard to think of a book more influential to business strategic thinking than Clayton Christensen’s The Innovator’s Dilemma. If you haven’t read it (or grasped the concept), you are way behind anyone in thinking about innovation and competitive markets, especially in the technology world. I’ve talked about it in the past, and I’m sure many of you are familiar with it, or have read it, but I’m reminded of one of the key points made in the book that seems to be a key stumbling block in some of the discussions we have around here. The reminder comes from a blog post that Jay Rosen recently mentioned, talking about Christensen’s main point, in relation to the new industry, focusing mainly on why so many companies fail at innovating:
The management trap of disruptive technology is insidious because, like all good traps, it doesn’t look like one at first. It looks prudent and fits a corporate culture of conservative, data-driven management. But incumbents can’t recommend change because it would mean recommending something less profitable, less accepted, and less proven than what they’re already doing.And that’s the trap.
Disruptors have no such inhibitions.
This is the key point, and while I’m not going to talk about what that post is actually discussing (the failure of some companies to be able to innovate due to this issue), I am going to use it to try to make a particular point, and hopefully clear up a misperception. There are two points that we’re often trying to make around here, and the problem is that those two points often get conflated.
- What’s happening in the market is going to happen anyway.
- The end result will actually be better for everyone, which is why it’s important to embrace the innovation
The two points are related — and, it’s actually one of the key points made in Christensen’s famous chart — but they are different points:
So the first point that we talk about all the time is that these changes in the market are happening — no matter what. As much as the legacy providers don’t like it, they don’t seem to offer any serious alternatives, other than denial or screaming about how much they don’t like it. They don’t offer any serious alternatives.
But, the second point is also important. Historically, pretty much every disruptive innovation has followed Christensen’s curve, meaning that the eventual outcome really is a better overall solution for the market, and thus makes the market much bigger, even if it doesn’t look that way at first. But, the problem is that it’s difficult to see that. So, when we get industry defenders (whether it’s the recording industry, the movie industry, the newspaper industry or others) insisting that it doesn’t make sense to jump off that cliff and embrace these new offerings, because the market just isn’t big enough (or, as short-sighted Hollywood execs have taken to saying: “turning analog dollars into digital dimes”), we note that they’re absolutely making the management trap described above.
They’re refusing to make the leap because of a misunderstanding of both of those points — but they’re often focusing too much on arguing against point two, that they ignore point one. If you want to believe that point two isn’t true, that’s fine (even if you turn out to be wrong). That doesn’t excuse not being able to respond to point one. If you really think that the market is turning into digital dimes, you at least need to do something about point 1: what are you going to do about it. Because, for the most part, it seems like those legacy industry’s aren’t doing a hell of a lot, other than complaining about what’s happening, and then confusing that with point number 2.
They’re refusing to do anything because they think that the new market is too small — not realizing that the existing market is going to zero anyway. So even if you believe that the new market isn’t going to be as big (on which point you’re almost certainly wrong), you’re making a mistake in thinking you can just do nothing. What’s happening is you’re comparing the new market to the old market — which no longer exists.
Permalink | Comments | Email This Story
From Techdirt