The Innovator's Dilemma
"This book ought to chill any executive who feels bulletproof … and inspire entrepreneurs aiming their guns." Forbes.
Get it from Amazon. (And no, I don't make a commission).
I recently finished reading The Innovator’s Dilemma by Clayton M. Christensen.
When companies achieve success, they become "blinkered" by the feedback their customers give them. In a particular market, businesses will create incremental improvements, or sustaining technologies.
Think of disk drives that always seem to squeeze in more capacity (and therefore value) for the customer. And therein lies the dilemma: Customer focussed management is ironically the very cause of the business being left behind when a new disruptive technology changes the rules.
A good example may be when solid state disks (SSD) come of age, at a price-point that is affordable. Where will the hard disk manufacturers of today be, should SSD succeed? All that investment in manufacturing and refining the spinning disks of today… who will make the decision to shut down the factory?
People in a successful business
Managers at big companies are trained (and rewarded!) to make decisions that generate profits.
On the other hand, innovative ideas take time to make money, and not all of the ideas come to fruition or go on to generate a profit. The simple fact that is that employees and managers who spend time on projects that don't make money, tend not get promoted. They get the sack. "Good" business practices therefore filter through from the managers to the employees, and new ideas that don't meet the criteria are quickly squashed.
Christensen cites several examples where a 'disruptive technology' caused problems for bigger companies. New ideas are ignored by the big companies because they are customer focussed, and their customers tell them that they don't (yet) need the new technology. When the disruptive technology comes of age, it is too late for the big companies to compete.
In an attempt to catch up, they then apply their know-how and retrofit the new technology to their existing markets and customers. This seldom succeeds, because what is needed is needed is a fresh approach: an office far away from the head office, with its own budget, objectives and management – unencumbered by the now-outdated thinking of the successful parent company.
History shows that surprisingly few overcome this dilemma.
Steve Jobs is a fan
Steve Jobs, once again, has been hailed as a trend-setter when it comes to innovation. During his exile from Apple, Jobs noticed that the organisation had changed and, as a result, profitability outweighed passion and innovation. The priorities had flipped and the goal was solely to make money.
When Jobs returned, he completely upended the company. Even though the company arguably needed money more than ever before (being three months away from bankruptcy), he remarkably shifted the focus away from profits.
This change of attitude took Apple from three months away from bankruptcy, to one of the most valuable and influential companies in the world.
Jobs once said he was "deeply influenced" by The Innovator's Dilemma and listed the book as one of his all-time favourites.
I bought a hard-cover 1997 publication for about 60 pence plus delivery from Amazon. I wondered at the time why it was so cheap – then noticed a few days after the book arrived that a there was an updated, 2011 publication. I have now bought the updated publication too! (And no, I don't get a commission).
What does this blog post have to do with my CRM Business?
In short, nothing.
In the last two years, I started making a note of book recommendations. Whether in a business or social situation, I make an effort to jot the title down, and then just buy the book. My thinking is that if someone else found it interesting or helpful, then it is likely to influence me in a positive way. Occasionally, a book just hits you between the eyes and you just have to share it with the world.
If you are an innovator, entrepreneur or just have an enquiring mind, do connect to me on LinkedIn.
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