Innovation and Disruptive Technology

The Innovation Economy: How Technology Is Transforming Existing Industries and Creating New Ones - Clayton Christensen, MIT Presentation

I've logged my unedited notes here:

The Innovation Economy: How Technology Is Transforming Existing Industries and Creating New Ones - CLAYTON CHRISTENSEN

http://mitworld.mit.edu/video/108/

Transcription notes:

If I wanted to unseat a major player or create a new industry, how would i do it, how do I know a winning strategy when I see it?

talks about medeival aviators jumping off high places flapping their fabricated wings...mentions 12th century writer - bernuli (sp) - wrote discussing why humans can't fly like birds, because birds have hollow bones.

Laws of nature: as we continue to understand laws of nature, probablility of success in those areas are greater.

want to identify and understand those concepts that increase the probability of success.

Discuss some of those variables that contribute to the probability of success.

Disruptive Technologies. a driver of leadership failure and the source of new growth opportunities. trajectory of technological progress statistically outstrips the consumers opportunities/abilities to use it...ie, the technology offshoots the user's chances to use it...ex: intel has overshot what the average computer user can use with their big 2gigaherts boxes that the average word processor guy never has need for...

Why is it that leaders in an industry get killed? The paradigm has been that they just get big and slow through beauracracy, etc...but findings are that this is not necassarily true...

nearly100% of the time...the companies that adopted the new technologies were the old companies...

Disruptive Technologies, not because a dramatic breakthrough...not because it was a breakthroug but because......

discusses how all the mini computer companies like digital, et al, all fell apart at the same time...and this helped him to understand what was going on...

These companies were not technologically behind, they had continued their regular expected pattern of sustained innovation...

But the new microcomputers - apple II were disruptive technologies...and they were kids stuff, toys...apple ii was for kids, he says...

not a single one of digital's customers could use a personal computer...

talked about intel in late 80s.

Disruptive Technology should maybe be called trivial or straightforward technology that disrupts the business leaders...

Digital had a model that minicomputer was complex and had to have training and support, etc...

It is difficult for managment to move downmarket, because their manager sense wants them to move upmarket where profit margins are higher...but it is this tendancy that brings about the situation of losing focus on the downmarket, and opening up opportunity for disruptive markets to come to play...

If innovative company, seeks to introduce a better product that what is available in an existing market to their customers...probablity of success is low...

However, if you enter with a disruption that the business leaders find irrelivant, and that looks unnattractive financially, probability of success increases...about 6 times higher, because you have seized a territory that the leaders just don't want.

a worry about optical communications...problem is the inherent belief about the upmarket region (of the graph he is showing)...

two types of disruptive technologies. celecron disrupting pentium, an example of intel successfully disrupting itself - paying attention and satisfying both upmarket and downmarket ends of the scale...rather than providing an opening for others to do it...and thereby staying on top of things.

type 2 disruptions don't create new markets, but create a low cost market that enable...

disruptive technology enables a larger number of people to start using a technology than before...

Personal computer is type 1 disruption. Creative creation often goes on before creative destruction...

Litmus tests: are they targeting obvious established market, or are they targeting a new target of users? The latter has greater success. Example: Transistor vs. vacuum tubes. How the transistor came into disruptive use is that it was put into hearing aids (not targeting the tv/radio/etc consumers using vacuum tubes in tvs, etc)..then in 1955 sony put it in the pocket radio - good for low end customers (kind of crappy)...new market emerged (targeted to new customers - teenagers)...1959, portable tvs, competing against non-consumption...people were delighted for crummy project, because otherwise they had no product..

In 1960s, solid state revolution occured, vacuum tube companies dissapeared...

Voice Recognition. Innovators in the industry approach discussion. IBM Via Voice, targeting wrong customers (a secretary)...it isn't good for this customer,...needs to be better, faster, cheaper, etc...BUT where it is taking off is 'press or say 1' apps, or robots, or chat stuff...IM...blackberry/palm VII...

Therefore, Litmus Test: Does it target a large population who historically lacks the money or skill to participate in the market..

Early years of most industries, when product isn't good enough...to compete, you make better products...usually proprietary and interdependently designed...

You have to do everything in order to do anything...so when the product isn't good enough (early on) it is advantageous to have an interdependent proprietary design/model...

Once you've overshot, how do you compete to win business in the oversatisfied population? You change business...to be fast, flexible...and evolve to become more modular, open, and disintegrated, or independently...

Being integrated or not integrated at the appropriate time is very important...

Apple originally was closed most integrated...but as performance got better & better...proprietary architecture had to give way to open....but apple was unable, and market changed (when apple was in trouble)..

In beginning, to try to have modular industry standards is premature. Japanese company done the best is most proprietary...he suspects that this will filp however and they will open up...

MS .NET Strategy is probably a good one...

Suns is probably premature...
Todd Hopkinson