Is The 'Innovator's Dilemma' About To Get Disrupted By 'Big Bang Disruption'?

from the perhaps-an-evolution dept

As some of you know, I'm a big believer in the concepts behind Clayton Christensen's Innovator's Dilemma, which explain how disruptive innovation almost always takes incumbents by surprise. A few years ago, I even did a two minute video in which I tried to succinctly explain the innovator's dilemma (an explanation later endorsed by Christensen himself). The basic idea, if you're unfamiliar with it, is that disruptive innovations often hit the market by appearing to be "worse" than the legacy product, and thus the incumbents tend to ignore it. They brush it off as being too crappy or too small or too low end or whatever, and they focus on the "high end." What they often fail to take into account are the basic trend lines. The disruptive innovator tends to improve their product at a much faster rate, and, at some point, hits the quality level where, even if it's still worse (or possibly significantly worse) than the incumbents' offerings, it's actually good enough for their needs. When you look at innovative markets through this prism, you can see it happening over and over again.

So, I read, with much interest, a new piece by Larry Downes (a friend, and someone who has posted here on occasion) and Paul Nunes in the Harvard Business Review about Big-Bang Disruption, in which they argue that the old Innovator's Dilemma model may be somewhat obsolete. This is due to a variety of factors, focused around the fact that disruption comes faster than ever before and, these days, frequently comes out of left field -- from someone that people didn't even think was a "competitor." It's a really good read that basically says that a combination of factors, mainly centered around the ability to build new products and services in almost no time and requiring almost no resources, has allowed for a world in which lots of people are rapidly innovating experiment after experiment, and some of those catch on and go viral in an instant -- frequently disrupting existing players, who never even had a chance to see the disruption coming.

It's a great piece that I highly recommend for folks who are interested in the nature of disruptive innovation -- though I'll push back on one point. I really don't see how this conflicts with or is any different than the innovator's dilemma. It just shows the same basic thing happening more quickly. The main argument that Downes and Nunes use to argue that this is different doesn't so much focus on the innovator's dilemma, but rather focuses on how incumbents should respond to disruptive innovation. In the past, it has been argued, that if you understood the dilemma properly, you could spot the disruptive innovator's early, and then move to buy them out or build a viable competitor quickly. In practice, however, we very rarely see that happen. The number of legacy players, who have succeeded in responding to disruptive innovation, remains an astoundingly small list. And I'd argue that part of that is because disruptive innovation always seems to come out of left field and always seems to come much faster than incumbents expect.

That doesn't detract from the main point of the article, however, which does show how these things are happening faster and faster, and a lot of that is because of the ability to just throw something out there for fun, rather than investing millions of dollars early on in an idea that might never even work.
Right now, at Silicon Valley companies large and small, engineers and product developers are getting together late at night in what are popularly known as “hackathons.” Their goal is to see what kind of new products can be cobbled together in a few days. You know, for fun. The innovators are not even trying to disrupt your business. You’re just collateral damage.

Twitter, for example, began its commercial life humbly at the 2007 South by Southwest conference, following its invention at a hackathon the year before. Its developers wanted to test sending standard text messages to multiple users simultaneously, an experiment that required almost no new technology. Today the company boasts more than 200 million active users and half a billion tweets a day. Twitter has destabilized everything from the news and information ecosystem to unpopular national governments.
While I think the article underplays this somewhat, a big part of why these Big-Bang Disruptions can succeed in this way has a lot to do with the fact that not only can ideas hit the market incredibly fast, but they can also fail fast. We're in an environment where so much innovation for new services can not only be built quickly but people can learn and adapt or even shut down just as quickly. One of the biggest reasons why many people believe Silicon Valley remains the home of so many innovative companies is because there's very little stigma associated with failing. In many circles it's a badge of honor. But, in this environment, where it's so easy to create, that means that innovators also get to test a lot of ideas quickly, to throw out the bad ones, and to focus on the winners. This is so much more productive. On top of that, Downes and Nunes point out that each of those failures might not really be "failures" so much as priming the demand pump by teaching the market what's possible.
The adoption of disruptive innovations is no longer defined by crossing a marketing chasm. Instead, the innovators collectively get it wrong, wrong, wrong—and then unbelievably right. That makes it even harder for businesses wed to today’s products and services. All those failed experiments seem like evidence that the emerging technologies just aren’t ready. In reality, in today’s hyperinformed world, each epic failure feeds consumer expectations for the potential of something dramatically better.
The one other bit of insight that I pulled from the article was that this ability to build things quickly and cheaply, but also to do so online, where one can make use of a variety of tools to have a direct relationship with a community, users, customers, etc., means that companies can burst out of the gate with amazing products that aren't just disruptive by being worse than the market leader, but they can actually hit the market while being better than the leader. The authors write about how various strategy experts in the past have suggested that innovators need to focus on a specific value: be cheaper, be more innovative or be more custom (i.e., most customer focused), but that trying to hit on more than one category will dilute the message and the product. However, thanks to a variety of new services and products, it's absolutely possible to hit the market while being cheaper, more innovative and more closely connected to the customer. And that certainly makes it tough to be an incumbent.

In a separate piece, Downes goes further in explaining the policy implications of this argument, focusing on how these "big bangs" suggest that regulators need to tread even more lightly, as new disruptive services can completely change a market in a very short period of time -- in fact, in time frames that many regulators might not even be able to properly comprehend.
Quickly and efficiently, a predictable next wave of technology will likely put a quick and definitive end to any “information empires” that have formed from the last generation of technologies.

Or, at the very least, do so more quickly and more cost-effectively than alternative solutions from regulation. The law, to paraphrase Mark Twain, will still be putting its shoes on while the big bang disruptor has spread halfway around the world.
All in all, a very interesting theory with some important points that are worth thinking about. I look forward to the eventual book on the subject by Downes and Nunes, though I still think that setting it up as somehow a rethinking of the Innovator's Dilemma doesn't quite make sense, as I believe that what they're describing really is just a more detailed explanation of how current tools and technologies have accelerated the innovator's dilemma. It does, potentially, upset the businesses of those who claim they can train incumbents in how to avoid the innovator's dilemma, but I'd argue most of those efforts were never that successful in the first place anyway.


Reader Comments (rss)

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  •  
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    Dave Nelson, Mar 8th, 2013 @ 7:23pm

    And so we get back to the buggy-whip manufacturer's dilemma. The incumbents are spending increasing amounts of money trying to preserve their position and profits by buying legislators and legislation, and litigating based on that law. They should be spending it on innovation where it might count. They always fail to recognise the fact that they have been superceded until it's too late and they're almost out of business, which is the reason for the mad scramble for law. Yes, there are still buggy-whip makers out there, but they are a very small fraction of their previous might, and are serving a very small niche market. Besides, R&D is SOOOO expensive for so little return, or so says the stockholders, and those presidents want to keep their jobs, after all.

     

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      Anonymous Coward, Mar 9th, 2013 @ 12:19am

      Re:

      That made me think that the lobbying is kind of disrupting disruptive innovations, as the big corporations just try to make them illegal and ban them (like how they tried with Uber, for example).

      Fortunately, we're seeing more and more disruptive innovations, and they are happening lightning fast, and it might not give the corporations enough time to react against them. Although it's still a big issue, and it does manage to stop or slow down some of them.

       

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    alanbleiweiss (profile), Mar 9th, 2013 @ 12:08am

    Really good concept to consider. I think it's a matter of both being true (with the big bang model still being mostly that extreme rarity, yet on such a large scale as to become much more in people's awareness).

    And not for nothing, the geek in me was like "please don't tell me "Big Bang Disruption" means one of my favorite tv shows is going off the air"..

     

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    bjflanagan (profile), Mar 9th, 2013 @ 7:20am

    Disruptive innovation

    "This is due to a variety of factors, focused around the fact that disruption [...] frequently comes out of left field -- from someone that people didn't even think was a 'competitor.'"

    What he said. My work on "quanta & consciousness" was the subject of sci-fi until Penrose came along and made it somewhat respectable.

    Fast-forward to June, 2011, when 'Nature' came out with an article on the "Physics of life: The dawn of quantum biology."

    Today, googling "quantum biology" fetches up to 40 million hits, including one to a pretty good scientific panel featuring a prominent figure in quantum computation.

    When asked about quantum theory and the mind, he replied with a superior smirk, saying that consciousness is the 'C' word. And that was that.

    I recalled that I'd first heard this quip 30 years ago from Gell-Mann, who also seemed to think that a joke serves in place of an argument. Remarkable in the chronicles of comedy, this little witticism seems to have lost none of its luster, notwithstanding decades of repetition.

    Happily, my own work was not restrained by convention, which is another way of saying I don't give a crap about what most people think -- if that is not too strong a word.

     

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      Vic Kley, Mar 9th, 2013 @ 8:56am

      Re: Disruptive innovation

      It is difficult to understand how anyone from Schrodinger on would believe that quantum mechanics and quantum electrodynamics would not be involved in biology.

      It may be that Penrose spoke positively about the involvement when none other had, but once accepted as governing the physical chemistry of all atomic matter (about 1922) a denial would be a black mark on any physicist's record. In the realm of bioscience quantum interactions remain an uncommon subject for thesis.

       

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    Vic Kley, Mar 9th, 2013 @ 9:33am

    The Dawn peTROLL and Clayton Christensen's Favorite Disruptive Example

    Horse and buggy vs Ford Model T - the contest demonstrating disruptive technology right? Almost completely wrong!

    From about 1880 to 1901 when Olds began manufacturing a reasonably priced automobile expensive automobiles were available to the rich, the horse and buggy were middle class transportation (poor people walked).

    The big invention by Olds was the assembly line for autos which allowed him to sell at a price acceptable to the upper middle class. Ford innovated Old's invention in an improved assembly line and was able to further reduce price until most middle class families could afford to buy an auto.

    Then Ford went after the inventor of the "Road Engine" Patent 59160. Selden was a Patent Attorney who had filed 16 years before his patent was granted (it appears to have been purposely kept in play by Selden). Selden was the inventor but had no interest and made no effort to manufacture. He was collecting royalties from all the automobile manufacturers except Ford who refused.

    Selden sued and lost his case when the judge required that a car be built using Selden's patent. The vehicle was judged a failure and Selden's patent was struck down one year before it was due to expire.

    No royalties and the price of a ride came down again.

    So the disruptive innovation was the Assembly Line without which most of us would be walking, biking or riding horses today.

     

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      Atkray (profile), Mar 9th, 2013 @ 10:55am

      Re: The Dawn peTROLL and Clayton Christensen's Favorite Disruptive Example

      "without which most of us would be walking, biking or riding horses today."

      I really hope you don't actually believe that.

      You can't stop progress.

      You can hold it back, shackle it, try to kill it with legislation and litigation, but at best you will slow it down, you cannot stop it.

       

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        Kirion (profile), Mar 15th, 2013 @ 6:47am

        Re: Re: The Dawn peTROLL and Clayton Christensen's Favorite Disruptive Example

        I invented nothing new. I simply assembled the discoveries of other men behind whom were centuries of work. Had I worked fifty or ten or even five years before, I would have failed. So it is with every new thing. Progress happens when all the factors that make for it are ready and then it is inevitable. To teach that a comparatively few men are responsible for the greatest forward steps of mankind is the worst sort of nonsense." -- Henry Ford

         

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    Vic Kley, Mar 9th, 2013 @ 10:38am

    The Dawn preTROLL and Clayton Christensen's Favorite Disruptive Example

    Horse and buggy vs Ford Model T - the contest demonstrating disruptive technology right? Almost completely wrong!

    From about 1880 to 1901 when Olds began manufacturing a reasonably priced automobile expensive automobiles were available to the rich, the horse and buggy were middle class transportation (poor people walked).

    The big invention by Olds was the assembly line for autos which allowed him to sell at a price acceptable to the upper middle class. Ford innovated Old's invention in an improved assembly line and was able to further reduce price until most middle class families could afford to buy an auto.

    Then Ford went after the inventor of the "Road Engine" Patent 59160. Selden was a Patent Attorney who had filed 16 years before his patent was granted (it appears to have been purposely kept in play by Selden). Selden was the inventor but had no interest and made no effort to manufacture. He was collecting royalties from all the automobile manufacturers except Ford who refused.

    Selden sued and lost his case when the judge required that a car be built using Selden's patent. The vehicle was judged a failure and Selden's patent was struck down one year before it was due to expire.

    No royalties and the price of a ride came down again.

    So the disruptive innovation was the Assembly Line without which most of us would be walking, biking or riding horses today.
    The contest? The contest was between vehicles only the rich could afford and autos for everyone.

    To see it otherwise would be like saying the Personal Computer was competing with the mechanical calculator, fun to envision but entirely false.

     

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    Suzanne Lainson (profile), Mar 9th, 2013 @ 10:39am

    Expecting big tech to be taken down, too

    I embrace the concept of disruptive innovation. Therefore, I am continually amazed at how often people continue to assume that whatever big tech company dominating the current news now will continue to do so very long.

    It was hard to get people to realize Apple would not be the leader forever. It was hard for people to look beyond Facebook for the next wave of social media.

    But if you have been following tech companies long enough, you know that whatever forces allowed them to rise are the same forces which will allow other companies to come in to take over from them.

    I'd much rather people think small, innovative, and even temporary than to get excited by market cap. In fact, we should be telling ourselves that the moment a company's market cap reaches a certain point, it's time to think about the company's decline and perhaps even encourage the company's break up. Let's move beyond the idea that big is better or even desirable.

    In a lot of the press coverage of Silicon Valley I see a certain myopia among the folks there suggesting they don't see disruption coming their way. But it will, and it will be good if Silicon Valley is no longer the center of the tech innovation universe. It's time to have less concentration.

     

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      Suzanne Lainson (profile), Mar 9th, 2013 @ 11:44am

      Re: Expecting big tech to be taken down, too

      I think it might be good to also think in terms of climate change as being the ultimate disruptor. If it is coming as fast as scientists predict, then more people need to be thinking about how life will change for them and their customers.

      There are a few companies/cities looking into risk management and re-engineering in anticipation of water levels rising, more disruptive weather events, and so on. But most people are still operating on a business-as-usual scenario.

      I suppose that is a challenge in itself. If you design companies to be extremely flexible, thereby adjusting to changes that may come about very rapidly, how do you also plan for events that will be happening 10-50 years down the road? What's the right balance of very short term and very long term?

       

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    Anonymous Coward, Mar 9th, 2013 @ 11:33am

    I suppose the only way not to be effected by disruptive innovation is to always be the disruptive innovator.

     

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      John Fenderson (profile), Mar 10th, 2013 @ 1:23pm

      Re:

      You'd still be affected by disruptive innovation, but you'd have better skills at handling the disruption and turning it to your advantage.

       

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        Suzanne Lainson (profile), Mar 10th, 2013 @ 1:36pm

        Re: Re:

        You'd still be affected by disruptive innovation, but you'd have better skills at handling the disruption and turning it to your advantage.

        I wish we'd have more stories coming out of Silicon Valley like this. "We've invented this new thing and we'll give it about two years before something else comes along."

         

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    MD2000, Mar 10th, 2013 @ 10:00pm

    Synergy

    Actually, sometimes you get it from the front, sometimes you get it from the rear. Both ways.

    Consider the MP3 player - like the cassette player, pretty crappy at first. But the synergistic contribution was Napster and other trading sites. And disk/memory size.

    When the CD was first designed, 600MB was stratospherically unreachable for the average user. With compression and growing disks everyone could store a few hours, then a few days of music on their spare drive space. But then came computerized trading of songs - something that destroyed the music market that failed to adapt. Between that and the MP3 player, how many businesses did they destroy? Record stores, much of the music business, walkman and discman and cassette tapes... Either tech was pretty good, together they were lethal.

    Another example would be cell phones- slowly destroying the low end camera market. In the race to megapixels, we have overlooked that for 90% of photos, 1Mp or 2Mp (screen resolution) is plenty good enough, and in most cases beats the blurry instamatic or disposable film camera pics most people had. Why? Because people are content to look at pictures on screens more often than printing them. Two techs collide and fuse and another industry headed for a niche market status.

     

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    Ninja (profile), Mar 11th, 2013 @ 4:39am

    There are sectors that are very prone to disruption and online stuff is one of those. However there are several others that are dominated by a few that can't be easily disrupted (I'm thinking of TVs for instance). I wonder if some disruptor can come in and snag a big hunch of market share from the big companies. An even worse part is in the realm of telecommunications (ie ISPs) that are poisoned by Govt granted monopolies. I'm just throwing thoughts all around btw.

     

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    Kevin Douglas, Mar 11th, 2013 @ 10:40am

    The impact of mobile

    Interesting topic here. One aspect I'm thinking about here is the mobile use-case. In order to ensure that users have an effective experience on mobile use cases need to be brutally distilled to the essentials. This leads to not only products better suited to more specific groups of users, but also tighter, purer products. You could argue then that the innovators dilemma will intensify with the proliferation of mobile use.

     

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