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.

Well, we've certainly heard plenty about DRM and shoehorned-in multiplayer recently, what with EA's recent Hindenburgish SimCity "launch." As was detailed all over the web, the only people hurt by these "features" were paying customers, many of whom spent $50-60 for a server Roulette wheel that limited users to one spin every half hour.

Many developers are concerned with piracy and have made the mistake of crippling their software with DRM that punishes paying users disproportionately while affecting pirates hardly at all. At best, these efforts result in a Pyrrhic tie, damaging the developers' relationships with their customers while having a negligible effect on infringement.

Fortunately, some developers would rather not sacrifice their customers' happiness in order to briefly irritate a few pirates. Avalanche Studios, the developer behind Just Cause 2, is one of these forward-thinking developers. In an interview with Gaming Bolt, founder Cristofer Sundberg had this to say about DRM.

"DRM solutions which limit the game experience should not exist. That's my honest opinion...

They make us look greedy, which we are not. It treats our fans like criminals, which they are not. With that said, I think that we deserve getting paid for years of hard work and I think piracy is hurting our ability to make great games."

However you may feel about his statement on piracy, there's no arguing with the fact that he's unwilling to put anti-piracy efforts ahead of providing Avalanche's customers with a great experience. He also parts ways with EA (among others) on another aspect of piracy prevention, one that's almost always presented as a "feature," rather than just another limitation on the end user.

He is also against adding multiplayer component to a game to prevent the game from being traded.

He uses his own game as an example. Just Cause 2 is rarely sighted in used game stores simply because the players who purchased it years ago are still playing it. There's no (native) multiplayer in Just Cause 2 (excluding an awesome PC-only mod), but that has done nothing to diminish its popularity). As Sundberg sees it, throwing multiplayer options in for their own sake (or as a form of DRM/resale prevention) weakens the original product.

"Nobody wins in the end; the developer can't make the great experience that they want to, the publisher doesn't get its money back and the consumer is disappointed. I am convinced that this mentality contributes to the downfall of the industry."

So, either Sundberg is crazy or he's actually paying attention to the gaming community. At times, it almost seems as though certain companies think their customers are the last people they should listen to -- a very strange position for entities in the business of selling things. Hopefully, more will realize the damage they're doing far outweighs the nominal gains and DRM will become an exception rather than the rule for AAA developers.