Explaining The Innovator's Dilemma… In Two Minutes With A Whiteboard

from the out-innovate-yourself dept

As you may recall from last month, UPS recently asked us to create a series of videos, where we explain some of the stuff we talk about here on Techdirt on a regular basis in under two minutes, using a whiteboard. The first video was about the economics of abundance and got a great response. The second video is now up, and it’s an attempt to explain the Innovator’s Dilemma, based on Clayton Christensen’s must-read research. If you’re unfamiliar with it, it explains how difficult it is for many companies to adapt to changing markets, and is a good framework for understanding both why some companies are so slow to adapt. More importantly, it provides a good system for thinking about your own company and understanding how to adapt and implement new ideas rapidly:

Again, with only two minutes, I had to simplify things down a bit, but hopefully it will kick off another good discussion on the innovator’s dilemma and how to deal with it. We still have one more video to go, which I believe will be posted sometime next month. And, yes, once again (though, it should be obvious), UPS sponsored these videos, though we had free rein in creating the scripts — which should be quite obvious as the topic is one we talk about here frequently enough.

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Comments on “Explaining The Innovator's Dilemma… In Two Minutes With A Whiteboard”

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42 Comments
Anonymous Coward says:

There is only one part that really isn’t discussed: What if your “disruptive technology” has no true business model? What if your new technology will never pass the existing ones?

A perfect example is the phone: Even as new technologies have come along (computer networks, IM, texting) the use of the phone is still as strong as ever, and has yet to be innovated out of existance. In fact, the new developments in the phone business keep pushing phones. Even theoretically disruptive technologies like walkie talkie functions and such have not dethroned the idea of one on one phone discussion.

The horse and buggy thing is nice, but it is one example where the new technology won (after a very, very long time). New technology isn’t always the winner (Kindle, anyone?)

Mike Masnick (profile) says:

Re: Re:

There is only one part that really isn’t discussed: What if your “disruptive technology” has no true business model? What if your new technology will never pass the existing ones?

Then it’s not a disruptive technology. Problem solved.

A perfect example is the phone: Even as new technologies have come along (computer networks, IM, texting) the use of the phone is still as strong as ever, and has yet to be innovated out of existance. In fact, the new developments in the phone business keep pushing phones. Even theoretically disruptive technologies like walkie talkie functions and such have not dethroned the idea of one on one phone discussion.

Again, theory is not reality. If it’s not disruptive, it’s not disruptive. It doesn’t change the lesson: which is to focus on making sure the consumer benefit remains maximized. That means understanding what the consumers actually want, not what the company thinks they want.

The horse and buggy thing is nice, but it is one example where the new technology won (after a very, very long time). New technology isn’t always the winner (Kindle, anyone?)

No one said new technology always wins. There are a lot more failures than winners, of course. What I said was that you need to focus on the benefit to the users, so that when a disruptive tech *does* come along, you can respond to it properly.

Kazi says:

Re: Re: Re:

“Phone”

Think “land lines” being phased out by “cell phone” being phased out by VoIP, i.e. data networks. The example provided was a generalization.

Furthermore, the “idea” of a phone discussion won’t be phased out. The technology behind the idea will be.

Ideas are not technology. Same applies to Patents. Ideas are not Patentable otherwise you’d have writers applying for spaceship and timetravel patents.

Anonymous Coward says:

Re: Re: Re:

Then it’s not a disruptive technology. Problem solved.

Not really, by your own definition, the existing business won’t know a disruptive technology until it is successful. Effectively, by your definition, the incumbent is behind and probably already lost the war by the time they know what is actually the disruptive technology.

Mike Masnick (profile) says:

Re: Re: Re: Re:

Not really, by your own definition, the existing business won’t know a disruptive technology until it is successful. Effectively, by your definition, the incumbent is behind and probably already lost the war by the time they know what is actually the disruptive technology.

Again, I think you may be misunderstanding the video, and I apologize if I wasn’t clear. The whole point is not to focus on the technology, but on providing the most consumer benefit. In that situation, you don’t care what technology provides it, you just focus on serving the customer. In that way, you don’t lose the war at all.

Sorry if that wasn’t clear. Again, it’s only two minutes.

Cynyr (profile) says:

Re: Re: Re:

@ Yaniel
I’m not sure ereader/ebook will ever compleatly knock off books. I’ve seen books from 200 years ago that still have all the information in them. Yes they took some care to keep that long. Also until battery tech improves to the point where the kindle will last weeks, I’ll keep my books. Actually a lot of my “analog” portable devices are still winning over the digital ones simple because of the batteries.

P.S. I would really like my flying car that runs on the fusion of garbage. GOGO Mr. Fusion.

Dark Helmet (profile) says:

At a high level, what's the lesson?

Okay, first thing’s first: I insist that on your final whiteboard video, any person figure featured, such as the one in the car, MUST be wearing an oversized darkened helmet.

That said, the 2 minute presentation was EXCELLENT. It helped me to focus on something that I’m trying to hone in my own career: a focus on the customer as your market.

After all, isn’t that really the lesson here? If someone asks what I do, which of the following is the better response?

1. I architect technology security technology infrastructure for small businesses

2. I ensure that my customer’s employees work in the most effective way possible

The first is how too many people see their jobs: they sell their product or services. But the second says it clearly: I protect my customers. If certain technologies go in and out of favor, that can affect the first. But if I am focused on simply protecting my customers, then I’ll do whatever it takes to get that done, and my services will always be in demand (assuming I’m good at what I do). I no longer have to rely on specific products, I focus on the goal. If that means different products, fine. If that means I take some kind of additional non-product related action on my end, then I do that.

It’s subtle but important. To me, it’s a mentality thing. You can either have the focus be on the products you’re offering, or on the customer. The latter seems to engender much more favorable responses.

Mike Masnick (profile) says:

Re: At a high level, what's the lesson?

Okay, first thing’s first: I insist that on your final whiteboard video, any person figure featured, such as the one in the car, MUST be wearing an oversized darkened helmet.

Too late… already filmed. 🙂 I don’t remember exactly, but I don’t think there are any people in the last one… Pretty sure it’s people free…


That said, the 2 minute presentation was EXCELLENT. It helped me to focus on something that I’m trying to hone in my own career: a focus on the customer as your market.

Cool. Glad I could help.

The first is how too many people see their jobs: they sell their product or services. But the second says it clearly: I protect my customers. If certain technologies go in and out of favor, that can affect the first. But if I am focused on simply protecting my customers, then I’ll do whatever it takes to get that done, and my services will always be in demand (assuming I’m good at what I do). I no longer have to rely on specific products, I focus on the goal. If that means different products, fine. If that means I take some kind of additional non-product related action on my end, then I do that.

Yup. Good summary.

CanceledLegend (profile) says:

Historically Poor Choice of Example

I completely agree with the point you are trying to illustrate in the video. However, it is a poor choice, as you are citing the defeat of a cheaper and more flexible system for a system that is better only under ideal conditions. Those ideal conditions, the existence of suitable roads going where you want to travel and and refuel points did not exist at the time the invention was created.

http://en.wikipedia.org/wiki/Interstate_Highway_System

In effect the non-disruptive tech was subsidized by state and federal governments until it was disruptive. So your example is a disruptive gov’t pushing a new tech into faster adoption, not a tech that is purely disruptive. Even to this day your example is being subsidized by taxpayer funds.

Lawrence D'Oliveiro says:

Re: Historically Poor Choice of Example

CanceledLegend claimed:

Those ideal conditions, the existence of suitable roads going where you want to travel and and refuel points did not exist at the time the invention was created.

http://en.wikipedia.org/wiki/Interstate_Highway_System

In effect the non-disruptive tech was subsidized by state and federal governments until it was disruptive

No it wasn’t. The US interstate highway system wasn’t built until the 1950s, nearly a half-century after the motorcar had started disrupting the horse-and-buggy industry. So there was no government subsidy until the motorcar had already become the preferred choice of transport for ordinary people. In fact, quite the opposite—remember the Red Flag Act?

Ion (profile) says:

=)

I enjoyed the video. I like Such Great Heights. I also find it interesting that one of the first posters brought up the subject of phones, because although phone companies have been slower than consumers would like in meeting demands, they have been forced to innovate so much that they have replaced the products they originally sold several times.

Ask yourself, how many people do you know that still have a land line? Can you even still send a telegraph? Remember the annoying commercials for long distance calls under a buck? I am sure we could make quite the list.

The phone companies that are still in business today are the ones who learned the lesson illustrated in this video. Even if they kicked and screamed the entire way.

Mike Masnick (profile) says:

Re: Re:

I love these videos. I mentioned in a past post how it seems people forget “Marketing Myopia” so easily (I wonder, at times, whether certain businessmen have even read it). This is that essay in a nutshell, taken to its simplest terms.

Yeah, this video uses both Christensen’s work and Levitt’s work as inspiration — though I have to admit that I had come up with the same theory as Levitt before I ever heard of him, and then realized he came up with it ages before I did and thought “neat.”

Mike Masnick (profile) says:

Re: adapt

Exactly. That’s why large companies are trying to kill the patent system with what they call reform so they don’t have to adapt.

Staff3, I recognize that you make your living suing other companies for patent infringement, but this particular discussion had nothing whatsoever to do with patents. You might want to stop looking at everything through your unique set of glasses. The patent system is not everything…

Justin says:

These are helpful

I am really liking these UPS videos that are being put together. They explain so much so quick that at least starts a good conversation on how things really work and get people starting to think in the right direction.

I am not sure if there are anymore of these coming out, but another topic that I don’t think many people understand is Lots of data vs Good data. This seams to be an issue I run into and could use some outside opinions to help explain this to people

Kyote (profile) says:

Good job Mike and UPS

I just want to express my appreciation for these videos. Thank you UPS for sponsoring them. And thank you Mike for doing such an excellent job on both.

I’m new here at Techdirt and love your articles. When I read this, before getting to the video, I thought there’s no real way to explain it effectively in 2 minutes. WOW GREAT job!.

Al the Patent Agent (profile) says:

Innovator's Dilemna

The Old Technology Companies(Oldies)can’t innovate within their companies because it costs them too much. So, the Oldies want others to innovate and then they can steal the innovations. That is why the Oldies are sabotaging the Patent Laws. They want endless challenges to a patent so that they can bankrupt the Inventor and Small Innovative Companies (Newbies). They want publication of applications so that they can steal the inventions before they issue as patents. Then, they can steal the market and bankrupt the Newbies in Court. They want a first-to-file system because they have the money to file endless applications and the Newbies don’t. If you like the status quo and to be told what you can do, you will get it if the Oldies get their paid politicians (Dems and Reps) to change the Patent Laws.

Chinese Perspective (profile) says:

What's next?

I like Mike’s video on explaining disruptive innovation.
After all, “employee” can’t afford to spend too much and too long without getting something back. The real thing is that no one would jeopardize its title and salary on a Fairy tale unless company allows.

So what’s next after knowing it?
Well, the big companies wait.
1. Wait for the technology to fail
Just read this article: Ahead of their time: Nine technologies that came early
http://www.networkworld.com/slideshows/2009/111009-technologies-ahead-of-time.html
2. Wait for a right time to acquire it to either continue the project or to kill the technology
Pharmaceutical industry has done many things like this.

So what should we do about it if we have a good innovation?
This is something I hope people can tell me. 🙂

Anonymous Coward says:

Yeah we’re supposed to have flying vehicles (not necessarily cars) but the govt did a lot to restrict them, partly for safety reasons. I suspect the auto industry had something to do with it. Now the govt is starting to loosen up a bit on some model, as was mentioned on techdirt before, perhaps because some incumbent industry (the auto industry) ensured that they are the ones who would profit?

http://www.techdirt.com/articles/20100630/11220610024.shtml

Though wikipedia doesn’t seem to directly indicate so.
http://en.wikipedia.org/wiki/Terrafugia

It would be interesting to see how this develops and replaces the traditional automobile and how incumbents ensure that they, and not newcomers, are the ones that profit.

irv (user link) says:

The dilemma is misnamed

The dilemma of the person or company that innovates is that the forces dominating the market (which often includes government) have a vested interest in the status quo. They do not want innovation.

The dilemma described was the non-innovator’s dilemma: How do we recognize that an innovation is something we MUST pay attention to and then get a piece of it before we’re consumed?

David Corkindale (user link) says:

Innovator's Dilemma is quite defendable

I think that the existing, traditional businesses often do recognise the threat of a potentially disruptive innovation but the reasons they do not respond are:
1. Their customers, who they often do consult, tell them that they are not interested in the innovation ( IBM?s clients who used big computers at the time told them they did not want PCs)
2. To supply the innovation usually requires different technologies and skills that the traditional supplier does not have ( slide rule makers could not make electronic calculators)
3. Traditional suppliers would have to supply BOTH the old products ( horse and carts) AND the new( cars) as they have many customers who still want the old technology, so their costs would double for probably not double the revenue, so they opt for the guaranteed income and profit, for the time being and let others risk their money. ( Kodak stayed with films and physical pictures for almost too long but they cash flowed in still to help their ROI on the investments in film processing.)

The Newspaper industry has managed to hold off the effects of the Internet pretty well for 15 years ( amazingly) and Murdoch will just buy the innovators ( he backed My Space instead of Facebook which says he is fallible, but he jumped in too early; at least he was prepared to move into the new industry).

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