L09 The Innovator's Dilemma

Lecture L09 THE INNOVATOR’S DILEMMA

Economist article: The last Kodak moment?

Kodak is at death’s door; Fujifilm, its old rival, is thriving. Why?

READING ASSIGNMENT

Founded in 1880 Noted for their pioneering technology

“You press the button,we do the rest”

By 1975 they had 90% of firm and 85% of

camera sales in US

Eastman pioneered dry plate technology when others use wet plate

Introduced the Brownie camera in 1900

Used film rolls

Camera for $1, then sold films

The picture quality was inferior to begin with, but consumers loved the convenience

In 1935 Kodak introduced Kodachrome,the first colour film

The picture quality was inferior to begin with, but consumers loved colours pictures

Initially Available as 35 mm slides

1. Where  did  Kodak  fail?  2. What  did  Fuji  do  differently?

READING ASSIGNMENT

1. Where  did  Kodak  fail?  2. What  did  Fuji  do  differently?

READING ASSIGNMENT

Kodak

Kodak knew that digital cameras would take over

In 1981, a team inside Kodak assessed the threat

The report said:* The quality is not there* Consumer’s desire for print cannot be replaced* The device is too expensive

Source: Decisive

Kodak

Culture

“suffered from the mentality of perfect products,rather than the high-tech mindset ofmake it, launch it, fix it.”

One company town

No criticism, changing leadershipFailed to capitalise on pharmaceutical assets

Fuji

Plan: to squeeze as much money out of the film business as possible, to prepare for the switch to digital and to develop new business lines

Brutal reorganisation

Launched a line of cosmetics and sold it

Kodak’s Lack of Tripwire

The report said:* The quality is not there -> We will act when more than 10% of public is pleased with

digital images

* Consumer’s desire for print cannot be replaced* The device is too expensive -> We will act when more than 5% of public has some kind of viewing system

Source: Decisive

Van Halen’s Brown M&M

They demanded M&M back stage but without the brown M&Ms

Source: Decisive

Technology is one of the

major factors in change

Firms that succeed in one generation of innovation almost inevitable become hamstrung by their own success and thus doomed to lose out in the next wave of innovation

Source:  (Christensen,  2000)  

The Innovators Dilemma

The Innovators Dilemma

Should we focus improving our products to make them higher margin, with more performance or look at this new technology that is low performance with low margins?

Surviving Technological Change

What is it that kills successfulcompanies?

The Innovator’s Dilemma Clayton Christensen

professor at Harvard Business School

Source:  Yang,  Harvard

Traditional Concept of Good Management

Focus on your best customersFocus on your highest margin products

Reason for Failure?

If you become wildly successful because you do everything right,

you're doomed

Disruptive Innovation

Resources, Processes and Values Theory  R e s o u r c e s (what a firm has), p r o c e s s e s (how a firm does it´s work), and v a l u e s (what a firm wants to do) collectively defines an organisation’s strengths as well as weaknesses and blind spots

Source:  (Christensen,  2000)  

The RPV Theory

WHENPLATFORM

SHIFTS HAPPEN, COMPANIES FIND

IT HARD TO MOVE TO NEW

GENERATION OF TECHNOLOGY

Image  Source  Page:  http://www.teach-­‐ict.com/wp/archives/264

Only ONE established firm managed the transition from one

generation to the next

Why did they fail?

They listened to their customers

Case Study

Betware transformed from custom software

development to product development

– from technology to service

“If I’d asked my customers what they wanted, they’d have said a faster horse”

- Henry Ford

We tend to view technology based on

past usages but not the future potential

The hardest things when you are trying to affect change

Steve Jobs Insult Response, WWDC 1997

Source:  Yang,  Harvard

Traditional Concept of Good Management

Leads successful companies to ignore disruptive innovations with deadly

consequences

“We listen to our best customers”

The Innovation Trap

“Our customer is asking for the new product, but we don’t have it and its to late the enter the market”

The Innovation Trap

“Our customer are starting to ask for our new product.”

The Innovation Trap

It is very difficult for incumbent companies to disrupt themselves,

so usually others will do it

“Markets that do not exist cannot be

analysed” - Clayton Christensen

Adjacent Possible...a kind of shadow future, hovering on the edges of

the present state of things, a map of all the ways in

which the present can reinvent itself

Steven  Johnson

NextInnovator’s Method