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Disruptive vs sustaining innovation. Wikinomics and Images of the Future.

Tanja Storsul 27 January 2012

The innovators dilemma Two technologies

•  Sustaining technologies –  Improve performance of

established products. –  Established firms lead

the way.

•  Disruptive technologies –  Underperform in

mainstream markets. –  But: cheaper, simpler,

smaller. –  Great companies fail.

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5 principles

1.  Companies depend on customers and investors for resources.

2.  Small markets don’t solve the growth needs of large companies.

3.  Markets that don’t exist can’t be analyzed. 4.  An organisation’s capabilities define its

disabilities. 5.  Technology supply may not equal market

demand.

The innovators dilemma

•  Companies with a practiced discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely to build a case for investing in disruptive technologies until it is too late.

What is disruptive innovation?

•  Generally disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.

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Flexibility, not technology

•  The essence of the attacker’s advantage is in the ease with which entrants, relative to incumbents, can identify and make strategic commitments to attack and develop emerging market applications, or value networks. At its core, therefore, the issue may be the relative flexibility of successful established firms versus entrant firms to change strategies and cost structures, not technologies.

Disruptive innovations

•  Fixed telephony - IP-telephony •  CDs - mp3 •  Publishing - ebooks •  Newspapers - web •  .........

NB – most innovations are still sustaining

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Wikinomics

Wikinomics is a metaphor for a new era of collaboration and participation, one that, as Dylan sings, “will soon shake your windows and rattle your walls” The times are, in fact, a changin’.

The promise of collaboration

The collective knowledge, capability, and resources embodied within broad horizontal networks of participants can be mobilized to accomplish much more than one firm alone. A key message in this book is that the old monolithic multinational that creates value in a closed hierarchical fashion is dead.

Principles of Wikinomics

•  Being open •  Peering •  Sharing •  Acting globally •  Changes everytning

•  “There are always more smart people outside your enterprise boundaries than there are inside.”

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Peer production

•  Peer production mixes elements of hierarchy and self organization and relies on meritocracy.

•  Tasks chunked out into bit-size pieces that individuals can contribute.

•  Examples: wikipedia and IBMs open source experience.

Ideagoras

•  “Companies can tap emerging global marketplaces to find uniquely qualified minds and discover and develop new products and services.”

•  Example: InnoCentive

Prosumers

•  “Customers do more than customize or personalize their wares; they can self-organize to create their own.”

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Open platforms

•  With open platforms a company creates a broader stage upon which various partners can build new businesses or simply add new value to the platform.

•  Examples?

Images of future media in the Norwegian media industry

• Future media trends: •  Personalized content •  User-generated content •  Rich media •  Cross-platform media •  Mobile media

Personalized content • Edward Bellamy 1888: • Music rooms connected by telephone.

• 2005 executives: • Increasing number of personalized services – from weather services to music playlists. • Linked to mobile terminals as personal media. • But: • Personalization is not replacing mass media. • Personal media grows, niches are developed, but people still use mass media.

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User-generated content • Berthold Brecht 1932: Radio as an apparatus for communication.

• 2005 executives: Users’ experiences in travel sections, user productions in tv: “here is my cat”. • But:Did not foresee Facebook! • Did not foresee users’ creativity and new genres. • Did not foresee importance of peering and networking.

Rich Media • 2005 executives: • Focus on rich mobile services. • But: • Users adapt rich services slower than expected.

Cross–Platform Media

• Earlier – convergence • One terminal wins.

• 2005 executives - multiplatform: • Cross-platform formats will become more important. • De-centered media landscape.

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Mobile Media • 2005:

• But: • Mobile television – no hit (yet). • Rich mobile services are increasing – but will users pay?

The most important strategic area is really 3G and mobile television, because the willingness to pay is great and revenues might be substantial.

Looking forward by looking backward

• Future media trends: •  Old ideas – re-articulated by new technology (mobile). • Trends identify general developments, but fails in the specific: •  Executives think within their own box. Fail to see how user’s creativity and peering changes media. •  Users adapt different aspects of new technologies than expected – and often later than expected.

• Concern: •  Executives all rush towards the same conclusions.