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Bringing Tech to Market: The Rules of Innovation
Everyone knows that best-quality plus first-to-market doesn't always equal success. A Harvard prof who specializes in this stuff has a great article in Technology Review that digs a lot deeper, called
The Rules of Innovation.
It's a look at why some technologies are marketplace success stories and some are forgotten failures -- and more, an attempt at rules which predict which will be which. There are lessons here for the entrenched companies (e.g. Sony) as well as for the disruptive upstarts (e.g. Sony 50 years ago). You have to understand the battlefield to win the war.
This is something that's irked me for a while, since I switched over to the Dvorak keyboard layout (see sig for link to more info). The Dvorak layout is more efficient for typing English text than the standard Qwerty layout, but never succeeded due to market inertia.
Read my keyboard review.
Best quality + first to market almost never means success. Inferior but good enough, introduced when people are used to the idea almost always wins.
The strongest insight in the article - and the best supported - is that well-managed companies that take care of their existing customers well are often not innovative, because processes and methods that are profitable are unlikely to be challenged, and because truly outre and novel ideas are too disruptive to be welcomed. The notion that innovation occurs in the context of and also creates disruption is a reasonable one. The rest of the article is questionable: his observations that lean projects are more adaptive than ones that have deep pockets which let them stick with a 'a bad strategy' begs the question of what a bad strategy is. It's the Right Thing To Say in a post-boom age (profits now! no vapor!) - but it omits the many successes that came of plodding along after initial disappointments. And, as soon as he used the word "leveraging" I know his article had run out of ideas.
Microsoft tends to solve problems by throwing money at them, but if this article is correct, that is a flawed strategy. The excess cash allows them to keep a flawed product on the shelves (e.g. XBox) long past the point where a poorer company would be focusing on improving the product to make it match the customers needs.
Food for thought, anyway.
--
I have taken more out of alcohol than alcohol has taken out of me - Churchill
This is the concept Christensen is famous for (and there is a book titled after it which you should all read) Here's my 10 second synopsis of Innovator's Dilemma:
Your old customers are demanding you spend all your resources on your old technology (eg. 5 1/4 inch disk drives) But there are new potential customers who want to buy new technology you haven't developed yet (eg. 3 1/2 inch disk drives) There are more potential new customers than old customers, and thus more profits in devoting your resources to new technology. But you already have your old customers, and you're supposed to *listen to your customers* So there's the dilemma.
Solution to the dilemma? Sometimes it doesn't pay to listen to your customers. And that's a tough pill for an established company to swallow, since that's how they made money in the first place.
Websurfing done right! StumbleUpon
1. You do not talk about Innovation
2. If you do talk about Innovation you must be Microsoft.
3. If you are not Microsoft you DO NOT INNOVATE
4. Bring lawyers too.
If the transition costs you impose on your customers is too high they'll run for the door screaming. It doesn't matter how wonderful your technology is. That's why DIVX and HDTV are dead or dyeing for example. You can't make it so hard to use or purchase or install that only primary adopters use it.
cough cough hack linux cough bsd
That's the lesson of desktop linux - it doesn't matter HOW BAD MS is - what matters is HOW HARD the transition to something else is.
VisiCalc was the first electronic spreadsheet. Lotus 1-2-3 destroyed it, and became so successful in the market that at least three competitors (including Excel) supported 1-2-3 keystrokes for compatibility. Excel now dominates.
WordStar, at one point, was the only viable word processor. Word now dominates.
Netscape Navigator, at one time, had over 70% of the web browser market share. Internet Explorer now dominates.
It's not that simple.
A well written article. His main point is that contrary to the VC's thinking, you can analyze and predict success. However, he gives a powerful counterpoint aswell:
What drove Sony's shift from a disruptive to a sustaining innovation strategy? Prior to 1980, all new product launch decisions were made by cofounder Akio Morita and a trusted team of associates. They never did market research, believing that if markets did not exist they could not be analyzed. Their process for assessing new opportunities relied on personal intuition.
Dvorak failed because the mechanism it was designed for could not function properly.
/. aint really worth the effort.
The original type writer started with dvorak keyboards, actualy started with a lot of layouts, but the dvorak method caught on. But then they found out that people could type too fast, and the keys would get stuck. this would kill in aded efficience they were getting for switching to type write, which where very expensive, and there users required training.(sound familiar?)
so someone came up with the qwerty method bacause it slowed people down.
none of this applies to todays market, but training momentum has kept it going. what may finally begin qwerty's decent is the fact that I can change they layout of my keyboard through software.
The first CEO that demands there people learn Dvorak lay out will get a nice bonus from the increased productivity.
I would rather see people learn the dvorak method, then most coding 'techniques' that are implimented to imnprove code speed release, and usually don't
yes I know its probably Ironic that I typw something like this, and it will no doubt have typos, but
The Kruger Dunning explains most post on
Not that I think the there is a problem with the concept of helping students Cram for exams.
But the url www.cramming.com forwards you over to a pornographic website.
I don't think that this is the type of cramming he had in mind.
Open Source Identity Management: FreeIPA.org
A few years back, I worked for a small company that was developing a cell phone localization technology. We had a patent on one of the primary means of locating an unmodified phone (worked rather well too). The problem was that while we were developing the technology, we had to beat people over the head at the same time to make them see how valuable the idea was.
:)
Nowdays, the FCC and all the carriers are still trudging towards the goal of fully implementing E911 and we ended up having to sell out to a competitor having spent too many resources building the market. sigh.
Don't anthropomorphize computers, they don't like it.
But I must quibble with a few points. I suppose he knows more about it than I, but does all innovation in a given field necessarily take place on the low end? What about new products that may or may not be higher-end than existing products? (Example: The runaway popularity of SUVs, which are certainly NOT low-end impulse purchases, and newer models of SUVs seem to subscribe to the Micro$oft bloatware model: more, more, more [useless] features and a higher and higher price tag. But people sure buy 'em.)
SUV's were sold by existing companies to existing customers. This makes them a "sustaining innovation" in the language of the article -- listening to the existing customers and making improvements to the product. And that's if you call them an innovation at all; they are not much different from the GMC Carryall my father bought used in 1963, drove for 15 years, and replaced with a new Carryall.
Sustaining innovations often do tend towards the high-priced end. The customer demand an established company is least likely to respond to with major innovations is "lower price" - you know your existing customers have the money, so making things cheaper just reduces the part of it you get, while making the product better and more expensive might milk more money out of them.
It's not impossible for a new company to be successful selling high-priced products -- think fashion designers and fancy restaurants. But note that you don't get GMs, IBMs, or Microsofts out of such markets. I can remember two computer companies that tried to start at the top: CDC (tried to sell bigger mainframes than IBM in the 1960's, went bankrupt, "refinanced" via an antitrust suit against IBM, and lost the money in supercomputers, IIRC), and Cray (supercomputers). There's also Amdahl, which made imitation IBM mainframes (a little faster or a little cheaper) so I'd call that starting almost at the top. None of these ever did very well. By contrast, starting at the bottom produced the mini-computer companies, at least two of which (DEC & Data General) were apparently quite successful until the PC companies found a lower bottom. And many PC companies have been very successful, although not at all secure - PC's are a nasty bottom-end commodity market where any company that lets its cost control or marketing lapse for a moment is dog-meat for momentarily more efficient competitors. Or possibly to competitors that have managed to lower the quality even further without getting buried in bad units...
...most notably Amazon. They're still the leader in user-friendliness among ecommerce sites, and always have been, right from the beginning. Not to mention other quality issues. And they were the first major ecommerce player.
Innovative marketing, maybe, but not the product.
This next song is very sad. Please clap along. -- Robin Zander
IANAET (evolutionary theorist) so take these comments with care.
One element of the theory of punctuated evolution says that new species arise not by direct competition against their parent species, but by finding an isolated and protected niche where they can develop.
Say a new species of horse is to develop. A subpopulation becomes isolated and has a chance to develop new characteristics and to become reproductively distinct (no longer interbreeds with the parent species).
Then, when the geographical isolation ends, the new and parent species come into contact and competition. The new species spreads rapidly, having had a chance to strengthen in isolation.
This theory is designed in part to explain gaps in the fossil record. The small, original populaiton of the new species leaves few fossils - we only see them after explosive growth - so some intermediate forms are lost.
That sounds like the article's model of innovation succeeding by finding a niche market before improving the product to compete head on head in the general marketplace.
Wonder what other analogies exist with evolutionary theory and this article.
After reading the article, the one thing I want to do is hear from Akio Morita about why his intuitions were so often correct at Sony. Doesn't that put a lot of MBAs out of jobs?
Soundblaster wasn't first.
I have an original SoundBlaster. 8bit ISA card, anchient, with box. It even sayes AT recomended (ie it will run in an IBM XT (8088) computer).
It also says 100% Ad-Lib compatable; becuase Ad-Lib came first and Creative Labs SoundBlaster killed them
And nVidia, ATI, S3, and Matrox were fighting it out for 3d acceleration long before 3dfx came on the scene. Of course they didn't hold a candle to the voodoo card, but they were the first. The nVidia Riva128, ATI Rage - Rage Pro, the S3 Virge (graphics decelerator), and matrox's m3d all predate the voodoo, and for quite a while 3dfx smeared them and took everying but the OEM market away from them. Except matrox for 2D only work...
Bad examples
Take his criteria for a successful disruptive technology. I can't help but observe that the light bulb, a successful innovation if ever there was one, satisfies neither. The answer to 1 is negative because neither the poor nor the wealthy were capable of lighting their homes with electricity at the time. Likewise the answer to 2 because there was no existing market. Yet this technology was undeniably disruptive; just ask the manufacturers of candles, oil lamps and gaslights.
Later on in discussing (as far as I could tell) allocation of resources, he says, "Processes, however--the central element in our second question--are typically inflexible. Their purpose is not to adapt quickly but to get the same job done reliably, again and again." He must be completely unfamiliar with the Software CMM (and now the CMMI for other disciplines) where to attain the highest rating and organization's processes must be flexible. Continuous improvement of processes is one of the more important lessons from the quality movement Prof. Christensen discusses in the opening of his article, so I'm a little surprised he chooses to ignore it here.
This leads me to suspect that some of his other examples are flawed too, but I don't know enough about all of them to detect it. I don't trust his conclusions, in any event.
And the brethren went away edified.
You know.. /. headline for the article. Spent about 5 minutes reading various replies and comments about the article and I still had no real interest in actually reading the article. Then I read your comment which sparked my interest and I went and looked.
/. too much..
I read the
Now I know I have nolife and hang out on
Bad boys rape our young girls but Violet gives willingly.
This is drifting off-topic, but what the heck.
The first CEO that demands there people learn Dvorak lay out will get a nice bonus from the increased productivity.
Assuming you're talking about a software company, I could not disagree more. I think any difference in productivity would be small and it would be next to impossible to establish faster typing as the reason. (If you're not talking about a software firm, then you might possibly be right, and I have nothing to say.)
I think there are other things that contribute to software development productivity. Good and open communications between developers and a quick bug catching process that gets bugs fixed before they become panic-mode fixes... these two things by themselves would completely dwarf any productivity increases due to better typing.
The one place where I do believe that a mechanical skill would help productivity in a software firm is a twofold skill: touch-typing (either QWERTY or Dvorak), along with deep familiarity of a text editor. When I see some people poking away at their keyboards, it leads me to believe that my skill in the above two areas really does increase my productivity.
When I have sudden "what if?" flashes, it means I can bang out a quick test twice as fast as someone else, which means I can try twice as many different options. It also means that I don't mind taking the extra time required to format my code nicely, or even document it (gasp!), because for me, it's not that much extra time.
In the end, I believe it means I can produce either twice as much code, or in the same amount of time, I can produce code that's twice as good in quality.
Just MHO. Mostly off-topic. Moderate at will.
Accountability on the heads of the powerful.
Power in the hands of the accountable.
Your old customers are demanding you spend all your resources on your old technology (eg. 5 1/4 inch disk drives) But there are new potential customers who want to buy new technology you haven't developed yet (eg. 3 1/2 inch disk drives) There are more potential new customers than old customers, and thus more profits in devoting your resources to new technology. But you already have your old customers, and you're supposed to *listen to your customers* So there's the dilemma.
Sounds like Jobs must read Christensen, since he's all about dumping old technology for the new (e.g. floppy disk drives). He must just do s/distruptive new market/Next Big Thing/g... it does seem like Apple has become pretty good at keeping its existing markets safe while disrupting its competitors.
There are 10 types of people in this world, those who can count in binary and those who can't.
All of your examples are for software and include Microsoft, who has had a monopoly on the IBM PC right from the get-go. But the parent was referring to hardware and what used to be a competetive market for sound cards. It's apples and oranges.
But I still disagree that first always wins. Even looking at his soundblaster example, it seems that the lowest price always takes the lions share of the market eventually. It's even starting to happen to Microsoft now.
So I think it all depends on what time frame you are looking at. In other words how mature the market is.
I don't see the problem. Leveraging is a perfectly acceptable word that means using something to gain greater benefit than if you didn't have that thing. (like a lever) Just because something has been used as a buzzword does not eliminate it from the list of useful, valid words.
Give me where to stand, and I will move the earth.
-- Archimedes, expounding on the theoretically limitless power of the lever
He looked at me and said, "Kid, we don't like your kind, and we're gonna send your fingerprints off to Washington."
He looked at me and said, "Kid, we don't like your kind, and we're gonna send your fingerprints off to Washington."
disrupting competitors, not customers
Okay, so what is the best way to disrupt your competitor? What, you say, build a better product? NO!!! Dammit! Hire lawyers! Lots of 'em for frivolous lawsuits. Why? It slows down the competition so a) you can keep a weak product on the market longer b) if you are damn lucky, you can kill their product.
I have worked for a lot of companies and have been surprised at the number of frivolous lawsuits that do PRECISELY that. I really don't consider that "competing" (which is what "competition" is about, right?). Isn't the point to build better products? Last I looked, lawyers really weren't considered to be a part of economic theory (but, hey, economic theory says monopolies provide the lowest priced goods - guess there are flaws in everything, eh?).
So, if we look at Microsoft, in essence they did EXACTLY what this guy says is successful. The question is, was it ethical or moral? And my grandfather could have made children work in coal mines for slave wages while he got rich, but noooooo, he had this damn ethical streak!!! So now instead of a billionaire, I'm a working stiff. Doesn't seem fair in the end does it?
Expect more folks to be following the Microsoft model [sigh]...
IANAL, but I've seen actors play them on TV
... about Dvorak vs. Qwerty, but have no idea if they're true:
- Dvorak is significantly better than Qwerty. But there are a number of other "improved" keyboards that are about the same amount better than Qwerty. So if you're an executive looking into paying to retrain, you look into the merits and find there is no clear choice.
(We hear a lot about Dvorak because it's the one that gets better press, and has some support in the computer community, more for historical reasons than its merits relative to other improved keyboard layouts. That, combined with the relative ease of remapping a computer keyboard {compared to a mechanical typewriter} might get it over this hump. A trivial graphic config tool in Gnome and Kde would give it a BIG push.)
- Qwerty wasn't deliberately designed to be slow. It was just the first layout that was built by that group of engineers. The deficiencies were quickly discoverd and they came up with a better layout. And management nixed it because of the retraining costs - the first such decision.
At the time there were less than ten trained typists.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
...but I'd be quite interested to see a writeup on whether these dynamics applied equally to the usage of various pieces of Free Software. Any ideas? I'm not sure it applies as well... for instance, I've seen some small and great text editors sprout up in the last few years, but I know quite a few people who love and will never give up GNU Emacs. =)
Paranoid
Bwaahahahahaa.
Isn't it safe to say, and to bet your business, that some people (ever over 35) want to be disrupted? And does Christensen actually know any of the students at MIT?
___
"with their freedom lost all virtue lose" - Milton
Previously I've attempted a description of the success of an Open Source product, Ant, in terms of the Innovator's Dilemma. I think the fit is very good, provided you recognize how the rewards and costs should be measured in the OSS environment. If you are interested it can be found at Ant as an Example of the Innovator's Dilemma. Now I'll have to go back and see how Ant matches against the guidelines in the article, so far it's looking pretty good.
development.lombardi.com
I'm afraid I don't buy that theory. It seems to say that evolutionary innovation only occurs in small, isolated groups. The fact is, the innovations the isolated group develop would be more likely to occur in the larger group where they would be quickly quashed by the vast majority.
Almost all changes will be debilitating instead of strengthening. The odds of making enough changes to go through a valley to a different peak are likely much better in a small isolated group, struggling to find an identity as which it can survive. In parallel, the large group will develop a pool of mostly recessive characteristics which may allow some of its members to survive an evolutionary crisis. In any event, you would most likely miss evolution in progress even if you were looking right at it.
Lady luck may help you win a lottery ticket, but she does not have the time to help you make your business a success.
IBM is successful not because of LUCK, but SAVVY MARKETING.
EXXON is successful not because of LUCK, but the KNOWING OF HOW THE OIL MARKET WORKS.
The airline industry is in trouble, not because they are LUCKLESS, but because the airline industry has remained STATIC for decades. In other words, the airline industry is failing because THEY CAN'T CATCH UP WITH THE WORLD.
America is successful not because of LUCK alone. America is successful because of the attitude of the American people - the people who will never take "No" for answer !
Luck may make a person PROUD, and pride begat failure.
In a sense, LUCK actually brings FAILURE.
Muchas Gracias, Señor Edward Snowden !
Yep, you're right. Way back when I was going to buy a soundcard for my familys 16MHz 386 (which at the time was a really high end machine) there wasn't much choice. There were no soundcard drivers with a unified API in DOS, so every game had to support your particular soundcard. And they all supported Adlib. SoundBlaster was Adlib compatible, and had a joystick port. So in the end it was an easy choice.
The SUV marketplace validates the "don't listen to your [current] customers" thesis rather well, really.
Go back 20 or 30 years. Instead of SUV, think "vehicle capable of handling rough terrain and bad weather." I was the typical customer for this kind of vehicle. I wanted it simple, sturdy, and easy to fix. I did not want an automatic transmission, power windows, power steering, or any other gewgaw that would add complexity or might break when I was out in the boonies. I didn't care about a smooth ride or plush seats, and I drove with the windows open (or top down) most of the time, so I didn't need air conditioning, and I wasn't picky about heat. I didn't need a lot of power as long as the gearing was right, so I didn't need a fire-breathing motor. In a 60s/70s context, I was happy with a ~200 CID straight six or a big 4 cylinder engine.
A Willys Jeep was just fine with me. An International Harvester Scout did the job. My younger brother, a photographer, often hauled a lot of gear (and he was a really big guy) so he got into the habit of buying used Suburbans or Carryalls from the (Arizona) highway department.
In other words, these 4X4 vehicles were sold, for the most part, either as working tools to ranchers and the highway department or to camping-type people like me. We got them because we often needed or wanted to go where there were no roads or drive through snow and ice. We wanted trucks. We liked trucks. We didn't care much about paint because it was going to get scraped off anyway.
There was also a racing/performance offroad subculture that spent megamoney on 4X4 vehicles. Again, no attention to luxury.
Fast forward. Jeep sold Wagoneers with car-style amenities, but the hard-cores didn't buy them. Subaru sold 4X4 little cars and station wagons, but only a limited number of them. Broncos and Blazers came a little closer to mass appeal, but were still trucks at heart, not all that different from your old Scout or CJ although they tended to have car-style (plastic) dashboards instead of real he-man ones.
If you had listened to the people who bought the old-style 4X4s, you would not have SUVs. It took a major market perception shift to bring the idea, "Hey, you can have the capability of a 4X4 in a car you usually only drive on the highway and sit in air conditioned, padded comfort even in crappy weather -- and you can now drop into 4 wheel drive without getting out and setting front hubs," onto dealer showroom floors.
I own a middle-aged Jeep Cherokee. It's not a hard-core old-style 4X4 truck, but still has no power windows and crappy air conditioning (in Florida), and I'm okay with that. I like my Cherokee, and that's a problem for the car makers. I am not a good SUV customer, because one important piece of the old 4X4 truck guy ethos is that old trucks are better than new ones, and once you get one you like you only get rid of it if you can't get parts for it any more or some moron runs into it and totals it.
There's an old guy near me who has a late 50s Willys pickup for himself, and a CJ for his wife. They're not restored, just maintained well. Not show condition -- blanket instead of seat cover in the pickup -- but decent.
Hell, listen to that guy and you'd never make an SUV with a stereo (those who wanted stereos would install their own) or any other kind of amenity, and "soccer moms" would not be running around in those grossly huge Ford Expeditions, let alone something as silly (by old truck guy standards) as a 4X4 Cadillac or Lincoln.
- Robin
Cray may still be around - but it's in a small niche market, and doesn't seem to have any prospect of ever becoming bigger.
I didn't know CDC had other lines. I might have mixed up when they (first) went into receivership, although I thought it was before they got their antitrust settlement (middle 70's). This suit (or at least the conclusion of it) was much too late to "stop IBM from promoting vaporware". The background: In the early 1960's, some IBM engineers designed a much more powerful mainframe, but management killed the project. The engineers took their ideas to CDC, which started work on a mainframe at least 10x anything IBM had in regular production. IBM management suddenly realized their mainframes weren't big enough for big corporations anymore - but IBM also needed machines for smaller businesses, and didn't want to follow the previous pattern of making each new computer a unique and incompatible design. So they dumped the previous design efforts and started the 360 project, a full line of computers from rather small to the biggest mainframes possible, all running the same software, and including a grossly overambitious OS. At least that was the plan; the hardware design went slower than planned but as fast as a project of that magnitude ever actually goes, with some big iron on the market by 1968. However, OS/360 was much farther behind schedule. It seems to have been the most massively fouled up project to ever be finally successful (unless you lump all the USA's efforts in WWII together as one "project"). So for a few years you could buy a new 360 but the only thing one could do with it to run an emulation of an older and much less powerful machine. I saw a 360 still running an emulation of an old 1400 in 1973, although OS/360 had been out for at least a year...
IBM had hurt its customers as well as CDC with vaporware in two ways: first, by announcing the 360 line when they started designing it (1964?), they caused a good many companies that were thinking about CDC's to decide to wait a couple of years for IBM assured quality - and it turned into close to 8 years. (This also hurt IBM - nobody wanted to buy their older computers either, and by 1968 they must have really needed to sell something to bring in the cash). And then there were the companies that needed and bought IBM big iron starting in 1968, and waited maybe 4 years to be able to fully use it. Although IBM's antitrust violations were unintentional, they hurt both the competition and loyal IBM customers. But CDC's lawsuit didn't stop this - it stopped when IBM had real products to back up the vaporware, and CDC just skimmed some of IBM's profits years later.
Think CAFE: Corporate Average Fuel Economy.
Basically, the car manufacturers realized they couldn't keep producing full-size station wagons and still meet CAFE standards. But since "light trucks" not only have a less stringent standard, but also are counted separately from their cars, they could replace full-size wagons in their lines with SUV's and mini-vans instead.
Nope, no sig