Chapter 6: Disruptive Innovations Graded A+
Kodak and Photography ️- Manufactured camera 'film' and some hardware - Synonymous with photographs "Kodak moments" - In the 1990s......
o 145,000 employees
o market share near 90 percent
o profit margins so good "any products more lucrative tha...
Chapter 6: Disruptive Innovations Graded A+
Kodak and Photography ✔️- Manufactured camera 'film' and some hardware
- Synonymous with photographs "Kodak moments"
- In the 1990s......
o 145,000 employees
o market share near 90 percent
o profit margins so good "any products more lucrative than film were likely illegal"
- Crushed by digital photography
Why Do Companies Like Kodak Fail? ✔️- Many once-large firms fail to make the transition as new
technologies emerge to redefine markets.
- Since the 1990s
- The market-creating price elasticity of fast/cheap technologies acts as a catalyst for the fall of huge
firms.
Why Big Firms Fail ✔️- Failure to see disruptive innovations as a threat.
o Reason: They do not dedicate resources to developing the potential technology since they (initially) do
not look attractive.
• Creates blindness by an otherwise rational focus on customer demands and financial performance.
- Start-ups amass expertise quickly.
o Big firms are forced to play catch-up.
• Few ever close the gap with the new leaders.
Characteristics of Disruptive Technologies ✔️- They come to market with a set of performance
attributes that existing customers do not value.
- Over time the performance attributes improve to the point where they invade established markets.
Disruptive vs. Sustaining Technology ✔️Sustaining technology: produces incremental improvements in
existing products - 'better, faster, cheaper'. Readily accepted by existing customers.
, - Better fuel economy in cars
Disruptive Technology: a new way of doing things that usually opens new markets and destroys old
ones.
- Steamboats in the 19th century
- Electric or Hydrogen Fuel Cell Cars ... self driving cars
- Quartz watches
- The internet....
Digital Darwinism ✔️Implies that organizations which cannot adapt to the new demands placed on
them for surviving in the information age are doomed to extinction
Recognizing Potentially Disruptive Innovations ✔️- Don't focus on the short term and on customer's
current needs
- Create positions in the organization to scan the environment for potential innovative technologies:
o The Chief Technology Officer (CTO)
- Scan the environment and have conversations with those on the experimental edge of advancements.
- Increase conversations across product groups and between managers and technologists.
When a Potential Disruptor is Spotted ✔️- Build a portfolio of options on emerging technologies,
investing in firms, start-ups, or internal efforts.
o Focus solely on what may or may not turn out to be the next big thing.
- Have a process to experiment with new technologies
Stages ✔️1. Generate Ideas: Strategic business and IT planning, environmental scanning, employee
suggestions.
2. Develop a Proof of Concept: Small scale experiment to demonstrate usefulness. Use as a 'gate' to
determine if we should proceed with idea.
3. Pilot Stage: Try out the technology in the real world. Small Scope, low risk.
4. Transition: Roll out technology on larger scale
The Internet - History ✔️- Began as a U.S. Dept. of Defense network called ARPANET in 1962
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