Summary articles Corporate
Entrepreneurship May 2021
, 1. Christensen, “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”,
(introduction only), Boston: Harvard Business School Press.1
Simple and consistent factors that determined the success and failure of the disk drives’ industry best
firms:
- Success: listened responsively to customers and invested aggressively in the technology,
products, and manufacturing capabilities that satisfied their customers’ next-generation
needs.
- Failure: the same reasons as above.
➔ = innovator’s dilemma: blindly following the maxim that good managers should keep close to
their customers.
Technology mudslide hypothesis: Coping with the relentless onslaught of technology change was akin
to trying to climb a mudslide raging down a hill. You have to scramble with everything you've got to
stay on top of it, and if you ever once stop to catch your breath, you get buried. However, neither the
pace nor the difficulty of technological change lay at the root of the leading firms' failures. The
technology mudslide hypothesis is wrong. Leaders could actually manage to keep up with the change.
Sometimes, customers held the leaders captive with their wishes. It is the type of change that matters.
2 types of change:
- Sustaining the industry’s rate of improvement in product performance, ranging from
incremental to radical change, usually led by leading firms.
- Disrupting or redefining performance trajectories that result in the failure of leading firms.
Patterns that kept repeating:
1. Disruptive innovations were rather straightforward.
2. The purpose of technology development was always to sustain, often they were radical and
difficult, yet not disrupting. Customers led the suppliers to these achievements (and thus also
held them captive).
3. New entrants always led the industry in adopting and developing disruptive technologies,
which incumbent firms also allowed because they were not investing in this disruptive
technology.
, 2. Moore, “Darwin and the Demon,” Harvard Business Review, July-August 2004, p. 86-93.->
response to Christenen
Due to outsourcing and offshoring, innovation is necessary. Different forms of innovation:
- Disruptive innovation. Markets appear as if from nowhere, creating new sources of wealth.
Often has roots in technological discontinuities.
- Application innovation. Takes existing technologies into new markets to serve new purposes.
- Product innovation. Takes established offers in established markets to the next level.
Performance increase or usability improvement are examples.
- Process innovation. Makes processes for established offers in established markets more
effective or more efficient.
- Experiental innovation. Surface modifications to improve customers’ experience of established
products or processes.
- Marketing innovation. Improves customer-touching processes, for example marketing
communications or consumer transactions.
- Business model innovation. Reframes an established value proposition to the customer or a
company’s established role in the value chain or both.
- Structural innovation. Capitalizes on disruption to restructure industry relationships.
Focusing on core competencies doesn’t always guarantee a competitive advantage anymore; which
innovation to focus on? Solving the issue of focus: life cycle -> different types of technologies are
preferred at different phases of a market’s life. Market development phases:
- Early market. New technology introduction; early adopters. Pragmatic buyers make no
commitment.
- The chasm. Technology is caught betwixt and between. Lost novelty, but acceptance also not
widespread. Adoption is stalled. The solution is often to target a niche market.
- Bowling alley. Technology is gaining acceptance among pragmatists in one or more niche
markets.
- Tornado. Technology has passed the test of usefulness and is now perceived as necessary and
standard. Competition is fierce.
➔ Adoption life cycle: disruptive, application and product innovation.
- Main street early. Era of hypergrowth has subsided, but growth is still nice. Systematic
improvements are the focus.
➔ Process innovation
- Main street mature. Growth has flattened and commoditization is increasing. It is now taken-
for-granted yet no obsoleting technologies in the horizon.
➔ Indefinitely elastic middle period: Experiental and marketing innovation.
- Main street declining. It has become ossified; leaders are unresponsive to customer needs;
customers are looking for relief. Next generation is on the horizon but no tornados yet.
➔ Business model and structural innovation.
- Fault-line and end of life. Difference between what is sold and what is wanted/needed by
customers. The next generation tornado is coming to destroy the previous technology, it is just
a matter of time.
Entrepreneurship May 2021
, 1. Christensen, “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”,
(introduction only), Boston: Harvard Business School Press.1
Simple and consistent factors that determined the success and failure of the disk drives’ industry best
firms:
- Success: listened responsively to customers and invested aggressively in the technology,
products, and manufacturing capabilities that satisfied their customers’ next-generation
needs.
- Failure: the same reasons as above.
➔ = innovator’s dilemma: blindly following the maxim that good managers should keep close to
their customers.
Technology mudslide hypothesis: Coping with the relentless onslaught of technology change was akin
to trying to climb a mudslide raging down a hill. You have to scramble with everything you've got to
stay on top of it, and if you ever once stop to catch your breath, you get buried. However, neither the
pace nor the difficulty of technological change lay at the root of the leading firms' failures. The
technology mudslide hypothesis is wrong. Leaders could actually manage to keep up with the change.
Sometimes, customers held the leaders captive with their wishes. It is the type of change that matters.
2 types of change:
- Sustaining the industry’s rate of improvement in product performance, ranging from
incremental to radical change, usually led by leading firms.
- Disrupting or redefining performance trajectories that result in the failure of leading firms.
Patterns that kept repeating:
1. Disruptive innovations were rather straightforward.
2. The purpose of technology development was always to sustain, often they were radical and
difficult, yet not disrupting. Customers led the suppliers to these achievements (and thus also
held them captive).
3. New entrants always led the industry in adopting and developing disruptive technologies,
which incumbent firms also allowed because they were not investing in this disruptive
technology.
, 2. Moore, “Darwin and the Demon,” Harvard Business Review, July-August 2004, p. 86-93.->
response to Christenen
Due to outsourcing and offshoring, innovation is necessary. Different forms of innovation:
- Disruptive innovation. Markets appear as if from nowhere, creating new sources of wealth.
Often has roots in technological discontinuities.
- Application innovation. Takes existing technologies into new markets to serve new purposes.
- Product innovation. Takes established offers in established markets to the next level.
Performance increase or usability improvement are examples.
- Process innovation. Makes processes for established offers in established markets more
effective or more efficient.
- Experiental innovation. Surface modifications to improve customers’ experience of established
products or processes.
- Marketing innovation. Improves customer-touching processes, for example marketing
communications or consumer transactions.
- Business model innovation. Reframes an established value proposition to the customer or a
company’s established role in the value chain or both.
- Structural innovation. Capitalizes on disruption to restructure industry relationships.
Focusing on core competencies doesn’t always guarantee a competitive advantage anymore; which
innovation to focus on? Solving the issue of focus: life cycle -> different types of technologies are
preferred at different phases of a market’s life. Market development phases:
- Early market. New technology introduction; early adopters. Pragmatic buyers make no
commitment.
- The chasm. Technology is caught betwixt and between. Lost novelty, but acceptance also not
widespread. Adoption is stalled. The solution is often to target a niche market.
- Bowling alley. Technology is gaining acceptance among pragmatists in one or more niche
markets.
- Tornado. Technology has passed the test of usefulness and is now perceived as necessary and
standard. Competition is fierce.
➔ Adoption life cycle: disruptive, application and product innovation.
- Main street early. Era of hypergrowth has subsided, but growth is still nice. Systematic
improvements are the focus.
➔ Process innovation
- Main street mature. Growth has flattened and commoditization is increasing. It is now taken-
for-granted yet no obsoleting technologies in the horizon.
➔ Indefinitely elastic middle period: Experiental and marketing innovation.
- Main street declining. It has become ossified; leaders are unresponsive to customer needs;
customers are looking for relief. Next generation is on the horizon but no tornados yet.
➔ Business model and structural innovation.
- Fault-line and end of life. Difference between what is sold and what is wanted/needed by
customers. The next generation tornado is coming to destroy the previous technology, it is just
a matter of time.
