The document discusses disruptive innovation theory and how successful companies can fail to adapt. It provides three key points: 1) Clayton Christensen's disruptive innovation theory explains how new, simpler technologies can overtake established companies. Incumbents focus on existing customers rather than emerging needs. 2) Christensen's RPV (resources, processes, values) theory shows how a firm's strengths can also be weaknesses, blinding them to disruptions. When platform shifts occur, moving to new technologies is difficult. 3) Listening primarily to current customers can cause companies to miss disruptions. New entrants are often best poised to pursue adjacent possible markets that incumbents cannot envision.

1. LECTURE L09
THE INNOVATOR’S DILEMMA

2. OPPORTUNITY
THREAT

3. Source: (Christensen, 2000)
The Disruptive Innovation Theory
New organisation can use relatively simple,
convenient, low-cost innovations to create growth
and triumph over powerful incumbents

4. Source: (Christensen, 2000)
Organisations successfully tackle opportunities
When they have the resources to succeed,
when their processes facilitate what needs
to get done, and then their values allow them
to give adequate priority to that particular
opportunity in face of all other demands that
compete for the company’s resources
The RPV Theory

5. 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

6. 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

7. 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

10. Form the Economist article

11. Economist article: The last Kodak moment?
Kodak is at death’s door; Fujifilm, its old rival, is thriving. Why?

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

14. 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
* The device is too expensive
* Consumer’s desire for print cannot be replaced
Source: Decisive

15. Kodak
Culture
“suffered from the mentality of perfect products,
rather than the high-tech mindset of
make it, launch it, fix it.”
One company town
No criticism, changing leadership
Failed to capitalise on pharmaceutical assets
Source: Economist

16. 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
Source: Economist

17. 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: DecisiveSource: Decisive

18. Van Halen’s Brown M&M
They demanded M&M back stage but without the brown M&Ms
Source: Decisive

20. Technology is one
of the major
factors in change

21. Surviving Technological Change
What is it that kills successful
companies?

22. Surviving Technological Change
Business models of the 21st century
may not support the organisational
structure of the 20th century

23. 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?

24. 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 means

25. The Innovator’s Dilemma
Clayton Christensen
professor at Harvard Business School

27. Source: Yang, Harvard
Traditional Concept of
Good Management
Focus on your best customers
Focus on your highest margin products

29. Reason for Failure?
If you become wildly successful
because you do everything right,
you're doomed

30. Disruptive Innovation

31. Disruptive Innovation

32. Resources, Processes and Values Theory
Resources (what a firm has),
processes (how a firm does it´s work), and
values (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

33. WHEN
PLATFORM
SHIFTS HAPPEN,
COMPANIES FIND
IT HARD TO MOVE
TO NEW
GENERATION OF
TECHNOLOGY

34. Image Source Page: http://www.teach-ict.com/wp/archives/264
Only ONE established firm
managed the transition from one
generation to the next

35. Why did they fail?

36. They listened to their customers

37. Case Study
Betware transformed
from custom software
development to
product development
– from technology to
service

38. “If I’d asked my
customers what they
wanted, they’d have
said a faster horse”
- Henry Ford

39. We tend to view technology
based on
past usages
but not the future potential

40. The Resistance Corollary
Even outdated things that
should “disappear” don’t
due to supposed importance

41. The hardest things when you are trying to affect change
Steve Jobs Insult Response, WWDC 1997

43. Source: Yang, Harvard
Traditional Concept of
Good Management
Leads successful companies to ignore
disruptive innovations with deadly
consequences

44. Source: Yang, Harvard
Traditional Concept of
Good Management
“In the history of business, things happen only once”
- Peter Thiel

45. Source: Yang, Harvard
Traditional Concept of
Good Management
"The next Bill Gates will not build an operating
system. The next Larry Page or Sergey Brin won’t
make a search engine. And the next Mark Zuckerberg
won’t create a social network. If you are copying these
guys, you aren’t learning from them."
- Peter Thiel

46. “We listen to our best customers”
The Innovation Trap

47. “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

48. “Our customer are starting to ask
for our new product.”
The Innovation Trap

49. It is very difficult for incumbent
companies to disrupt themselves, so
usually others will do it

50. “Markets that do not exist
cannot be analysed”
- Clayton Christensen

51. 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

52. Next
The Broadcast Century