One of the great irony of successful companies is how easily they can fail. New companies are founded to take advantage of some new technology. They become highly successful and but when the technology shifts, something new comes along, they are unable to adapt and fail. This is the innovator’s dilemma. Then there are companies that manage to survive. For example, Kodak survived two platform shift, only til fail the third. IBM has survived over 100 years. What do successful companies do differently?

1. Lecture L09
THE INNOVATOR’S DILEMMA

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

3. 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

4. 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

5. 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

9. 1. Where
did
Kodak
fail?
2. What
did
Fuji
do
differently?
READING ASSIGNMENT

11. 1. Where
did
Kodak
fail?
2. What
did
Fuji
do
differently?
READING ASSIGNMENT

12. 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
* Consumer’s desire for print cannot be replaced
* The device is too expensive
Source: Decisive

13. 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

14. 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

15. 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: Decisive

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

18. Technology is
one of the
major factors
in change

19. 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

20. 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?

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

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

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

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

27. Disruptive Innovation

28. 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

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

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

31. Why did they fail?

32. They listened to their customers

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

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

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

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

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

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

40. “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

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

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

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

44. 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

45. Next
Innovator’s Method