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02 JULY 2011

Disruptive versus Radical Innovations

"The innovator's dilemma is this: a company that does everything by the book – listening to customers, managing by facts, being disciplined about costs and quality, and so forth – can get blindsided by an innovation that rapidly takes away its markets, because it was doing everything right. The innovations that cause this 'why bad things happen to good companies' dilemma are disruptive innovations. The signature story of disruption reads as follows: an upstart low–end competitor displaces a much larger incumbent in a market, with the incumbent either retreating upmarket to higher margin/lower volume products or dying out altogether. ...

Examples are smaller, cheaper hard drives disrupting incumbent hard drive makers, hydraulic shovels disrupting cable–winch shovels (an early 20th century example), PCs disrupting mainframes, ink jet printers disrupting laser printers and, most recently, the Nintendo Wii starting to disrupt the Playstation and the Xbox.

Major though they were, innovations such as CDs, laser printing and jet airplane engines were not disruptive with respect to the technologies they displaced ( cassette tapes, light lens Xerography and piston engines respectively). In each case, the incumbents benefited from these non–disruptive, or sustaining innovations.

The key point to remember is that disruption is a market/business phenomenon and has little to do with technology per se. In particular, a disruptive innovation may or may not represent a major technical breakthrough. Major breakthroughs, which are called 'radical' in Christenson's model, may or may not be disruptive, while minor, or 'incremental' innovations can be massively disruptive. The opposite of disruptive is sustaining. Why and how does disruption happen?

A disruptive innovation usually starts as a low–quality differentiated product in a low–volume marginal segment of a much larger mature market, which demands attributes that the mainstream market does not, and which is willing to give up performance attributes the mainstream market is not (example, Wii customers willing to give up sheer processing horsepower for 3d input capability).

A marginal player occupies this segment and starts growing rapidly, solving initial quality problems while retaining a cost advantage.

The incumbent mature market leader, no matter how visionary, is forced to ignore the opportunity because it does not meet the growth needs dictated by its larger size, and also because the disruptive product is not yet good enough for its mainstream customers.

The marginal player goes through a learning curve, solves its quality problems and suddenly starts threatening the market leader in its main markets

The incumbent scrambles to put together a response, nearly always fails because of the disruptor's head start and optimized culture, and retreats to a higher–end market."

(Venkatesh Rao, 23 July 2007)

TAGS

breakthrough • business phenomenon • cable-winch shovels • cassette tapes • CDs • Clayton Christensencompetitor • differentiated product • disruptiondisruptive innovation • disruptive innovations • growth needs • hard drive • hydraulic shovels • incremental • ink jet printer • innovation • innovations • innovators dilemma • jet airplane engines • laser printer • laser printing • light lens Xerography • listening to customers • mainframemarket leader • market phenomenon • Nintendo Wii • non-disruptive • opportunity • PCs • piston engines • Playstationproductradicalradical innovationsustaining innovations • technical breakthrough • Venkatesh Rao • Xbox

CONTRIBUTOR

Simon Perkins
06 NOVEMBER 2008

The Waterfall Versus Whirlpool Project Management Methods

"'Whirlpool' projects embrace the fact that requirements are volatile. Instead of trying to deliver a system that satisfies 100% of the requirements in one go, the focus is on delivering an agreed subset of the requirements at intervals. Use cases are the building blocks of requirements and provide a convenient basis for risk assessment and prioritising. The riskiest and most significant use cases are tackled first, within the context of a clearly understood architectural vision. Tackling risk early identifies problems before they become too expensive or threatening, and helps lead to more stable architectures. The system evolves as a sequence of increments, each one an enhancement to the already–delivered functionality.

The development process for each increment is founded on the idea of a workflow, consisting of activities. For example. instead of having an analysis stage followed by a design stage, a worker might be engaged in analysis activities and design activities, depending on the job in hand. It is important to recognise that analysis activities focus on the problem space, while design activities focus on the solution space. A good understanding of one part of the problem may well lead to faster progress to design in that area. It is also possible that design activities highlight shortcoming in the analysis or even the requirements, in which case these are amended to reflect the newer (and hopefully better) understanding.

Successive iterations converge on a more complete, correct and consistent model, leading ultimately to implementation and delivery."
(Tecademy)

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CONTRIBUTOR

Simon Perkins
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