M2M EVOLUTION MAGAZINE

Making Connections

Everything We Know About Disruption is Wrong

By Rich Tehrani, Group Editor-in-Chief, TMC  |  August 07, 2014

People in the tech space generally accept the Innovator's Dilemma written by Clayton M. Christensen as fact – companies need to either disrupt or be disrupted. Jill Lepore, writing for The New Yorker Magazine, questions much of what is "accepted wisdom" or as Al Gore might call it, "settled science" in a well-researched and written piece debunking much of what techies have believed for decades.

Lepore's argument is that the book uses handpicked case studies, which aren't necessarily cut and dried in terms of their outcomes. Moreover, the innovators aren't always more successful than the incumbents, as you can see from this passage below:

In fact, Seagate (News - Alert) Technology was not felled by disruption. Between 1989 and 1990, its sales doubled, reaching $2.4 billion, "more than all of its U.S. competitors combined," according to an industry report. In 1997, the year Christensen published "The Innovator’s Dilemma," Seagate was the largest company in the disk-drive industry, reporting revenues of $9 billion. Last year, Seagate shipped its two-billionth disk drive. Most of the entrant firms celebrated by Christensen as triumphant disrupters, on the other hand, no longer exist, their success having been in some cases brief and in others illusory.

She continues:

As striking as the disruption in the disk-drive industry seemed in the nineteen-eighties, more striking, from the vantage of history, are the continuities. Christensen argues that incumbents in the disk-drive industry were regularly destroyed by newcomers. But today, after much consolidation, the divisions that dominate the industry are divisions that led the market in the nineteen-eighties. (In some instances, what shifted was their ownership: I.B.M. sold its hard-disk division to Hitachi, which later sold its division to Western Digital (News - Alert).) In the longer term, victory in the disk-drive industry appears to have gone to the manufacturers that were good at incremental improvements, whether or not they were the first to market the disruptive new format. Companies that were quick to release a new product but not skilled at tinkering have tended to flame out.

Another subject of the book, Bucyrus was a victim of disruption – did indeed enter Chapter 11 protection but emerged some years later as an entity that was sold for nearly nine billion dollars.

The point is, companies can indeed come back from a disruptive influence. Apple is a great example.

Google (News - Alert) seems to be involved in every industry we can imagine: cars, robotics, satellites, fiber, etc. because – you guessed it – it is afraid to be disrupted by new entrants.

Amazon recently launched its Fire Phone with 3D technology and the ability to scan and buy virtually limitless products because it fears disruption from Google, Apple (News - Alert), and app developers. It included its famous Mayday help button, powered by WebRTC, making this technology available beyond just the company's tablets.

VoIP disrupted telecom. It doesn't mean that it killed the established players (some of course are gone), but it did give major advantages to new companies like Cisco.

Still, new disruptive technologies can help kill off incumbents if they don't adapt properly. The good news for incumbents – whether they play in the machine-to-machine arena, in VoIP, or unified communications – is that most startups fail, and moreover that incumbents can adapt, restructure and thrive. Think the second tenure of Steve Jobs at Apple – or IBM (News - Alert).

The point is, you need to embrace change and innovation and not be afraid to cannibalize existing businesses as you get into new ones. And if this is what you take away from this article and disruption in general, I think we'll all be in good shape.




Edited by Adam Brandt


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