The innovator's dilemma

For high-tech enterprises, it is not enough to keep up with the rapid technological changes. Enterprises must consider the overall situation of the value network and comprehensively consider various factors such as users, organizations, products and markets, so as to understand the essence of subversive innovation and prevent other enterprises from subverting their own enterprises by using destructive technologies.

Understand the main points of this book from three aspects:

1, continuous technology and destructive technology;

2. Value network and subversive innovation;

3. Why mainstream enterprises face the "innovator's dilemma".

1 the first part, the concepts of continuous technology and destructive technology are the key to understand the dilemma of innovators.

The so-called "continuous technology" emphasizes that the new technology is an innovation on the extension line of the original technology track. And "destructive technology", to put it bluntly, is to completely start a new stove and break the tradition.

1. 1 destructive technology actually has two meanings.

The first layer means: it is not developed on the basis of the original technical track, but a new stove;

The second meaning, it will even break the original road of technological development and find another way.

The destructive technology of 1.2 seems to have more technical content, just as some entrepreneurs often say now: Only when the performance exceeds the competitor 10 times, can I completely knock down the competitor. But the author believes that this may not be the case in fact. The destructive technologies mentioned in the theory of disruptive innovation are often those that are not so advanced, or even worse than the original technologies in their main performance. It makes sense to think about it carefully-if destructive technology and native technology are on the same development track and much better than native technology, how can those leading enterprises with deep pockets not invest, master or even monopolize? How can they be so easily subverted?

Case A classic case about continuous technology and destructive technology. 1956, IBM developed the world's first hard disk drive. Since then, hard disk drives have become the focus of research and development of IT vendors and engineers all over the world. Then, the key technologies needed to develop hard disks can actually be divided into two categories: one is continuous technology and the other is destructive technology.

1, a typical continuous technology.

For example, the new magnetic head technology, which is used to read data, is actually a gradual improvement of the original technology. Then, due to the natural continuity of magnetic head technology, leading enterprises can always maintain a leading position in the next generation of magnetic head technology innovation. This development process is very easy to understand. But the structural design of hard disk is a typical destructive technology, and the development of this technology is very interesting. As we all know, in the past few years, the size of hard disks has become smaller and smaller. How come...

2. Background of the case

In the mid-1970s, the mainstream hard disk specification was actually 14 inch. This kind of hard disk has great performance and can provide the storage space needed by large computers. But by the end of 1970s, 8-inch hard disks appeared on the market. The advantage of this 8-inch hard disk is its small size, but the biggest disadvantage is its small size-because of its small size and low capacity, those enterprises that produce 8-inch hard disks can't meet the storage needs of large computer enterprises, so they have to sell this product to manufacturers that produce microcomputers. Looking back now, we know that miniaturization is the historical trend of computer development. However, the enterprises at that time did not realize this trend, so the 8-inch hard disk technology was considered as a low-end technology, and the mainstream enterprises producing 14-inch hard disks were not very interested in it.

3. Ratio substitution

What happened afterwards was very dramatic. With microcomputer enterprises becoming the mainstream of the industry, 8-inch hard disk has gradually become the mainstream technology of the hard disk industry. Those manufacturers who produce 14-inch hard drives, although they are constantly making serious and continuous innovations, are finally ruthlessly replaced by 8-inch hard drives.

4, constantly being replaced

This is not over yet, and the story that happened later is more interesting: 8-inch hard disk technology was subverted by 5.25-inch hard disk; 5.25-inch hard disk, subverted by 3.5-inch hard disk; 3.5-inch hard drive, and then overturned by 2.5-inch hard drive-so all the way down, it is said that 2.5-inch hard drive is small enough? But this is not over yet, and it was subverted by the 1.8-inch hard disk used by Ultrabook. Nowadays, smaller flash memory technology has been popularized in various IT devices.

1.3 subversion

From the development history of the data storage industry, it can be seen that the mainstream technologies and enterprises at that time seemed to be under a spell and could not escape the fate of being constantly subverted. In fact, it is based on the observation of this phenomenon that Christensen summed up the theory of subversive innovation.

Two-level subversion in 1.4:

One is the technical level, and the other is the enterprise level-at the technical level, it is a new technology that looks "low" at first, subverting another traditional technology, that is, the concept of destructive technology mentioned above. At the enterprise level, it is a group of new enterprises that adopt destructive technologies, subverting the mainstream enterprises that adopt traditional technologies. This is the concept of so-called subversive innovation.

1.5 All industries may be subverted.

In fact, similar to the data storage industry, the phenomenon that new enterprises subvert mainstream enterprises is constantly being staged in many industries. For example, in the photographic equipment industry, Kodak, which invented film, collapsed in the tide of digital imaging technology; In the communication industry, Motorola, which invented mobile phones, and Nokia, which once dominated the world, declined rapidly after the emergence of smart phones. As a sentence written on the cover of the book The Innovator's Dilemma: "In the face of new technologies and new markets, impeccable management often leads to failure"-in other words, the author believes that these subverted mainstream enterprises are not poorly managed, but well managed.

The second part is value network and subversive innovation.

Why can destructive technology bring subversive influence to powerful mainstream enterprises? To understand this problem, let's first understand the value network.

2. 1 The so-called value network refers to the mutual relationship formed between relevant stakeholders. The main elements of this network include customers, products, technologies and organizations. Mainstream enterprises like, or tend to engage in, continuous technological innovation. In addition to the inherent advantages and easy achievement of mainstream enterprises in these technologies, the more essential reason is actually driven by interests. To put it bluntly, continuous technological innovation can protect the interests of stakeholders in the value network of mainstream enterprises, while destructive technologies tend to be the opposite.

1. From the user's point of view, there is a network relationship between them. For those hard disk companies that produce 14 inch hard disks, their customers are large computer companies. When mainstream enterprises with 14 "hard disk discover 8" hard disk technology, they usually invite the personnel of marketing department and engineering management department who have close contact with large computer enterprises to seek the opinions of large computer enterprises. Compared with 14-inch hard disk technology, 8-inch hard disk technology has small storage capacity, slow speed and high cost, so large computer companies definitely don't like 8-inch hard disk technology. Therefore, the feedback from the marketing department and the engineering management department to the decision-making level of hard disk enterprises is that customers don't like it.

2. From the point of view of products, there is a network relationship between products. In other words, hard disk companies can't make hard disks entirely by themselves. They need related companies to provide them with accessories. For example, the production of hard disk drives requires disks, magnetic heads, power supplies, starters, interfaces, etc. If an enterprise producing 14 inch hard disk changes to mainly producing 8 inch hard disk, it needs the cooperation of all suppliers, but these suppliers are likely to be unwilling to cooperate because of the small number of accessories and low profits.

3. From a technical point of view, there is also a network relationship. In other words, every major technology needs some auxiliary technology to support it. For destructive technologies in an industry, when these technologies first appeared, the development speed of main technologies was usually very slow because there was no mature auxiliary technology support. For example, as an enterprise producing 14 inch hard disk, if it wants to produce 8 inch hard disk, it may need to develop these auxiliary technologies by itself, or wait for the auxiliary technologies in the market to mature, and these auxiliary technologies usually develop slowly in the initial stage.

4. From the organizational point of view, the internal organization of an enterprise is also a network. In other words, departments and employees in enterprises usually prefer continuous technology because it allows them to continue to exert their knowledge and experience. Destructive technology is usually a challenge to the existing departments and employees of enterprises, and may even make them unemployed. Therefore, although destructive technologies such as digital images and smart phones were first invented by Kodak and Nokia, their related departments secretly killed these new technologies within the enterprise.

3 The third part

Third, why do mainstream enterprises face the "innovator's dilemma"? We say that mainstream enterprises are "trapped" by their own value networks, and it is difficult to adopt destructive technologies, but they are easily subverted by new enterprises that adopt destructive technologies. Next, let's take a look at how this subversion happened. In my book The Innovator's Dilemma, I summarized the reasons why mainstream enterprises were subverted as "five impossibilities". These five can't be: 1 can't see users, 2 can't look down on demand, 3 can't understand patterns, 4 can't learn to organize, and 5 can't keep up with the market.

3. 1 "Invisible users" means that mainstream enterprises have their own accumulated customers, and "satisfying customers" is their creed, but these mainstream enterprises probably ignore the existence of "non-customers". The so-called "non-customers" are those enterprises or individuals who were not corporate customers in the past, but may become customers or even major customers in the future. Take the video industry as an example. Before the popularity of DVD, everyone rented videos from offline video stores, which was very inconvenient. Hastings, founder of Netflix, saw the opportunity brought by the popularity of DVD and Internet and founded Netflix. Users place orders online and rent and return DVDs through the US Postal System. This innovative model turns people who used to be troublesome and didn't rent videos into Netflix users, and these new users who are used to using the Internet are invisible to the traditional video giant bestv.

3.2 "Looking down on demand" means that emerging small markets are often unable to solve the growth needs of large enterprises. Also talk about the example of video rental. When DVD began to appear, bestv, a traditional video giant, also noticed this new video carrier form. However, because DVD players were not popular at that time, the DVD rental market was actually small and scattered. As a traditional giant in the video rental industry, bestv despises and has no patience to cultivate this small market, but this small market is already very good for Netflix, which has just started its business. Therefore, the small market despised by large enterprises can often become the starting point of new ventures.

3.3 "Don't understand the model" means that the new business model based on destructive technology is often incomprehensible to mainstream enterprises. For example, after the popularization of broadband infrastructure, online video rental business model began to appear. As a traditional offline leasing giant, bestv can't understand the online leasing model without Internet genes. As a Netflix company, because its DVD rental mode is originally a combination of online and offline, Netflix has Internet genes, and the transition from DVD rental mode to streaming media mode is much smoother than in bestv.

3.4 "Organizations that can't learn" means that the existing systems, inertia and processes of mainstream enterprises will restrict their ability to adapt to the new situation and adopt destructive technologies. The bursting of the Internet bubble in 2000 made Netflix face great difficulties. That year, Netflix lost more than 50 million dollars and had to seek the cooperation of people of insight. Hastings had proposed to sell Netflix directly to people familiar with the matter for $50 million, but the CEO of bestv rejected the proposal. Bestv rejected this proposal because the huge offline rental stores in bestv conflict with Netflix's online rental model. Bestv's offline franchisees will think that online rental has robbed their business.

3.5 "Can't keep up with the market" means that after missing the best opportunity to adopt destructive technology, mainstream enterprises will repeatedly miss opportunities because they fail to accumulate the capabilities needed for market transformation in time. For example, when bestv really started to pay attention to the DVD rental business in 2003, it was six years later than Netflix. The physical stores in bestv seem to have a huge number of customers of 20 million, but the efficiency is very low because the information management system is outdated and there is no data analysis of users' behavior habits. Bestv persisted until 20 10, and bestv applied for bankruptcy protection.

4 abstract

First, continuous technology and destructive technology. Destructive technology is "destructive" because it does not continue the original technical development track, but develops on a new technical track, and finally replaces the continuous technology.

Second, value network and subversive innovation. The reason why mainstream enterprises are subverted is that a huge and complex value network has been formed in its development process, which restricts the reform of mainstream enterprises. If we can't get rid of the shackles of the original value network and form a new value network, mainstream enterprises will always be subverted by destructive technology.

Third, why mainstream enterprises face the dilemma of innovators. From the perspective of mainstream enterprises themselves, there is a dilemma of "five impossibilities". Mainstream enterprises can't see non-users at first, despise small demand, don't understand new models, learn not to change organizations, and finally can't keep up with market development. This is the dilemma faced by mainstream enterprises. As for how mainstream enterprises break through the dilemma of innovators, please listen to another book by Christensen, Answers from Innovators.