Clayton Christensen's book "The innovator's dilemma: when new technologies cause great firms to fail" to date is a classic literature on strategic planning. Speech in it goes that many companies fail for the reason that they are trying to do everything right. They can focus on the opinion of consumers, invest in promising innovations and follow the steps of successful companies, but still be defeated.
The information presented in the book is an excellent material for thinking, because is mainly theoretical, and is aimed at familiarizing the reader with the problem. Be that as it may, the idea of any person who has read the book, how to manage modern business, will radically change.
About Clayton Christensen
The book offered to your attention consists of a section of thanks, introduction and two large parts, which include eleven chapters in total. The final section is devoted to the author's personality. Below I would like to introduce you to some of the most interesting, in my opinion, features of the book.
Introduction
Any company today must be in a state of constant development, because without it there can be no profit, nor the desired market positions. But for movement along the path of development, it is necessary to use innovations and new technologies. The result of this process is able to meet the needs of customers.
In the process of the organization's activities, not everything follows the planned scheme, and even a seemingly thoughtful modification of production can lead to defeat. It is in this case that innovation is an extremely negative phenomenon. To understand this, it should be said that innovations can be of two kinds:
Innovative support is characteristic of large market players; are aimed at maintaining the market position, attracting new customers and retaining existing customers
Innovation is subversive - peculiar to beginners, prone to risk and actions in conditions of uncertainty; large companies often do not pay attention to such innovations, which in the future can go for them sideways
Our task is to understand why large companies fail, interacting with innovations, and also understand how they can be managed.
The innovator's dilemma # 1: dependence on the opinions of consumers and investors
The desire of companies to manufacture and sell a popular product is quite natural. But this captures them in captivity of interested persons - investors and consumers. This dependence also does not allow the company to accept market calls, because The entire interior of the company is subject to the behavior of stakeholders.
The company's resources are distributed according to specific directions set by the market. Hence the cost is created, based on the wishes of consumers, solving the financial issue in their favor. If there is a great demand for a service, then there will be a desire to get the maximum income from it.
But not only resources can slow down the response to innovation. The procedures adopted in the organization play a noticeable role here: they are designed to limit the access of decision-makers to a common basis for alternative solutions.
Among other things, investors, already mentioned, are an obstacle to the financing and commercialization of subversive innovations, because they imply considerable risk. In addition to this, they are the reason for the emergence of a new line of business.
To avoid a collision between what is profitable and what is promising, effective managers implement disruptive innovations that are consumed by the consumer, use values and procedures from the main organization, place low-cost resources behind subversive innovations and come out with a subversive project to neighboring markets, where their technical characteristics can be evaluated.
The innovator's dilemma # 2: the desire to enter the market "above"
A successful company is always guided by its principles in the process of creating a value chain. The main strategy here is continuous growth. Proceeding from this, the management increasingly makes a decision to move up - entering larger markets. Hence it turns out that the schedule of sales is built on an ascending one. Subversive innovation appears on the lower levels, and is capable of directing the entire organization along a new path.
There are three main factors characteristic of the zeal of large companies to rise to a higher level: they expect higher incomes, increase the quality of life of consumers and apply the scale effect to their intended purpose. It is also important to say that there are factors for which "lower" markets are not satisfied with large companies: for example, they are not able to meet the need for development.
The innovator's dilemma # 3: an overabundance of quality
Despite apparent evidence, if the product is of better quality, this does not mean that it is better. According to the peculiarities of the demand curve, known from economic theory, if the quality of the products is excessively improved, the producer can jeopardize his profit.
In such situations, the risk can not be justified, based on the following reasons:
- The consumer does not want to buy higher quality products at higher prices, if he is satisfied with the previous quality
- The manufacturer does not take into account the stages of the product life cycle, accelerating the process of his "death"
Quality is understood as a complex of related product properties. A serious change in one property is reflected on the other, thereby increasing the value of the goods. In order not to make mistakes, the manager must, first, conduct a theoretical analysis of the situation and insist on his own, interacting with the members of the company, and secondly, create a test version of the product in order to show in practice the weight of his arguments.
The innovator's dilemma # 4: analysis of the nonexistent
From one point of view, an effective manager engages in detailed market research and action planning, but on the other, it can become a hindrance to the company's becoming the initiator of major changes in the market.
Companies may be afraid of subversive innovations due to the lack of specific quantitative returns, an unclear representation of the financial features of the issue, and a lack of budgetary management capacity.
In such situations, one should resort to the use of agnostic marketing, since It is assumed that the organization operates in conditions of complete uncertainty. But you must remember that there is no need to identify the failures of an idea and the failure of a company, just as the capabilities of employees should not be considered an organization's capabilities.
Agnostic marketing involves answers to the following questions:
- How will the project be correlated with the procedures adopted in the company?
- How will the project relate to the values of the organization?
- Is it possible to create a separate unit based on resources?
Answering these questions, you can proceed to determine the types of commands by structure.
Conclusion
To solve the problem of innovation, you do not need to strive for better management, increasing the amount of working time and getting rid of errors. Practical studies have shown that in all effective companies there were hardworking leaders and there have always been errors. So you need to choose the right reaction without anybody's accusations, and draw the right conclusions. Do not think that you will instantly make a leap; It's worth just putting your product on the market right away and watching what comes out of it.
You will learn about other important features of working with innovations from the book by Clayton Christensen "The innovator's dilemma: when new technologies cause great firms to fail". I recommend it to businesspersons, managers, managers and people who are interested in business and innovation issues.