Disruptive Technology - Why large companies often fail to innovate
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Why do large companies often fail to innovate? Often it is good management, that has made them become industry leaders. This paper gives an analysis of the 5 principles of disruptive technologies and some advice what managers of large companies can do.
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Disruptive Technology - Why large companies often fail to innovate
- 1. by Norman Hiob DISRUPTIVE TECHNOLOGY WHY LARGE COMPANIES OFTEN FAIL TO INNOVATE
- 2. © NORMAN HIOB WHY DO LARGE COMPANIES OFTEN FAIL TO INNOVATE?
- 3. © NORMAN HIOB 5 REASONS
- 4. © NORMAN HIOB 1 COMPANIES DEPEND ON CUSTOMERS AND INVESTORS FOR RESOURCES
- 5. © NORMAN HIOB GOOD MANAGERS DO WHAT MAKES SENSE © NORMAN HIOB
- 6. © NORMAN HIOB WHAT MAKES SENSE IS PRIMARILY SHAPED BY THEIR VALUE NETWORK © NORMAN HIOB
- 7. © NORMAN HIOB VALUE NETWORK = ECONOMIC ECOSYSTEM
- 8. © NORMAN HIOB COMPANIES MUST SATISFY…
- 9. © NORMAN HIOB CUSTOMERS © NORMAN HIOB
- 10. © NORMAN HIOB INVESTORS © NORMAN HIOB
- 11. © NORMAN HIOB WITH PRODUCTS, SERVICES AND PROFITS THAT THEY REQUIRE
- 12. © NORMAN HIOB WHICH LEADS TO
- 13. © NORMAN HIOB RESOURCE DEPENDENCE COMPANIES FREEDOM OF ACTION IS LIMITED TO SATISFYING THE NEEDS OF EXTERNAL ENTITIES
- 14. © NORMAN HIOB IN OTHER WORDS
- 15. © NORMAN HIOB IT DRIVES THE ALLOCATION OF RESOURCES
- 16. © NORMAN HIOB TOWARDS SUSTAINING TECHNOLOGIES © NORMAN HIOB
- 17. © NORMAN HIOB AND AWAY FROM DISRUPTIVE ONES © NORMAN HIOB
- 18. © NORMAN HIOB 2 MARKETS THAT DON’T EXIST CAN’T BE ANALYSED
- 19. © NORMAN HIOB THE TECHNOLOGY S-CURVEProductperformance Time or engineering effort Richard N. Foster: „Innovation: The attacker's advantage“, New York, Summit Book, 1986 OFTEN USED TO PREDICT NEW TECHNOLOGIES
- 20. © NORMAN HIOB THE TECHNOLOGY S-CURVEProductperformance Time or engineering effort Richard N. Foster: „Innovation: The attacker's advantage“, New York, Summit Book, 1986 DECREASING RATE OF IMPROVEMENT INDICATES THAT A NEW TECHNOLOGY MAY EMERGE
- 21. © NORMAN HIOB USEFUL FOR SUSTAINING TECHNOLOGIES
- 22. © NORMAN HIOB #1 Sustaining technologies IMPROVES PRODUCT PERFORMANCE Productperformance Time or engineering effort Technology #1 Technology #2 Technology #3 Clayton M. Christensen: „Exploring the Limits of the Technology S-Curve“, Productions and Operations Management 1, no. 4, 1992
- 23. © NORMAN HIOB BUT NOT FOR DISRUPTIVE TECHNOLOGIES
- 24. © NORMAN HIOB #2 Disruptive technologies Technology #1 Technology #2 Technology #2 Application (Market) „A“ Application (Market) „B“ Time or engineering effort Productperformance DISRUPTS OR REDEFINES PERFORMANCE TRAJECTORIES Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 10, 47
- 26. © NORMAN HIOB MOST MANAGERS LEARN ABOUT INNOVATION IN A SUSTAINING CONTEXT
- 27. © NORMAN HIOB Sustaining innovations MARKETS: KNOWN CUSTOMERS: UNDERSTOOD MARKET RESEARCH GOOD PLANNING EXECUTION ACCORDING TO PLAN + + © NORMAN HIOB
- 28. © NORMAN HIOB MARKET RESEARCH GOOD PLANNING EXECUTION ACCORDING TO PLAN + + Disruptive innovations MARKETS: UNKNOWN CUSTOMERS: UNKNOWN © NORMAN HIOB
- 29. © NORMAN HIOB MARKETS THAT DON’T EXIST CAN’T BE ANALYSED
- 30. © NORMAN HIOB APPLICATIONS FOR DISRUPTIVE TECHNOLOGIES ARE UNKNOWABLE
- 31. © NORMAN HIOB 3 SMALL MARKETS DON’T SOLVE THE GROWTH NEEDS OF LARGE COMPANIES
- 32. © NORMAN HIOB SUCCESSFUL COMPANIES NEED TO GROW © NORMAN HIOB
- 34. © NORMAN HIOB TWO REASONS
- 35. © NORMAN HIOB 1 CREATE INTERNAL OPPORTUNITIES FOR EMPLOYEES
- 36. © NORMAN HIOB 2 MAINTAIN OR INCREASE SHARE PRICE
- 38. © NORMAN HIOB PROBLEM SMALL MARKETS OF DISRUPTIVE TECHNOLOGIES DON’T SERVE THE NEAR- TERM GROWTH OF LARGE COMPANIES
- 39. © NORMAN HIOB REVENUE 2016 GROWTH RATE ADDITIONAL REVENUE $40M 20 % $8M $400M 20 % $80M $4G 20 % $800M Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 147-148 SMALL COMPANY LARGE COMPANY
- 41. © NORMAN HIOB LARGE COMPANIES LOSE THE CAPABILITY TO ENTER SMALL EMERGING MARKETS
- 42. © NORMAN HIOB THEY OFTEN FAIL, BECAUSE THEY WAIT TOO LONG UNTIL THE MARKET IS ESTABLISHED © NORMAN HIOB
- 43. © NORMAN HIOB 0 % 10 % 20 % 30 % 40 % ESTABLISHED MARKET EMERGING MARKET Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 143-146 FIRMS REACHING $100M WITHIN TWO YEAR OF ENTERING THE MARKET
- 44. © NORMAN HIOB FIRMS THAT ENTERED SMALL, EMERGING MARKETS CAPTURED
- 45. © NORMAN HIOB 20TIMES THE REVENUE Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 143-146Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 143-146
- 46. © NORMAN HIOB THAN FIRMS THAT ENTERED ESTABLISHED MARKETS
- 47. © NORMAN HIOB 0 500.000.000 1.000.000.000 1.500.000.000 2.000.000.000 ESTABLISHED MARKET EMERGING MARKET Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 143-146 AVERAGE REVENUE CAPTURED PER FIRMS WITHIN TWO YEAR OF ENTERING THE MARKET
- 48. © NORMAN HIOB 4 COMPANIES CAPABILITIES RESIDE IN THEIR PROCESSES AND VALUES
- 49. © NORMAN HIOB TWO COMPANIES BA
- 50. © NORMAN HIOB SAME RECOURSES = A B … …
- 51. © NORMAN HIOB DIFFERENT OUTPUTS ≠ A B
- 53. © NORMAN HIOB PROCESSES AND VALUES
- 54. © NORMAN HIOB PROCESSES FORMAL INFORMAL CULTURAL Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 185-196 © NORMAN HIOB
- 55. © NORMAN HIOB ESTABLISHED TO PERFORM TASKS IN A CONSISTENT WAY (= VALUE CREATING MECHANISMS) © NORMAN HIOB
- 57. © NORMAN HIOB EMERGING MARKETS REQUIRE A DEGREE OF AGILITY
- 59. © NORMAN HIOB PROCESSES ARE INIMICAL TO CHANGE
- 60. © NORMAN HIOB VALUES CRITERIA BY WHICH DECISIONS ABOUT PRIORITIES ARE MADE Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 185-196 © NORMAN HIOB
- 61. © NORMAN HIOB COMPANIES THAT FOCUS ON HIGH-MARGIN PRODUCTS © NORMAN HIOB
- 62. © NORMAN HIOB CAN NOT
- 63. © NORMAN HIOB SIMULTANEOUSLY FOCUS PRIORITIES ON LOW-MARGIN PRODUCTS * * EMERGING MARKET
- 64. © NORMAN HIOB 5 TECHNOLOGY SUPPLY MAY NOT EQUAL MARKET DEMAND
- 65. © NORMAN HIOB INITIALLY USE OF DISRUPTIVE TECHNOLOGIES IN SMALL MARKETS ONLY
- 66. © NORMAN HIOB TECHNOLOGY SUPPLY MARKET DEMAND ≠ * MAINSTREAM MARKET *
- 68. © NORMAN HIOB DISRUPTIVE TECHNOLOGIES EVOLVE FASTER THAN MAINSTREAM MARKETS
- 69. © NORMAN HIOB TOMORROW, THEY MAY BECOME COMPETITIVE IN MAINSTREAM MARKETS
- 70. © NORMAN HIOB LET’S SUMMARISE WHY LARGE COMPANIES FAIL TO INNOVATE
- 71. © NORMAN HIOB 1 2 3 4 5 TECHNOLOGY UNDERSUPPLY RESOURCE DEPENDENCE UNKNOWN MARKETS GROWTH NEEDS PROCESSES AND VALUES
- 72. © NORMAN HIOB WHAT TO DO?
- 73. © NORMAN HIOB GIVE AWAY RESPONSIBILITY TO FIRMS WHOSE CUSTOMERS NEED THE TECHNOLOGY
- 74. © NORMAN HIOB SO RESOURCES WILL FLOW TO THEM
- 75. © NORMAN HIOB CHECK INNOVATION REQUIREMENTS FIT WITH PROCESSES AND VALUES
- 76. © NORMAN HIOB SET UP SEPARATE ORGANISATION SMALL ENOUGH TO GET EXCITED BY SMALL GAINS
- 77. © NORMAN HIOB 1 SPINS-OFF CREATE AN ORGANISATION WHOSE SIZE MATCHES THE OPPORTUNITY Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 154-155
- 78. © NORMAN HIOB 2 INCUBATE ACQUIRE A SMALL COMPANY WHOSE STRUCTURE MATCHES THE OPPORTUNITY Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 154-155
- 79. © NORMAN HIOB DISCOVERY DRIVEN LEARNING TEST MARKET ASSUMPTIONS Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 180-182
- 80. © NORMAN HIOB PLANS FOR EXECUTION PLANS FOR LEARNING Clayton M. Christensen: “The Innovators Dilemma“, Harper Business, New York, 2011, p. 180-182
- 81. © NORMAN HIOB PLAN FOR FAILURE DON’T RUN OUT OF RESOURCES OR CREDIBILITY
- 82. © NORMAN HIOB 1 2 3 4 5 PLAN FOR FAILURE FIND NEW CUSTOMERS CHECK PROCESSES AND VALUES SET UP SEPARATE ORGANISATION CREATE PLANS FOR LEARNING
- 83. © NORMAN HIOB ARE YOU READY TO INNOVATE? © NORMAN HIOB
- 84. © NORMAN HIOB GET IN TOUCH! Norman Hiob Olivaer Platz 17 10707 Berlin normanhiob@me.com