Wednesday, May 15, 2002

The Innovator's Dilemma

A picture named innovatorsdilemma.jpgBlogs as Disruptive Innovation.

One of the most thought-provoking business books in the last several years was Clay Christensen’s The Innovator’s Dilemma. It got carried into lots of meetings as entrepreneurs and consultants tried to justify their latest fantasy as the next disruptive innovation. I’m reasonably sure that most of them never bothered to read it.

Those who did read it will recall that one characteristic of disruptive technology innovations was that they weren’t particularly exotic technically. In other words, Christensen’s research made a strong case that disruptive innovations were those that combined existing, well-established, technologies into new designs that served markets that were underserved or ignored by the established industry leaders.

… While I understand why Dave gets irritated by all the attention going to the BigCos about web services while Userland gets generally ignoreed, to me it’s one more datapoint supporting the disruptive innovaiton hypothesis.  [McGee’s Musings]

It must be a book day. Prof. McGee’s post about The Innovator’s Dilemma reminded me that it’s definitely on the must-read list of anyone who’s interested in the business of technology. One of the interesting lessons I took from the book: you can’t always listen to your customers. Christensen’s research showed countless companies who listened obsessively to their customers and went out of business. (Think DEC.) The irony of Christensen’s research is that many wildly successful companies developed smaller, less functional products that over time grew to satisfy the broader market. They didn’t listen to customers – they believed they solved a fundamentally different problem, but one that would evolve into a broader solution.

The “BigCos”? They fail to see the broader need, instead listening to their best customers. By solving the unique needs of those best customers, they don’t address the needs of the masses. It’s a challenging hypothesis – one which has interesting lessons for anyone like me who’s with a growing software company. (And yes, Denise: my employer knows about this blog. And they’re cool with it.) We’re the market leader for CRM software in the professional services market – and we’re trying harder to solve more complex problems. What we hope (and I don’t think we’re being naive here) is that by solving a broader set of problems, we’re addressing a wider range of opportunities.

So… we’re a big company in a niche market. By almost any other measure, we’re very much a small but growing company. Of course, we hope we’ve avoided the “BigCo” mentality. Whether we have? Well, that’s up to folks like Chris to decide.

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