Running in the mountains

‚The Innovator’s Dilemma‘ as a source for disruptive business models

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‚Good Management‘ is the root cause to to problems when companies are confronted with disruptive innovations.

As I’m traveling a lot throughout the week, I’m usually carrying some books on my kindle with me to make the most out of the time. In most cases the books’ topics are about startups, entrepreneurship or respective methodologies. The current one I’m reading may be THE standard work for innovation management: ‚The Innovator’s Dilemma‘ by Clayton Christensen. Although his book is almost 20 years old, Christensen is able to explain the dilemma that is happening within corporations when they’re facing disruptive technologies. Today I want to transfer one of his theories to an innovative gadget which crossed my way a few days ago – and I hope it’s a more exciting example than the hard disk drives in the book.

On the one side, ‚good management‘ is one important aspect of a company’s success. On the other side, it’s the same ‚good management‘ that will normally decide for sustaining innovation instead of disruptive innovation. That means that resources will usually be allocated on projects where the market and customer is known and revenue and profits can be estimated. The problem is that this will only lead to the continuous improvement of existing features, but it won’t bring up new values with disruptive innovations – ‚The Innovator’s Dilemma‘:

Firms don’t fail because they don’t have the right technology or information, nor because of bad management.

Firms fail because disruptive technologies didn’t make sense to them until it’s too late.

As technology is normally developing faster than market demands, the behavior of the ‚good management‘ may lead to a ‚performance oversupply‘ where a company will add more and more functionality to a product. Thus, it’ll be hard to use and eventually quite expensive.

This results in a window of opportunity that corporations are opening for startups. They are able to develop a product that beats the competition in reliability, convenience – and price.

One example: the ‚Connected Lifestyle‘ is bringing more and more technology into our daily life. One huge trend is coming from the fitness industry, the ‚quantified self‘: using modern high tech to literally track ‚every step you take‘. Today’s smartphones incorporate all necessary technologies like GPS to track your way and bluetooth to connect your heart beat sensor. Additionally several apps and startups are rising up, i.e. Runtastic or Freeletics.

I’m definitely not fanatic about running, but I do like going out for a run around the river Isar and listen to some nice sounds to sort some thoughts and refuel my energy. In order to get motivated by personal improvements I need to carry a ‚several hundred euros‘ smartphone with me, packed into a waterproof plastic bag, unless I do want to put it into a sweaty, waggly pocket. Although I only need a GPS tracker and a music player, I carry around a large gadget, incl. WiFi, LTE, etc. and may also be interrupted by a call. For me – personally – that is definitely not convenient.

The ‚performance oversupply‘ of a smartphone for sport activities opened a space for smart activity trackers like fitbit or Jawbone: they’re small, handy & water (sweat) resistant. A few days ago another gadget crossed my way: the Pebble Core. It’s a very small clip, that is focussing on only a few functionalities (GPS, bluetooth, 4GB storage for music) at a low price point of roughly 60€.

At the moment it’s obviously addressing a different target group than a smartphone with a lot more functions. But as technology evolves, this product might be able to ‚attack‘ the smartphone from below and to be an alternative for the sporty user group.

I haven’t tested the Pebble Core and I don’t know about how convenient it is to work with it. For me, it should be able to automatically synchronize activity data and Spotify playlists, as soon as it is connected via Bluetooth to my smartphone at home. Nevertheless, I think that Pebble (which is usually a smartwatch manufacturer) had a good nose for this window of opportunity that was opened by the ‚performance oversupply’ of a smartphone in the fitness world – and the Pebble Core is a good example for a ‚good management‘ decision towards disruptive innovation.

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On 1. Juni 2016
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