The dangers of corporate success.Edgar A. Shoaff notes that, "The two leading recipes for successes are building a better mousetrap "A Better Mousetrap" is a first season episode of Beast Wars which first aired on October 8, 1996. Plot
Sentinel, a new automated defense system for the Axalon, is under development by Rhinox, as the Maximals' best line of defense against a Predacon attack. and finding a bigger loophole An omission or Ambiguity in a legal document that allows the intent of the document to be evaded.
Loopholes come into being through the passage of statutes, the enactment of regulations, the drafting of contracts or the decisions of courts. " (Qtd. in Peter, 1979, p. 481).
The above popular idea has, in my opinion, been rendered obsolete by the insightful observations of Dr. Clayton M. Christensen Clayton M. Christensen (born April 6 , 1952 in Salt Lake City, Utah) is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, with a joint appointment in the Technology & Operations Management and General Management faculty groups. , professor of business administration at the Harvard Business School Harvard Business School, officially named the Harvard Business School: George F. Baker Foundation, and also known as HBS, is one of the graduate schools of Harvard University. and author of The Innovator's Dilemma: When New Technologies Cause Great Firms to Fall.
What is a "disruptive technology A new technology that has a serious impact on the status quo and changes the way people have been dealing with something, perhaps for decades. Music CDs all but wiped out the phonograph industry within a few years, and digital cameras are destined to eliminate the film industry. "? Christensen coined the term in his best seller, The Innovator's Dilemma, published in 1997, and it has since become the hottest buzzword A term that refers to the latest technology or a term that sounds catchy. If not a flash in the pan, new technologies become mainstream. For example, Java was a hot buzzword in the 1990s, but should remain a major topic for decades. in business today as the Merrill Lynches react to the E-Trades. It's nothing new. Japanese automakers used disruptive technology in the 1970's to seize market share. A disruptive technology is often an inferior product or service, but one good enough to win wide swaths of market share" (Qtd. In Jones, 2000, p. 23).
Examples of disruptive technologies are as follows: The PC "TOY": The Minicomputer (1) An earlier medium-scale, centralized computer that functioned as a multiuser system for up to several hundred users. The minicomputer industry was launched in 1959 after Digital Equipment Corporation introduced its PDP-1 for $120,000, an unheard-of low price for a computer in Makers' Global Killer
A March to Industry Dominance-Disrupted
"During the mid-80's, minicomputer companies were high-growth, high-margin companies regarded by investors, the business press, and academia as among the world's best-manages organizations. Indeed, Digital was one of the most prominently featured companies in the McKinsey study that led to the book In Search of Excellence"(The PC "Toy," 2002).
"As medium and large businesses demanded ever-increasing amounts of computing power, this dynamic industry supplied it at rapidly decreasing prices. DEC and others did so by aggressively investing large amounts of capital in small to large, radical, and risky technology projects. Not even IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) could impede their successful march to industry dominance" (The PC "Toy").
The Stealth Attack
"At the same time, a few startups had introduced very simple, low-power computers. 'Just a toy,' declared DEC's founder. And he seemed to be right: PCs were purchased by individuals, mainly for games. Should DEC invest money, time, and energy in low-margin products that their customers don't want? Or should the company stick to higher-performance initiatives that promised up-scale margins and growing volumes, such as DEC's super-fast Alpha microprocessor?" (The PC "Toy").
"DEC had achieved its peak profits and some of its highest margins ever ... one year before the missile-like attach of the PC industry hit from below, severely wounding every minicomputer maker. Several minicomputer manufacturers failed and none established a viable position in the desktop personal computer value network" (The PC "Toy").
The Rise and Fall of Disk Drive Manufacturers
An Era of Sustaining Technologies
"In the late 70's, the market for disk drives consisted of large mainframe computer makers. These customers demanded an aggressive improvement in capacity of more than 20% a year, above the minimum required capacity of 300 MB. The leading and most innovative 14-inch drive makers (namely IBM, Memorex, EMM (Expanded Memory Manager) Starting with 386-based PCs, an EMM is software that converts extended memory (beyond one megabyte) into EMS memory, the first technique used to increase memory in the PC. , and Ampex) competed vigorously, maintaining the industry's aggressive rate of R&D investment that had led to dramatic improvements in capacity and cost" (The Rise and Fall, 2002).
The Stealth Attack
"During those years, a few startups developed 8-inch drives with less than 50 MB capacity, but only minicomputer startup companies could use them. Because these drives were easy to make, and because mainframe customers did not want them, profits margins and sales volume were extremely low. New entrants struggled to find a viable market for these drives and mostly only minicomputer startups were interested in them. The decision for IBM and other established drive-makers is whether to divert scarce engineering and financial resources to this small new market and risk eroding their market share of the high margin, high-growth 14-inch market. Alternatively, they could wait until the market was big enough, and then invest aggressively to capture it" (The Rise and Fall).
"Unexpectedly, 8-inch drive makers sustained a capacity increase of more than 40% a year. Their products soon met the needs of mainframe computer makers, while offering advantages intrinsic to a smaller disk, such as reduced vibration. Within four years, 8-inch drives had taken over the mainframe market. Although one-third of the 14-inch makers had introduced 8-inch models-with very competitive performance-every independent 14-inch drive maker had been driven out of the industry by the end of the '80s. And of the 17 disk drive companies existing in 1976, all but IBM had failed or had been acquired by 1995. The 8-inch manufacturers, however, were no wiser to the disruptive technology phenomena and found themselves fighting a losing battle several years later against the 5.25-inch drive (The Rise and Fall).
In "Am I Vulnerable" (2002), executives are asked the following six questions to determine whether their organizations are vulnerable to "stealth attacks" of new technology:
* Has your company lost relatively low-value customers in small market niches or low-end market In the USA, as well as in most developed countries, the low-end market consists of lower-priced products suitable for customers who are not willing or able to spend large amounts of money. In developing countries, some low-end products may be considered high-end or even luxury items. segments?
* Does your organization wait to target new opportunities until they are "big enough to be interesting"?
* Does it appear that greater and greater improvements in your products or services seem to be valued less and less by your mainstream customers?
* Have innovations that you believe to be critical to the future of your business been shelved or discarded because of market shares or financial constraints?
* Does poor initial performance of a new product or service lead to its abandonment?
* Have new entrants exploited opportunities where uncertainty over market size and customer needs resulted in inaction by your company?
"If the answer to any one of these questions is yes, the company could be a prime target for disruption" (Qtd. in Jones, 2000). He cites how a fatal threat to market shares can begin as a low-quality, low-margin product that customers do not want or cannot use yet. But companies that ignore these disruptive technologies may find they grow in capability to meet mainstream needs.
Why do successful companies allow upstarts to steal their thunder? Consider the following:
RADICAL INNOVATION HAPPENS in big corporations, but it's the exception rather than the rule. Making it sustainable and routine requires visionary leadership, markedly different management techniques, and an entrepreneurial team that can "manage chaos," say six Rensselaer management professors. In their new book, Radical Innovation: How Mature Companies Can Outsmart out·smart
tr.v. out·smart·ed, out·smart·ing, out·smarts
To gain the advantage over by cunning; outwit.
Informal same as outwit
Verb 1. Upstarts (2002), the Rensselaer team lays out a manifesto for managing corporate innovation:
"The business model these days is more than 'build a better mousetrap'" says Hark hark
intr.v. harked, hark·ing, harks
To listen attentively.
To return to a previous point, as in a narrative. Rice'71, director of the Severino Center for Technological Entrepreneurship. "Firms need to build a different mousetrap. If they don't do it, a competitor will and will drive them out of the market."
Rice is one of the six Rensselaer management professors who have followed top-secret research projects at 10 major corporations. Funded by a significant grant from the Sloan Foundation Sloan Foundation, fund established (1934) by automobile executive Alfred P. Sloan, Jr. as a philanthropic institution supporting research in various areas. In its early years it stressed support of U.S. economic education and research. in partnership with the Industrial Research Institute, the research examined radical innovation at Air Products, Analog Devices Analog Devices (NYSE: ADI) is an American multinational producer of semiconductor devices. Analog specializes in ADC, DAC, MEMS, and DSP chips for consumer and industrial goods. Analog is presently designing circuits in the 65 nanometer to 3 µm process feature sizes range. , DuPont, GE, GM, IBM, Nortel Networks (Nortel Networks Limited, Brampton, Ontario, www.nortelnetworks.com) A world leader in telecommunications products, which includes switching, wireless and broadband systems for service providers and carriers, telephones and systems for residential and business users, computer telephony , Polaroid, Texas Instruments See TI.
(company) Texas Instruments - (TI) A US electronics company.
A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. , and United Technologies.
The researchers found that creating the culture of entrepreneurship within a big corporation was no easy task, but sustaining that culture was a real management conundrum--"an unnatural act Unnatural act is the term, once common in legal parlance, for certain sex acts, including anal sex, oral sex, other non-procreative sexual practices, incest, or procreative sexual acts in the wrong position or without procreative intent. ," says Richard Leifer, associate professor of management (p.5).
"It's impossible to predict manufacturing costs, sales figures sales figures npl → cifras fpl de ventas , market response, and profits for a product that doesn't exist," says Gina O'Connor, assistant professor of marketing and another member of the research team. "Traditional management and marketing techniques just don't work when applied to radically new technologies (p. 5)," but established firms are learning some new tricks.
The Ransselaer Management professors note that Texas Instruments, for example, developed the Digital Micro-Mirror Device capable of creating a high-quality screen image by bouncing light off 1.3 million microscopic bidirectional The ability to move, transfer or transmit in both directions. mirrors squeezed onto a one-square-inch chip. The technology will displace rolling movie films and has opened up an entirely new infrastructure for distributing motion pictures to theaters.
Information, it seems to me, is the life-blood of an organization. Modern corporate dynamics are such that vital information does not quickly appear-if at all-on the corporate radar screen. The gap in vital information must be replaced by anticipation. In the words of the hockey great Wayne Gretzky Noun 1. Wayne Gretzky - high-scoring Canadian ice-hockey player (born in 1961)
Gretzky , "....skate to where the puck is going to be, not where it has been" (Radical Innovation, 2000, p. 5).
Am I vulnerable? (2002). Integral. Disruptive Technologies. http//www.disruptivetechnologies.com/ami.html
Jones, D. (2000). Will business schools go out of business? USA Today USA Today
National U.S. daily general-interest newspaper, the first of its kind. Launched in 1982 by Allen Neuharth, head of the Gannett newspaper chain, it reached a circulation of one million within a year and surpassed two million in the 1990s. , May 23.
The pc "toy": The minicomputer makers' global killer. (2002). Integral. Disruptive Technologies. http ://www.disruptivetechnologies.com/dt_examples/dtedec.html
Pocket pal diary. (2001). Myron Manufacturing Corporation.
Radical innovation outsmarting the upstarts. Rensselaer Alumni Magazine. Dec 2000, p.5.
The rise and fall of disc-drive manufacturers. (2002). Integral. Disruptive Technologies. http//www.disruptivetechnologies.com/dt_examples/dte-drives.html
Thomas, J.P. & Waterman, R.H. (1982). In search of excellence. New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : Harper & Row
Professor of Finance and Dean, Bureau of Business Research American International College American International College is a private, co-educational liberal-arts college located in the Mason Square neighborhood of Springfield, Massachusetts. The College offers undergraduate and graduate programs, including doctorate degrees in education and physical therapy. Springfield, MA 01109