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L10 The Innovator's Dilemma
The document discusses the concept of disruptive innovation, particularly using Kodak's decline and Fuji's success as case studies to illustrate the innovators' dilemma faced by established companies. It emphasizes how Kodak failed to adapt to technological advancements in digital photography despite being a market leader and highlights the importance of recognizing and acting on emerging threats. The text further explores traditional management practices that can lead to complacency and failure to innovate in the face of new market dynamics.
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L10 The Innovator's Dilemma
- 1. LECTURE L10 THE INNOVATOR’SDILEMMA
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- 3. Source: (Christensen, 2000) TheDisruptive Innovation Theory New organisation can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents
- 4. The Disruptive InnovationTheory Source: (Christensen, 2000)
- 5. Resources, Processes andValues Theory Resources (what a firm has), Processes (how a firm does it´s work), and Values (what a firm wants to do) collectively defines an organisations strengths as well as weaknesses and blind spots
- 6. Founded in 1880Noted for their pioneering technology “You press the button, we do the rest” By 1975 they had 90% of film and 85% of camera sales in US
- 7. Eastman pioneered dryplate technology when others use wet plate Introduced the Brownie camera in 1900 Used film rolls Camera for $1, then sold films The picture quality was inferior to begin with, but consumers loved the convenience Leader in Photography
- 8. In 1935 Kodakintroduced Kodachrome, the first colour film The picture quality was inferior to begin with, but consumers loved colours pictures Initially available as 35 mm slides Innovator in Photography
- 9. By 1976 Kodakaccounted for 90% of film and 85% of camera sales in America Until the 1990s it was regularly rated one of the world's five most valuable brands Revenues $16 billion in 1996 and profits $2.5 billion in 1999 Market Leader Form the Economist article
- 12. Form the Economistarticle
- 13. Economist article: Thelast Kodak moment? Kodak is at death’s door; Fujifilm, its old rival, is thriving. Why? Case Stury
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- 16. Kodak Kodak knew thatdigital cameras would take over In 1981, a team inside Kodak assessed the threat The report said: * The quality is not there * The device is too expensive * Consumer’s desire for print cannot be replaced Source: Decisive
- 17. Culture “suffered from thementality of perfect products, rather than the high-tech mindset of make it, launch it, fix it.” One company town No criticism, changing leadership Failed to capitalise on pharmaceutical assets Source: Economist Kodak
- 18. Fuji To squeeze asmuch money out of the film business as possible, to prepare for the switch to digital and to develop new business lines Brutal reorganisation Launched a line of cosmetics and sold it Source: Economist Plan:
- 19. Shaigetaka Komori, Fujiboss, spent around $9 billion on 40 companies since 2000 He slashed costs and jobs In one 18-month stretch, Fuji booked more than ¥250 billion ($3.3 billion) in restructuring costs for depreciation and to shed superfluous distributors, development labs, managers and researchers Source: Economist Fuji
- 20. Kodak’s Lack ofTripwire The report said: * The quality is not there * Consumer’s desire for print cannot be replaced * The device is too expensive Source: DecisiveSource: Decisive -> We will act when more than 10% of public is pleased with digital images -> We will act when more than 5% of public has some kind of viewing system
- 21. Kodak’s Dilemma “Wise businesspeopleconcluded that it was best not to hurry to switch from making 70 cents on the dollar on film to maybe five cents at most in digital.” - Larry Matteson, former Kodak executive Source: Economist
- 23. Van Halen’s BrownM&M During their 1982 world tour the band demanded M&M back stage but without the brown M&Ms Source: Decisive
- 26. Tripwire The timing isnot now - remember the adjacent possible, but the time will come Set a tripwire that will tell you when it is time to act
- 27. Technology is one ofthe major factors in change
- 28. Surviving Technological Change Whatis it that kills successful companies?
- 29. Business models ofthe 21st century may not support the organisational structure of the 20th century Surviving Technological Change
- 30. The Innovators Dilemma Shouldwe focus improving our products to make them higher margin, with more performance or look at this new technology that is low performance with low margins?
- 31. When disruptive technologymakes it possible to create products cheaper, should a company stop making high-margin, high- end product for their best customers, or use the disruptive technology to make cheaper products that none for their current customers are asking for at the moment. The Innovators Dilemma
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- 34. The Innovator’s Dilemma ClaytonChristensen professor at Harvard Business School
- 36. Source: Yang, Harvard Traditional Concept of Good Management Focus on your best customers Focus on your highest margin products
- 38. Reason for Failure? Ifyou become wildly successful because you do everything right, you're doomed
- 39. Source: (Christensen, 2000) The Innovators Dilemmameans Firms thatsucceed in one generation of innovation almost inevitable become hamstrung by their own success and thus doomed to lose out in the next wave of innovation
- 40. Resources, Processes andValues Theory Resources (what a firm has), Processes (how a firm does it´s work), and Values (what a firm wants to do) collectively defines an organisations strengths as well as weaknesses and blind spots
- 41. 3. Can youthink of other companies that suffered the same fate as Kodak? A company that was very powerful and dominant but is not today. Lecture exercise L10
- 42. WHEN PLATFORM SHIFTS HAPPEN, COMPANIES FIND ITHARD TO MOVE TO NEW GENERATION OF TECHNOLOGY
- 43. Image Source Page: http://www.teach-ict.com/wp/archives/264 Only ONE establishedfirm managed the transition from one generation to the next
- 44. Why did theyfail?
- 45. They listened totheir customers
- 46. Case Study Betware transformed fromcustom software development to product development – from technology to service
- 47. “If I’d askedmy customers what they wanted, they’d have said a faster horse” - Henry Ford
- 48. We tend toview technology based on past usages but not the future potential
- 49. 4. Can youthink of companies today that are doomed in the future but are minding their own business? Lecture exercise L10
- 50. The Resistance Corollary Evenoutdated things that should “disappear” don’t due to supposed importance
- 51. It is hardto move on since people will fight you The Resistance Corollary
- 52. Where is theC-drive? Where are the files? The Resistance Corollary
- 53. What!?! No CDdrive? And no Ethernet port? MacBook Air 2008 The Resistance Corollary
- 54. The hardest thingswhen you are trying to affect change Steve Jobs Insult Response, WWDC 1997
- 56. Source: Yang, Harvard Traditional Concept of Good Management Leads successful companies to ignore disruptive innovations with deadly consequences
- 57. “In the historyof business, things happen only once” - Peter Thiel Traditional Concept of Good Management
- 58. "The next BillGates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them." - Peter Thiel Traditional Concept of Good Management
- 59. “We listen toour best customers” The Innovation Trap Assumed cash stream resulting from doing nothing
- 60. Assumed cash stream resultingfrom doing nothing “Our customer is asking for the new product, but we don’t have it and its to late the enter the market” A more likely cash stream resulting from doing nothing The Innovation Trap
- 61. Assumed cash stream resultingfrom doing nothingA more likely cash stream resulting from doing nothing “Our customer are starting to ask for our new product.” Projected cash stream from investing in innovation The Innovation Trap
- 62. It is verydifficult for incumbent companies to disrupt themselves, so usually others will do it
- 63. Waves of technologiesare pretty predictive but the most difficult thing to master is timing of waves
- 64. Two Reasons CompaniesFail—and How to Avoid Them Knut Haanæs
- 66. “Markets that donot exist cannot be analysed” - Clayton Christensen
- 67. Adjacent Possible ...a kindof shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself Steven Johnson
- 68.