disruptive innovation

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  • 1. Disruptive Innovation based on theory by Clayton Christensen 27 augustus 2008 Future Studies

2. Synopsis: Outstanding companies can do everything right and still loose their market-leadership, states Harvard professor Clayton Christensen. Companies face a tough dilemma; Should you listen to your best customers or the non-customers? In this rapport we pose the question; When to invest in lower-performance products? 3. Index:

  • Simply the best: the fast track of innovation
  • The comfort zone of society
  • The real meaning is in the use
  • The innovator's dilemma: when new technologies cause great firms to fail

4. Simply the best: the fast track of innovation

  • Because of increased competition in a globalized world innovation is speeding up more and more. The end of this development is nowhere near. But while new products are launched in an increasing pace, consumers are having a hard time catching up

5.

  • Outstanding companies can do everything right and still loose their market-leadership, states Harvard professor Clayton Christensen. Companies face a tough dilemma; Should you listen to your best customers or the non-customers? In this rapport we pose the question; When to invest in lower-performance products?

6. According to Harvard professor Clayton Christensen outstanding Companies can do everything right and still loose their market-leaderhip 7. How can this be? 8. Last year a new product was launchedevery 3.5 minutes.This means that by the time you've reached the end of this presentation 5 new products have been launched! 9. The speed of this innovation is fueled by globalization and increased competition 10. Moores law states that information technologies double their power each and every year, creating exponential growth. 11. Head of IT at CERN, Francois Grey explains 12. 13. Technological innovation has become a major driver of progress 14. And while innovation is speeding up and companies are competing for better and better products the consumer is lacking behind in his adoption of those new technologies 15. Lecturer at Cranfield University Stephen Carver 16. 17. The comfort zone of society

  • Society doesnt change as fast as technological innovation is. Why is that? Because the outcome of any change in peoples behavior is unknown, their first instinct is to avoid taking such risks. They much rather stay within their comfort zone and keep living their lives they way they are used to living them. In a way everybody likes change, but nobody wants to change

18. Why is it that the needs of society dont change in the same pace as the technological opportunities do? 19. The adoption of technology means that the know-how, attitude and behavior of consumers has to change 20. And while everybody likes change, nobody wants to change 21. WHY NOT? 22. According to Robert E. Quinn, professor at the University of Michigan, people like to stay in theircomfort-zone 23. 24. You are comfortable in your current situation and the result of a change is unknown, including possible sight effect, learning curve etc. 25. This behavior is well explained by the prospect-theory 26. The prospect-theory states that people strongly prefer to avoid losses than to acquire gains 27. This behavior leads to risk-aversion 28. And when people avoid risk, change is less likely to occur 29.

  • Weve entered an age where the technological possibilities outstrip the adoption of new technologies. In such a society the way people apply technology to their daily lives is of essential importance. We are thus living in the application-age in which the real meaning of innovation is in the use.

The real meaning is in the use 30. What happens when technological innovation outstrips social adoption of technology? 31. According to John Thackara weve lost sight of what value new technologies add to our lives 32. 33. This crisis of innovation, the spread between that what is possible and that what is used today, has hardly ever been larger 34. According to Stephen Carver this means we have to focus on how technology is used 35. 36. Weve thus entered an age that is about how people use technologies. 37. We call this age the application-age: an era where the real meaning is in the use 38. Research Director at PhilipsLab, Josephine Green, explains what this new age means 39. 40. So when you innovate you have to focus on what customers can use 41.

  • The best customers of every company are driving them forward on the innovation curve. While that happens every company must steer away from the mainstream. That allows for new entrants to disrupt the innovators in any market. This dilemma is called the innovators dilemma

The innovator's dilemma:when new technologies cause great firms to fail 42. Companies keep innovating so they can sell better products for better profits to their best customers 43. But listening to their best customers with the biggest needs is driving them away from mainstream.Because the mainstream wants to use a simpler, more affordable product 44. Clayton Christensen, a professor of Business Administration at the Harvard Business School, calls this The Innovators Dilemma 45. 46. CONCLUSION: 47. The growth opportunities are with the non-users: the people who historically couldnt afford to own or use the innovation 48. Set-up a new business unit within the company to pursue the gradual transition to the disruption within your market 49.

  • For further details:
  • FreedomLab Future Studies
  • Singel 282
  • 1016 AD Amsterdam
  • The Netherlands
  • http://www.freedomlab.org