Transcript Disruptive Technology: Use and Abuse of the Concept

Disruptive Technology:
Use and Abuse of the
Concept
Dr. Michael Bell
Chief of Naval Operations (N61F)
Presentation to the Information Age Metrics Working Group
23 April 2004
The Innovator’s Dilemma
The Dilemma
“One of the most consistent patterns in business is the failure of
leading companies to stay at the top of their industries when
technologies or markets change.”
“Why is it that companies like these invest aggressively – and
successfully – in the technologies necessary to retain their
current customers but then fail to make certain other
technological investments that customers of the future will
demand? Undoubtedly, bureaucracy, arrogance, tired executive
blood, poor planning, and short-term investment horizons have
all played a role. But a more fundamental reason lies at the
heart of the paradox: leading companies succumb to one of the
most popular, and valuable, management dogmas. They stay
close to their customers.”
Definitions
Performance trajectory – the rate at which the performance of a
product has improved, and is expected to improve, over time
Sustaining technologies – tend to maintain a rate of improvement;
that is, they give customers something more or better in the
attributes they already value
Disruptive technologies – introduce a very different package of
attributes from the one mainstream customers historically value,
and they often perform far worse along one or two dimensions
that are particularly important to those customers. Performance
trajectory – the rate at which the performance of a product has
improved, and is expected to improve, over time
Disruptive Technology
The Impact of Sustaining and Disruptive Technological Change
Product Performance
Progress due to
Sustaining technologies
Performance
demanded at the high
end of the market
Performance
demanded at the low
end of the market
Disruptive
technological
innovation
Time
Source: C. Christensen, The Innovator’s Dilemma
Managing Disruptive Technology
1.
2.
3.
4.
“Marketing and financial managers,
because of their managerial and
financial incentives, will rarely support a
disruptive technology.”
“Lead customers are reliably accurate
when it comes to assessing the
potential of sustaining technologies, but
they are reliably inaccurate when it
comes to assessing the potential of
disruptive technologies.”
“Small, hungry organizations are good
at placing economical bets, rolling with
the punches, and agilely changing
product and market strategies in
response to feedback from initial forays
into the market.”
“In the history of the disk-drive industry,
every company that has tried to manage
mainstream and disruptive businesses
within a single organization failed.”
Value Networks
“A company’s revenue and cost structures play a critical
role in the way it evaluates proposed technological
innovations.”
• Value network – the context within which a firm
identifies and responds to customers’ needs, solves
problems, procures input, reacts to competitors, and
strives for profit
• “Within a value network, each firm's competitive
strategy, and particularly its past choice of markets,
determines its perceptions of the economic value of
new technology.”
Sample Value Network
Portable Personal
Computing
Word processing
and spreadsheet
software
CISC
microprocessor
Modems, etc.
Zenith
Toshiba
Dell
Connor
Quantum
Western Digital
Thin-film disks
Notebook
Computers
2.5-inch Disk
Drives
Light and compact
Rugged
Easy to use
Ruggedness
Low power consumption
Low profile
Cost
Applied Magnetics
Metal-in-Gap Availability in high
Ferrite Heads unit volumes
Displays,
etc.
AT/SCSI
embedded
interface, etc.
Skunkworks
“The strategy of forming small teams into
skunk-works projects to isolate them from the
stifling demands of mainstream organizations
is widely known but poorly understood.”
“Creating a separate organization is necessary
only when the disruptive technology has a
lower profit margin than the mainstream
business and must serve the unique needs of
a new set of customers.”
Questions
• What drives and maintains a rate of
capability growth in the technology
beyond what is demanded by the
market?
• How does technology cross the “valley
of death” between markets (value
networks) if there is no market in the
gap?
Asymmetry
• Mobility is upward because
development costs must be recovered
or justified
• Attack is from below because that is
how the value networks are merged
What’s Wrong with this Picture?
The Impact of Sustaining and Disruptive Technological Change
Product Performance
Progress due to
Sustaining technologies
No technology,
Performance
demanded at the high no market
end of the market
Disruptive
technological
innovation
Disruption at
bottom of market
Performance
demanded at the low
end of the market
Time
Source: C. Christensen, The Innovator’s Dilemma
Improved Picture
The Impact of Sustaining and Disruptive Technological Change
Product Performance
Progress due to
Sustaining technologies
Performance
demanded at the high
end of the market
Disruptive
technological
innovation
Performance
demanded at the low
end of the market
Time
Source: C. Christensen, The Innovator’s Dilemma
Implications for Defense
• What is our (DoD’s or DoN’s) value network?
• Do we have multiple value networks?
– Aviation, surface warfare, undersea warfare,
expeditionary warfare, special operations…
• Asymmetry
– Attack is from below
– Mobility is upward
– This could “explain” the blurring we have seen
between scales of conflicts
Competition vs. Conflict
• Companies compete to satisfy their
customers; the market decides
– VHS format meets customer needs better than
Beta
• Militaries attack one another; the battlefield
decides
– Improved precision (air) strike is not the same as
better air/missile defense
The Defense “Market”
• High end – high-intensity conflict
• Low end – whatever we are told
(generally assumed to be a “lesser
included case”)
• Is this really a single market?
• In peacetime, our “customers” are
internal
– E.g., the UK Equipment Capability
Customer
USJFCOM
DRAFT
Delivering Innovation
Hand-off to
institutionalize
Prototype Decision: SJFHQ and its
enabling concepts
(Chairman’s Guidance letter, 26
November, 2002)
Future Prototype
Decisions
Joint Concept Development Focus, FY03-05
(Joint Chiefs of Staff and Combatant Commanders
Approval - Jan 03)
Rapid Decisive Operations (RDO) featured Millennium Challenge 2002
(MC02) concept (CJCS Guidance, 17 April,
2000)
Unclassified
19
Capability Growth
“The typical framework of intersecting S-curves… is a
conceptualization of sustaining technological
changes within a single value network.”
Anti-Disruptive Technology
J. H. Helms, Ford Research Lab.