The Innovator’s Dilemma Summary
From the book on “The Innovator’s Dilemma”, Professor Clayton Christensen was of the opinion that well-managed companies fails while dealing in complicated products with higher prices in certain way (O’Reilly and Tushman 2016). It becomes difficult for the companies for entering markets for simpler as well as cheaper products. There are companies who have failed in entering in the upscale market as the management practices have allowed for becoming the industry leaders. This makes it difficult for companies for developing disruptive technologies that ultimately steal away their markets. It is thereby important for understanding the fact that well-managed companies are excellent in developing the sustaining technologies as it improve the performance of their products in the way that matters to the customers. This happen when the management practices remains biased towards listening to customers, investing aggressively in technologies that provide those customers what they say they desire for a particular period (Le Hir, Paulino and Martin 2015). Companies who seeks higher margins of profits as well as targeting larger ones rather than the smaller ones
There are some of the industries that face leadership failure and repeated one more time. Companies such as IBM that dominates the mainframe market but missed by years after the emergence of minicomputers where technology is much simpler than the mainframes (O’Reilly and Tushman 2016). There is no major manufacturer of mainframe computers that plays major player in the minicomputer business. This reveals the fact when digital equipment corporation creates the minicomputer market by setting other aggressively managed companies (König, Kammerlander and Enders 2013).
Apple was uniquely innovative by establishing the standard for user-friendly computing. By comparing, it has been found that Apple and IBM lagged five years behind the leaders in bringing the portable computers in the market. In the same ways, firms those are built in the engineering workstation market such as Apollo, Silicon Graphics as well as Sun were some of the newcomers to the industry. Most of the new technologies help in fostering ways for bringing improvement in the performance of a particular product. It is known as sustaining technologies whereby it can be discontinuous or radical in character while others comes under incremental nature (King and Baatartogtokh 2015).
From the book on “The Innovator’s Dilemma”, Professor Clayton Christensen are of the opinion that market does not exist and cannot be analyzed either. It requires sound market research as well as good planning that needs to be followed by execution in accordance with the plan for presenting good management (Dyer, Gregersen and Christensen 2013). At the time of applying sustaining technological innovation, it involves practices that are invaluable by nature as they are the primary reason as to why established firms leads to single instance of sustaining innovation. While dealing with the disruptive technologies in the new markets, it has been noted that market researchers as well as business planners are interested for the dismal records. It is based in the evidences from the disk drive, motorcycle as well as microprocessor industries that forecasts how emerging markets will become is that they are wrong by any means (O’Reilly and Tushman 2016). In one of the principle, it is mentioned that technology supply may not equal with the market demand. Disruptive technologies can be used in small markets from the mainstream where they are actually disruptive as they can become fully performance-competitive within the mainstream markets in and against the established products. This reveals the fact that pace of technological progress in products majorly exceeds from the rate of performance improvement whereby the mainstream customers demand matches with the absorption process. It depends upon the consequences where the products feature closely that meet the market needs. It needs to follow the trajectory of improvement where it can overshoot the mainstream market. In case the product underperforms them it is relative to the customer expectations in the mainstream markets that directly affects the performance competitiveness (Denning 2016).
Market Analysis and Disruptive Technologies
It has been noted that asymmetric mobility across value networks comes after making the comparisons between two different models of how resources are allocated in effective way (Christensen et al. 2013). The first model explains regarding the resource allocation as it is rational in nature whereby decision making process takes place by the senior managers that weighs alternative proposals for investment in innovation as well as putting money in the project that are consistent with the firm strategy as it offers highest return on investment. In most of the organization, it happens that manager’s careers receive a boost when they plan key role in given successful projects. Senior Managers are responsible for making the resource allocation decisions whereby there it takes place various critical allocation decisions that actually enables long before involvement of senior managers. It is case when senior manager decides for pursuing the disruptive technology whereby the people in the organization ignores some the aspects that fits the models (Akiike, and Iwao 2015). Most of the companies do not realize that the speed at which the product is moving up-market by over satisfying the needs of their original customers when it faces intense competition for achieving higher level of performance. It takes place in the higher-margin markets where it creates vacuum at lower price points. This is where the competitors employ disruptive technologies that enter into the mainstream markets. It is for the companies who measure the trends in how their mainstream consumers use their products for catching the points from where basis of competition will change as far as possible (Christensen, Anthony and Roth 2013).
When managers assign employees for tackling the critical innovation, it works together for matching the requirements of the job that aligns with the capabilities of the individuals. In case of evaluating the employee performance, managers will be assessed by understanding the employee’s values (Christensen 2013). Here, the hallmark of the great manager will define the ability for identifying the right person for the right job. It can be done by training the employees so that they have the capabilities for succeeding in the jobs as far as possible. There are factors that affect an organization that includes resources as well as process and its values. Resources considers as the vital factors as it contributes towards what an organization can or cannot do. This includes brands, information, cash, people, equipment as well as technology and customers at the same time (Berglund and Sandström 2014). It is noted that sustaining technologies brings improvement in the performance of established products aligning with the dimensions of performance of the mainstream customers in the major markets. Disruptive technologies emerge whereby innovation results in worse product performance in the near future. There are instances provided in the book where disruptive technologies precipitated the leading firms’ failure. When the performance of two or more competing products has been improved beyond the market demands, it may happen that the customers fail to base their choice on high performing product. They can base their choice that revolves around reliability and then to convenience and then to the price. It may happens that company’s desire in staying ahead of competition and compete with their superior products (Christensen and Raynor 2013).
1.
Asymmetric Mobility Across Value Networks
The factors, George must consider before the decision of manufacturing the devices producing the hydrogen by him, are as under:
Firstly, George must have applied for patents as he will have rights over his inventions and can easily earn income from the sale and licensing of such inventions. Secondly, he should apply for the trademark as the owner can take legal actions against the infringement of the trademarks. Most of the countries have a requirement of having a formal registration for the pursuance of such type of action (Blackett 2016). There are also countries, which recognize the rights of common trademarks law, and the same considers the actions, which can be taken in order to protect the unregistered trademarks in usage.
After, the filing of the trademark and patent, George must be keen towards working on the licensing actions before a manufacture is found for the production of the products. The licensing helps in the effective offer given to a third party authority for the manufacturing, selling and marketing of the inventions with the proportion of the income from such sale being returned to the inventor, as a fees for licensing (Parr 2012). There are many benefits, which follow an arrangement of licensing, and they are:
- The inventor does not bear any financial burden of the investment in the manufacturing or the marketing of the investment i.e. the licensee and not the inventor has the sole responsibility of bearing such burden (Buckley and Casson 2016).
- The inventor does not have a burden of having an employment of staffs for setting up the facilities for manufacturing and distributing their inventions (Drucker 2014).
An agreement of license provides a right of the usage of the technologies for further development and growth towards the commercialization. The agreements of license include the elements, which are as follows:
License Fees: The fees, which are paid after the signing of the agreement and the amount has dependability on the value of the technology.
Reimbursement of the patent: They are the fees paid for the defrayment of the processing cost of the patents. This includes the filing fees of both domestic and foreign nature, attorney fees and late fees of the intellectual property.
Royalty: They are paid after the sale of the technology used for the products and they may be calculated on the standards depending on the market. There is annually a minimum amount of royalty, which are expected at the end of the internal and external periods of developments, and the actually earned royalties will be credited towards the minimum amount of royalties and thus the same is not a fee with additional nature (Lichtenthaler and Ernst 2012).
The risks and opportunities associated with the process of technology licensing are as follows:
- Confidentiality: The process of production is a valuable right of property if the other businesses are ready and willing of paying up for the license on the process of production. The risk associated is that there is an increased exposure of the confidentiality and proprietary usage of the process of production. The more the people will know the process structure, the more the risk of somebody breaching up the confidentiality of the process. The same is true in cases where the company do not have a direct holding on the employees and contractors in the business of licensing.
- Competition: The issuance of licensing creates a force of competition, which is a major risk for an inventor. The license have a placement of the competition on a level which creates a field of playing as the competitor has a right in the usage of the same process of production used by oneself. The licensor or the inventor may take an attempt in limiting the competition by creating a limit on the scope of the license to the greatest extent possible (Alhawari et al.2012).
- Revenue: There is guaranteed and instant revenue for the inventor and there are several types of variable payments, which are based on the profits of the business.
- Brand recognition: There is a great advantage of the licensing process, which include the promotion of recognition of brands. There must be a right, which is to be retained for obtainment of the license from the licensor. The same can help in the provision of the credibility and reorganization of the brand for the inventor or the licensor as there is a creation of more awareness of the licensor being responsible for all the process of production (David et al. 2012).
1. The research made by Christensen explains that the process of resource allocation considers the mechanism of the investments being controlled by the customers. The innovation and allocation of a product or resource are same sides of a coin and the products which has projects of developing in a newer probability and with adequate amount of funding, attention of management and staffing have great chances of succeeding in future (Basu 2015). The inventors who lack and starve during the allocation of resources will never succeed and fade away in a short period.
The patterns of the innovation will be mirrored by the close patterns of the process of allocation of resources. The allocation with a good nature is a design, which contains the removal of the proposals not required by the customers. The decision-making process works in the best case when the products are funded by the customers if they want the product and vice versa. The senior managers are required to decide the funding of a project only after the decision of the lower levels of the organizations about the proposals of the projects in which they are interested and no effort is required by the senior levels of the management hierarchy (Fink 2016).
Employee Performance and Organizational Factors
The senior managers are only provided with a screen of generated ideas of innovation by the lower mangers. There are many other decisions to be taken after the launching of the products by the middle level managers who have been setting up priorities for the multiple products and projects.
The case above represents that the company finds that the customers see no value of the devices and secondly there is no much income generation behind such production. Therefore, the management must look forward in knowing the ultimate response to be given as the customers view is the major requirement for the success of the innovation.
2. Christensen points out that at the earliest stage of the introduction of a disruptive technology, it is difficult to see how it is a threat to a major competitor’s ongoing business and the same is described briefly below:
Several industries including the disk drive, mechanical shovel, and steel industries had the ability of providing the technologist the idea of difficulty in the business as a threat of competition (Fleisher and Bensoussan 2015). The performance oversupply can create an opportunity for emerging of the disruptive technologies and subsequent invasion towards the markets established. As there is a creation of risks or opportunities for a technology, which is disruptive there will be a trigger in a fundamental change in through performance oversupply.
The ordering of the rank criterion on choosing of the products and services over the substitutes by the customer changes and has a transition from one phase to other in the life cycle of the product. The intersection of the routes of the supplied performances are the major triggers which are behind the product life cycle phases. The paths in the book have a characterization of the dynamics of the industry’s competitiveness and the same is likely to change over time, with the advent of competitive forces in the market (Cho et al. 2012). The information does not suffice the characterization of the vehicles being disruptive in nature. They will be declared disruptive, once there is a finding that they are on the path of improving and will someday become competitive in the market with mainstream.
Firstly, the company was in utter denial to the innovation, as according to the management the same would not prove to be major success or field of competitiveness in the market. They suggested that the customers would not be interested in such product, which would lead to non-generation of revenues thus making it unworthy in nature. The same was considered non-competitive or non-threatening in nature and hence there was no use in attaining the resources for such innovation processes.
As per the Christensen’s theory, if one has the capability of leaping and going ahead on the top path or trajectory, then there may be innovations of a sustainable nature. The theory explains that the better products, which can be sold at best profits and to the best customers of the gigantic company, the latter will surely be successful in defeating the former one (Getz and Page 2016). However, if one is capable of creating a competitive market, which would really help the giant to run away from the market, instead of fighting for the position, than the company is successful in its Endeavour. Hence, according to the theory such odds can heavily help the companies who are going to make new entry in the market.
The above innovation was firstly taken to be unworthy but after researching done by the universities of US, they decided that there can be healthy competition provided by the innovation technologies. The competition will hence result in the increase in the revenues i.e. fivefold increase which can prove to be highly beneficial for the company.
References
Akiike, A. and Iwao, S., 2015. Criticisms on” the innovator’s dilemma” being in a dilemma. Annals of Business Administrative Science, 14(5), p.231.
Alhawari, S., Karadsheh, L., Talet, A.N. and Mansour, E., 2012. Knowledge-based risk management framework for information technology project. International Journal of Information Management, 32(1), pp.50-65.
Barney, J.B. and Hesterly, W., 2015. Strategic management and competitive advantage concepts and cases. Pearson.
Basu, R., 2015. Managing Projects in Research and Development. Ashgate Publishing, Ltd..
Berglund, H. and Sandström, C., 2014, January. A New Perspective on the Innovator’s Dilemma-Exploring the role of Entrepreneurial Incentives. In ISPIM Conference Proceedings (p. 1). The International Society for Professional Innovation Management (ISPIM).
Blackett, T., 2016. Trademarks. Springer.
Born, B. and Pfeifer, J., 2014. Policy risk and the business cycle. Journal of Monetary Economics, 68, pp.68-85.
Buckley, P.J. and Casson, M., 2016. The future of the multinational enterprise. Springer.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Cho, D.W., Lee, Y.H., Ahn, S.H. and Hwang, M.K., 2012. A framework for measuring the performance of service supply chain management. Computers & Industrial Engineering, 62(3), pp.801-818.
Christensen, C. and Raynor, M., 2013. The innovator’s solution: Creating and sustaining successful growth. Harvard Business Review Press.
Christensen, C., 2013. The innovator’s dilemma: when new technologies cause great firms to fail. Harvard Business Review Press.
Christensen, C., Anthony, S. and Roth, E.A., 2013. Seeing what’s next: Using the theories of innovation to predict industry change. Harvard Business Press.
Christensen, C., Raynor, M., Dyer, J. and Gregersen, H., 2013. Disruptive Innovation: The Christensen Collection (The Innovator’s Dilemma, The Innovator’s Solution, The Innovator’s DNA, and Harvard Business Review article” How Will You Measure Your Life?”)(4 Items). Harvard Business Press.
Davila, T., Epstein, M. and Shelton, R., 2012. Making innovation work: How to manage it, measure it, and profit from it. FT press.
Della Porta, D. and Diani, M., 2015. Introduction. In The oxford handbook of social movements.
Denning, S., 2016. Christensen updates disruption theory. Strategy & Leadership, 44(2), pp.10-16.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Dyer, J., Gregersen, H. and Christensen, C., 2013. The innovator’s DNA: Mastering the five skills of disruptive innovators. Harvard Business Press.
Ellison, N.B. and Boyd, D.M., 2013. Sociality through social network sites. In The Oxford handbook of internet studies.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
