The Importance of Adopting Disruptive Innovation
For companies to endure they must satisfy their customers and investors fully. Large companies, therefore, have devised ways of doing away with ideas which customers do not want. This results to these large companies finding it hard to devote sufficient funds in small, simpler and cheaper lower boundary opportunities that their customers don’t want at that particular moment. they tend to wait till their customers need them and that is when they take the action of providing them and by then it will be late, it will be too late i.e. it will have been taken over by other companies (Christensen, 2013).
In order for the well established companies to uphold their profits and returns and make inside openings for their workers, there is a necessity for prosperous companies to rise. It is not essential for them to raise their development speed, but they should uphold that speed. In the process of rising, there is a need for an increase in revenue just to uphold the development speed. As a result of that, it becomes hard for them to get into a small and growing market which has small revenues but are intended to improve in future (König, Kammerlander & Enders, 2013).
To maintain their development rates, they must emphasize on large markets. In the process of focusing on the larger market in order to maintain their rate of growth, large companies lose on some good opportunities which would have helped them remain competitive in the market in the future.
Complete market study, exploration and proper scheduling charted by implementation in accordance with the set strategies are the characteristics of noble administration. For companies who make their speculation decisions based on a quantified study of the market size, and revenues, they get paralyzed before penetrating the market when they encounter disruptive technologies because the market demand is not yet in existence (Christensen, 2013).
Disruptive technology is initially intended to be used in small markets but they finally develop into a competitive product in the top markets. This is as a result of industrial development rate exceeding the speed of enhancement in which top consumers of a product want. This results in products that are currently on top exceeding the performance that top markets demand while the disrupting technologies that perform poorly will eventually rise to compete directly in future. Once competing products are satisfying customers adequately they will find other criteria for choosing which product they will go for. The criteria they use normally tends to move towards price and suitability (Christenson, 1997).
Disruptive Technology and Small Revenues
Blackberry phones lost to iPhones. The iPhone came up with touch screens. Instead of turning to disruptive innovation, blackberry thought that the keyboard phone would continue to be attractive to business people and experts and therefore they got phased out of the market.
Marketing and advertising agencies lost to the digital marketing. Nowadays marketing and advertising are done through digital platforms for example through the use of YouTube ads.
The two mentioned above would have avoided being phased out of the market by simply adopting the disruptive technology. The Blackberry, for example, should have embraced the touch screens slowly while still manufacturing their keyboard phones but slowly getting rid of them.
Disruptive technology is whereby a product or service which initially had a low customer base or demand rises to compete and even outdo other services or products that initially had large customer demand and was on top in the market.
Online learning with the advancement in technology, most schools and universities are moving towards online learning. Nowadays students get their course work materials from their tutors online. That way they carry out their assignments and tests far from school i.e. distant learning and at the end of time, they acquire their awards (Phills, Deiglmeier & Miller, 2008).
The traditional physical buildings that are resistant to change and do not want to include distance learning into their systems and curriculum will soon be left out regardless of their reputation in the industry.
Mobile banking technologies. With the technology taking over the world fast, one can carry out their transactions from their mobile phone which they would otherwise have gone to the bank.
This way the traditional banking methods have been jeopardized with a possibility of banks retrenching most of its staffs and employees.
According to Clayton Christensen, companies tend to think that the outcome of innovation is hard to predict and therefore middle level managers are urged to put more effort in creating innovative ideas with disruptive technologies for such processes. Such ideas from middle level management must be approved by high level management. Unfortunately, the management never develops new products with these technologies reason being uncertain of the products to appear in the market from a corporate perspective (Henderson, 2006).
Planning a market strategy, in this case, is vital otherwise a lot of money will be lost. Middle level managers submit their proposals to the senior management with data analysis from their loyal customers for their products. They feel unhappy because senior management may not approve their proposals for their projects hence their reputation may be ruined. I order for them to maintain their status; they need to innovate more new ideas to demeanor excellent results so as to satisfy the senior management. As the market expands in future its demand is not so large and as such managers would like to kill or ignore disruptive technologies because of safeguarding by themselves (Christensen, 2013).
The Impact of Focusing on Large Markets
Christensen elaborates that Business growth is required to be maintained by senior executives in mainstream markets. In addition, they need to guarantee how to allocate assets, carry out the procedures, and set the standards in the correct conditions. Since they need to organize all actions and choices that the workers will be given orders to do the work as allocated by them.
In most organizations, employees tend to become too contented with their daily routine tasks. They are not ready or willing to support disruptive technologies because they find it not worth to take threats outside their daily duties. They are not willing to take risks to identify opportunities outside their daily responsibilities (König, Kammerlander & Enders, 2013).
Well managed companies should change these practices. The proposals presented by the employees should be watched closely and keenly. Also, decisions should not only be based on loyal customers but rather on potential customers and above all, an organization should be in a position to take risks.
Executives should start another distinct organization from the main organization which will undertake the disruptive technologies and innovations. Christensen reasoned that in order for the companies’ management to divert their interest to small markets, the company’s size should be proportional to the size of the suitable opportunity.
Administrators believe that obtaining another firm instead of setting up and an independent firm is preferable because it makes sense financially and competitively. Depending on the reason for the acquirer or the acquire d’s success, then will the managers make a decision on whether to let the business run independently and for the original business to supply resources to them.
This can involve hiring personnel with new skills, increasing capital, changing product lines etc. often, these are done into existing organizational processes and information can be obtained. Unfortunately, procedures are quite difficult to modify. Structural limits are often drawn to ease the action of current procedures. Those limits can hinder the formation of new procedures that cut through those limits. When new encounters need individuals interrelate otherwise than they are used to addressing dissimilar encounters with diverse judgments than traditionally required, executives need to tug the pertinent personnel out of the current organization and draw a new limit around a new group. New side limits allow new patterns of working together that eventually can unite as new procedures for transforming inputs into outputs (Christensen, 2013).
Depending on the current position of the organization, then should the decision on whether to redesign themselves or have a distinct organizational structure. If the organization in question is small, then redesigning it would be better although changing its process and procedures is not as easy as mentioned. If the organization in question is large, then I would advocate for them to have distinct organizational structures. This way, they will be able to cater for their small customer base and obtain their desired returns.
References
Christensen, C. (2013). The innovator’s dilemma: when new technologies cause great firms to fail. Harvard Business Review Press.
O’Reilly III, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in organizational behavior, 28, 185-206.
Henderson, R. (2006). The innovator’s dilemma as a problem of organizational competence. Journal of Product Innovation Management, 23(1), 5-11.
Lynn, L. H. (1999). The innovator’s dilemma: when new technologies cause great firms to fail.
Christenson, C. (1997). The innovator’s dilemma. Harvard Business School Press, Cambridge, Mass.
Christensen, C. M., & Christensen, C. M. (2003). The innovator’s dilemma: The revolutionary book that will change the way you do business (p. 320). New York, NY: HarperBusiness Essentials.
Phills, J. A., Deiglmeier, K., & Miller, D. T. (2008). Rediscovering social innovation. Stanford Social Innovation Review, 6(4), 34-43.
König, A., Kammerlander, N., & Enders, A. (2013). The family innovator’s dilemma: How family influence affects the adoption of discontinuous technologies by incumbent firms. Academy of Management Review, 38(3), 418-441.
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