The Meaning of Innovators Dilemma - Coursework Example

Disruptive Innovation Student’s Name University Affiliation Disruptive Innovations Introduction The innovator’s dilemma concerns how big firms fail despite doing all the right things in management (Christensen, 2013). Such companies stick to the same management practices that made them leaders. Many tech companies have suffered from the onset of disruptive technologies thus shrinking their profitability. In this report, the innovator’s dilemma is explained. The report also uses the innovator’s dilemma to explain why big firms fail. Clearly, Kodak succumbed to the wave of revolutionary digital and disruptive innovation despite doing everything right in management. Finally, the report describes why Barnes & Noble will likely fail due to of the disruptive technologies. The Meaning of “Innovator’s Dilemma" In The Innovator’s Dilemma, Christensen Clayton conceptualizes a theory concerning how large leading firms can fail while doing all the right things (2013). According to the author, the innovator's dilemma describes enterprises whose achievement and capabilities can become detrimental factors in the wake of changing innovations and markets. Therefore, innovator's dilemma illustrates a process in which well-run firms usually fail because of the same practices of management, which made them become dominant industry players. These procedures also make it tremendously difficult for them to create the disruptive innovations, which eventually pinch a portion of their markets. In an attempt to describe the innovator’s dilemma, Christensen differentiates the disruptive technologies from the sustaining ones. Sustaining technologies comprises the innovations, which many companies are familiar with and which enhance the performance of products (Christensen & Raynor, 2013). The innovations include improving a product, which has left a footmark in the market. Many large firms are skillful at changing sustaining innovation challenges into success but face a challenge with disruptive innovations. Disruptive innovations culminate in a worse performance in the market in the near term. They are often simpler, cheaper, smaller, and more convenient in their use. Despite occurring less regularly, disruptive innovations could lead to the failure of leading firms based on their insistence on improving their sustaining innovations (Christensen, 2013). Given the less profitability experienced by businesses that use disruptive innovations in the short term, the leading companies find it difficult to build a case for investing in them regarding managerial interest or resources until it is too late. Over time, the disruptive innovations improve their performance attributes to the point that they venture into the established markets. Why Big Companies Fail The innovator’s dilemma could explain one of the reasons why companies might have a harder time creating successful innovative strategy. The framework of failure grounds on the significant dissimilarity between the disruptive and sustaining innovations. The dilemma stems when firms are leading and find it necessary to guard their markets. The companies’ focus shifts from the disruptive technology to sustaining technologies (Christensen & Raynor, 2013). Many big companies often enhance their sustaining innovations to guarantee the better performance of products. All sustaining innovations often improve the success of established commodities alongside the performance dimensions, which the mainstream clients have valued through history. According to Christensen, most technological developments in a particular sector are sustaining in nature, and even the sustaining technologies that are regarded as radical have often led to the leading firms' failure. Accordingly, the big companies fail because their managers do not perceive disruptive technologies as a threat not because top executive and enterprises that depend on shareholders listen to their clients and direct their attention to the bottom line. The disruptive innovations are not considered as a threat because the customers in the market do not need the original new technology, which performs dismally (Henderson, 2006). The emergence of disruptive technologies often leads to the worse performance of products in the near term. At some point, the rival who emerges will threaten their market with an improved alternative suggesting that the competitiveness and significance of various innovative approaches can alter in different industries with time (Christensen, 2013). Therefore, these companies face a dilemma of whether to maintain the products where they dominate or lose some significant opportunities, which might seemingly only yield success in the longer term (if any). The disruptive innovations are the leading causes the failure of the dominating firms. Such technologies introduce into the market a very diverse value proposition that differs from the value proposition that previously existed (Christensen & Raynor, 2013). The disruptive innovations often introduce into the market a set of performance characteristics that the present customer do not need. Therefore, the changes generate worse productivity than the ones of the dominating industry player. Because the markets appear unattractive, the incumbents do not commit resources to cultivate the new customer’s needs or possible technology. There is the potential of the leading companies’ engineers being delegated duties that concern the existing cash-cow products as opposed to new products. The culmination is a kind of blurred perception established by a deliberate focus on the economic productivity and customer needs (Henderson, 2006). The managers of the bigger firms often fail to react to the competition of disruptive innovations because the present customers are not asking for these innovations. Moreover, these innovations would usually generate worse economic productivity that comprises smaller revenues and lower margins. Nonetheless, an improvement is seen in performance with time to a situation where the new technologies can venture into the markets of the established sectors. By the time the emerging market solidifies, start-ups will have been around for some time. They have already accumulated skills and usually gain from amassing a clientele base. The dominant firms that run in areas with developing disruptive technologies might familiarize with the recent innovation. In case this occurs, big business would be compelled to attempt to catch-up, and very few manage to bridge the gap with the novel leaders. Big businesses can avoid failure by improving their capacity to acquire potentially disruptive innovations (Schmidt & Druehl, 2008). These comprise pursuing external discussions with venture capitalists and researchers on the frontier of technological innovations as well as firm strategists and engineers who are keen on creativity that is yet to be exploited. Why Kodak Failed: What the Company did Right and What it Missed Kodak is a perfect example of the effect of disruptive technology on business. The decline of the company is not unique. Many large firms, which were once successful, fail to transition with the emergence of emerging innovations, which seem to redesign markets. The technology sector is maybe the most fertile field for disruptive technologies. The price elasticity that develops the market of cheap or fast technologies triggers the fall of giants. Kodak was once a thriving company that boasted of 145,000 workers and a significant share of the market of 90%. Other firms could not mount a serious competition, as they were no brands attributed to photography. Kodak produced emotionally inspiring images, which were often called "Kodak moments" (DiSalvo, 2011). Presently, the company is bankrupt, and it is now offsetting its assets to remain afloat, and its workforce has diminished considerably. Initially, Kodak did all the right things in its industry. The company has been on the forefront in developing and implementing risky innovations. The company’s founder George Eastman recognized this when he established the core business of Kodak from black and white to color and from dry plates to film despite having profitable lines of products in the near term (DiSalvo, 2011). Years later, the company blew its opportunity to become a leader in the revolution of digital photography. The company executives got things partly right. In the 1970s, Steve Sasson, an engineer in the firm designed the digital camera. The revolutionary digital innovation was sparking. Rather than focusing Kodak’s strategic plan on the upcoming digital innovations, its executives were making odd operations such as acquiring Sterling Drugs, a pharmaceutical giant and attempting to create a brand in the battery industry. While focussing on the battery and the Sterling debacles, the digital innovation was already passing the company, and the infrastructure of the corporate was cracking steadily. In the 1990s, the firm innovated the “Photo CD” as the defining digital photography medium of the industry. The move was bold, and the company invested millions in making it operational, but it ended up as a shortsighted decision. The company was attempting to benchmark the prototypical medium for storing images, eventually discovering that the digital revolution was eradicating the human-made borders between “photograph storage” and other data storage forms (DiSalvo, 2011). By sticking to the old philosophy pf photography, Kodak failed to perceive that it would never have a sustainable market for its potential commodities. Inflexible, monolithic, and with no capacity to maintain pace with the turns and dynamics of disruptive technology, the firm faced the difficulty of remaining in the market. Why Barnes & Noble is Likely to Fail in the Next Decade Printed books are facing a slow death (Regalado, 2011). A big chain store such as Barnes & Noble continually faces an agenda of to either adapt or die with the inception of e-books that are experiencing increased sales that are soaring into billions. Products such as Apple's iPad, Amazon's Kindle, and Barnes & Noble's Nook, readers can use their smartphones to see e-books they can download online (Regalado, 2011). However, despite gaining a portion the e-book market with their Nook e-readers just recently, Barnes & Noble is losing money. When readers get more time to adapt to the technologies, Barnes and Noble's brick and motor bookstores will receive declining profits. The clear message is that the future belongs to the tablet readers. Barnes & Noble will likely find it senseless to run a series of physical book outlets and may thus be left with only online and Nook book sales. Unfortunately, for the company, the Nook might not be sufficient to maintain the business on its feet but could prove a potential asset for large technology firms to obtain. In sum, The Innovator’s Dilemma presents a scenario, which big companies face. The big companies fail because their managers do not perceive disruptive technologies as a threat and usually consider that adopting such innovations would typically generate worse economic productivity that comprises smaller revenues and lower margins. However, firms can change their fortunes by investing technology alternatives using external or internal expertise. Businesses could also separate their technology aspects from core businesses to encourage technological development. References Christensen, C. (2013). The innovator's dilemma: when new technologies cause great firms to fail. Boston, MA: Harvard Business Review Press. Christensen, C., & Raynor, M. (2013). The innovator's solution: Creating and sustaining successful growth. Boston, MA: Harvard Business Review Press. DiSalvo, D. (2011). The fall of Kodak: a tale of disruptive technology and bad business. Forbes. Retrieved on 10 May 2017 from, https://www.forbes.com/sites/daviddisalvo/2011/10/02/what-i-saw-as-kodak-crumbled/#22848e9c7df1 Henderson, R. (2006). The innovator's dilemma as a problem of organizational competence. Journal of Product Innovation Management, 23(1), 5-11. Regalado, A. (2011). Five disruptive technologies happening now. MIT Technology Review. Retrieved on 10 May 2017 from, < https://www.technologyreview.com/s/426354/5-disruptive-technologies-happening-now/> Schmidt, G. M., & Druehl, C. T. (2008). When is a disruptive innovation disruptive?. Journal of product innovation management, 25(4), 347-369. Read More