I am consistently drawn to the central point of the conversation as I read all of our assigned articles, books and collateral material. One of the standout articles that has brought a new perspective to my work and analysis of what I’m doing is the Christensen HBR article (Bower, Joseph L. & Christensen, Clayton M. (1995). “Disruptive Technologies: Catching the Wave” Harvard Business Review, January-February 1995). His analysis on how competent companies miss disruptive technologies by listening closely to their existing customers describes a business problem I am working with.
He describes the ways that companies who have a successful line of products listen closely to their existing base of customers for how to improve and innovate alone the existing line of products. This may even include some genuinely creative improvements. The company focuses on the feedback loop from the key stakeholders and top tier partners and continue to work on improving their product line, expanding the segments of customers who may find their products interesting or compelling if the products had certain features or performed in a certain set of scenarios.
Into this mix, a new idea is born that does not fit the existing product set. While great companies do have the talent and perception to take note of truly innovative products or services, the market that would be initially served by this new product or service is insignificant to the company for any of several reasons. They would include not knowing the segment’s needs very well, the business model is too different from the “proven” business model, or the revenue and reach opportunities are insignificant when compared to the existing product set and market served.
If this product or service survives the initial onslaught of indifference (either by being set into a proof of concept with minimal resources within the company, or by breakaway entrepreneurs who strike out as a start-up), it then goes into well-defined start-up curve and agile iterations of improvement. These innovators listen to the previously non-served market segments and are not constrained by the expectations of the more established company’s customers.
Now there may be a tipping point. If the product or service struck out on its own from the larger company, there is no reason why it cannot continue to grow or be successful, besides obvious roadblocks like economic uncertainty, bad business practices or misread market research. If the product or service still resides under the wing of the established company, it is in danger in several areas:
· Misconception and miscommunication of goals – This may happen when the concepts that drive the innovation are not consistently defined and evangelized to the company stakeholders
· Unrealistic expectations regarding the organic lifecycle of a disruptive and innovative in-house start-up – This may happen if the young business starts to show growth, but is then expected to compete at the same revenue and reach targets as the main product lines
· Resource starvation due to a desire by the company to allocate its limited resources toward making its premier customers happy with the main product lines – This is a particular danger in a severe economic downturn when product and service development funding is frozen or cut
The Christensen article I refer to is certainly not the only reading that is helping me and my team navigate our way with new products and services, but I recommend it highly as a good place to start.