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The interesting thing about the marketplace disruption model is how difficult it can be to distinguish disruptive from sustaining innovations in their early pha

by apo 8y ago

The interesting thing about the marketplace disruption model is how difficult it can be to distinguish disruptive from sustaining innovations in their early phases. Take electric cars, an example that Christensen has talked about in his books. He viewed electric cars as a disruptive innovation. However, few of the predictions about the electric car market from this perspective have held up. Tesla, the upstart, attacked the market from the top end, not the bottom end with luxury cars. The company now has formidable competitors in major auto makers including Mercades, and GM. Electric cars are still pricy and appeal to an upmarket customer base willing to sacrifice range for other factors. Christensen's blueprint for the electric car industry was attack from the bottom. Focus on markets where inexpensive, short range vehicles are an advantage. He offers parents buying a first car for their kids as an example. But that's not how things have played out. It turns out that replacing a combustion-based powertrain with an electric one allows established players to continue using the same business model that got them where they are. Petroleum companies may be disrupted in the changeover to EVs, but that has little to do with automakers who at the end of the day make a bug hunk of metal and plastic for moving people around and sell it on credit. It's tempting to think of online universities in much the same way as Christensen thought about electric cars: as a disruptive innovation. What if online universities are instead sustaining innovations that will allow incumbents to preserve their existing business models (selling prestige and a credential to families with college-age children) while proving hostile to startups hoping to break in?

znpy 8y ago
Meh. So far, on-line education hasn't disrupted that much. Just this year the University of London has launched a fully on-line BSc in CS, but the MOOC movement has started in 2011 that is seven or eight years ago. So far, the MOOC movement has basically failed to truly deliver. In the end Udacity is selling something called "micro-masters" which is a nicer term to indicate "industrial certifications". If this is how it proceeds, my opinion is that in ten years most universities will still be where they now are, safe and sound.
wahern 8y ago
However, few of the predictions about the electric car market from this perspective have held up Clayton Christensen making predictions throws me through a loop. I feel like he misunderstood his own thesis. My take away from Innovator's Dilemma was that (1) at every step of the game the most economically rational, profit maximizing strategy is to ride your successful business model all the way to the cliff and (2) you cannot predict what will become disruptive because success is context dependent, path dependent, and highly dynamic. If you could foresee all those interdependencies you could make a fortune in the stock market over night; but you can't. Something appears disruptive only in retrospect; beforehand it's just one among several competing alternatives, most or all of which will be forgotten. His big solution at the end of the Innovator's Dilemma was GE-style conglomerates that spun off small ventures to test new ideas free from parent companies' economic calculus. But look at where GE and similar corporations mentioned in the book are now. That strategy does nothing to overcome the fundamental impediments to perpetual business success. Failure is inevitable, period. The only real "solution" is a financial market that can quickly reallocate capital to the manifest winners. The more efficient that capital and labor markets become, the less of an advantage large conglomerates will enjoy. But it all comes down to allocation of resources subsequent to the emergence of identifiable market trends. I never bothered to read his other books because what was the point? He was right in the first-half of the Innovator's Dilemma; everything he wrote after that was a contradiction.

by apo 8y ago

znpy 8y ago

Meh. So far, on-line education hasn't disrupted that much. Just this year the University of London has launched a fully on-line BSc in CS, but the MOOC movement has started in 2011 that is seven or eight years ago. So far, the MOOC movement has basically failed to truly deliver. In the end Udacity is selling something called "micro-masters" which is a nicer term to indicate "industrial certifications". If this is how it proceeds, my opinion is that in ten years most universities will still be where they now are, safe and sound.

wahern 8y ago

However, few of the predictions about the electric car market from this perspective have held up Clayton Christensen making predictions throws me through a loop. I feel like he misunderstood his own thesis. My take away from Innovator's Dilemma was that (1) at every step of the game the most economically rational, profit maximizing strategy is to ride your successful business model all the way to the cliff and (2) you cannot predict what will become disruptive because success is context dependent, path dependent, and highly dynamic. If you could foresee all those interdependencies you could make a fortune in the stock market over night; but you can't. Something appears disruptive only in retrospect; beforehand it's just one among several competing alternatives, most or all of which will be forgotten. His big solution at the end of the Innovator's Dilemma was GE-style conglomerates that spun off small ventures to test new ideas free from parent companies' economic calculus. But look at where GE and similar corporations mentioned in the book are now. That strategy does nothing to overcome the fundamental impediments to perpetual business success. Failure is inevitable, period. The only real "solution" is a financial market that can quickly reallocate capital to the manifest winners. The more efficient that capital and labor markets become, the less of an advantage large conglomerates will enjoy. But it all comes down to allocation of resources subsequent to the emergence of identifiable market trends. I never bothered to read his other books because what was the point? He was right in the first-half of the Innovator's Dilemma; everything he wrote after that was a contradiction.