Innovation
The Rules of Innovation by Clayton Christensen is a breakdown of important variables that affect the probability of success in innovation. In the past innovation was seen as random and unpredictable, but based off his article the probability of innovation is on the rise with the success of mastering his variables. He classifies the four variables as: 1) taking root in disruption, 2) the necessary scope to succeed, 3) leveraging the right capabilities and 4) disrupting competitors, not customers. If these four variables are understood than innovation wouldn’t be nearly as risky as it appears. In turn this would lead to creating more new companies, products, and services that we hope to achieve.
Taking root in the disruption is described as a new company taking entry into the market by introducing a disruptive innovation. This means that the technology lacks refinement, is convenient and low cost, and appeals to a new, small and initially unattractive set of customers. Sustaining technology relies on incremental improvements to an already established technology. What this breaks down to is that a new company entering the market, with a company that is known for its sustainable technology, will fail because they can’t compete. However, a new company that enters the market with disruptive technology will eventually prevail because it can capitalize on a cost-saving or new market opportunity created by low-margins. Sustainable technology will dismiss disruptive technology because it does not compete with current company goals and will eventually be blindsides as the technology matures and threatens marketshare.
Picking the scope necessary to succeed is the second variable in which relates to a new business success based upon “integration.” Highly integrated companies correlate with sustainable technology and nonintegrated associate with disruptive technology. When a company uses highly integrated technology, they sell their own proprietary components and products. Nonintegrated companies outsource as much as possible to suppliers and partners and use modular, open systems and components.
Taking root in the disruption is described as a new company taking entry into the market by introducing a disruptive innovation. This means that the technology lacks refinement, is convenient and low cost, and appeals to a new, small and initially unattractive set of customers. Sustaining technology relies on incremental improvements to an already established technology. What this breaks down to is that a new company entering the market, with a company that is known for its sustainable technology, will fail because they can’t compete. However, a new company that enters the market with disruptive technology will eventually prevail because it can capitalize on a cost-saving or new market opportunity created by low-margins. Sustainable technology will dismiss disruptive technology because it does not compete with current company goals and will eventually be blindsides as the technology matures and threatens marketshare.
Picking the scope necessary to succeed is the second variable in which relates to a new business success based upon “integration.” Highly integrated companies correlate with sustainable technology and nonintegrated associate with disruptive technology. When a company uses highly integrated technology, they sell their own proprietary components and products. Nonintegrated companies outsource as much as possible to suppliers and partners and use modular, open systems and components.