It Exam Note Cheat Sheet
Disruptive Technology(Joseph L. Bower, Clayton M. Christensen)
Issue lies at the heart of the paradox: They close too close to their customers. Companies listen to their customers, give product performances they were looking for, but in the end, were hurt by the technologies their customers led them to ignore.
2 Characteristics of the technological changes that damage established companies: 1) They typically present a different package of performance attributes (at the onset, not valued by existing customers 2) The performance that existing companies value improve at a very rapid rate (often too late now for established companies)
Performance trajectory -> the rate at which the performance of a product has improved, and is expected to improve.
Every industry has a performance trajectory (disk drives -> storage)(photocopiers -> number of copies / min)
Sustaining technologies-> maintains a rate of improvement (Give customers something better in attributes they already value)
Disruptive technologies -> introduce a very different package of attributes from the one mainstream customers historically value, and they often perform far worse along one or two dimensions that are particularly important to those customers. * Mainstream customers are usually unwilling to use disruptive technologies * Disruptive technologies only valued in new markets
Generally, disruptive technologies look unappealing financially. (Due to difficulty of forecast)
Companies have two choices: 1) Downmarket -> accept the lower profit margin and invest in the disruptive technologies. (High costs) 2) Upmarket -> stay at the sustaining technologies (profit margins seemingly high)
Key Lesson: Pay careful attention to potential disruptive technologies, and do not miss them.
The problem is that managers keep doing what has worked in the past.
Companies investment processes:
Use analytical planning and budgeting systems. But, disruptive technologies
Issue lies at the heart of the paradox: They close too close to their customers. Companies listen to their customers, give product performances they were looking for, but in the end, were hurt by the technologies their customers led them to ignore.
2 Characteristics of the technological changes that damage established companies: 1) They typically present a different package of performance attributes (at the onset, not valued by existing customers 2) The performance that existing companies value improve at a very rapid rate (often too late now for established companies)
Performance trajectory -> the rate at which the performance of a product has improved, and is expected to improve.
Every industry has a performance trajectory (disk drives -> storage)(photocopiers -> number of copies / min)
Sustaining technologies-> maintains a rate of improvement (Give customers something better in attributes they already value)
Disruptive technologies -> introduce a very different package of attributes from the one mainstream customers historically value, and they often perform far worse along one or two dimensions that are particularly important to those customers. * Mainstream customers are usually unwilling to use disruptive technologies * Disruptive technologies only valued in new markets
Generally, disruptive technologies look unappealing financially. (Due to difficulty of forecast)
Companies have two choices: 1) Downmarket -> accept the lower profit margin and invest in the disruptive technologies. (High costs) 2) Upmarket -> stay at the sustaining technologies (profit margins seemingly high)
Key Lesson: Pay careful attention to potential disruptive technologies, and do not miss them.
The problem is that managers keep doing what has worked in the past.
Companies investment processes:
Use analytical planning and budgeting systems. But, disruptive technologies