Tuesday, December 2, 2008

The Innovator's Dilemma

Stephen Shapiro brings up an interesting point when he mentions how “the crappy and cheap will eventually take over the sophisticated and expensive,” which is an ideal from Clayton Christensen’s book The Innovator’s Dilemma. Later on in the post Stephen also gives us an example of this idea in the computing world. Before the age of the PC, the mini-computer and mainframe that cost tens of thousands of dollars were heavy in production. Now there are talks of how the new $300 netbooks might eventually replace the PC which can be bought today for under $1,000.

The current economy has created this problem where many companies are looking away from innovation and building cheaper developments instead of building faster and more sophisticated technologies. I’m interested to see what companies out there are still looking to innovate through these troubling times.

1 comment:

David Locke said...

I believe that commoditization has always been a reality. The problem is that SaaS is commoditized from day one. It is sold as cheaper IT, or it is more a B2C than B2B move. The end result is that SaaS is sold into the Geoffrey Moore's late market. That late market has the same economics as the consumer goods market.

Innovation still pays a premium, but you have to innovate, rather than be the fast follower. The Internet is no longer an innovation. The social web was more marketing than substance. The social web has been around since the BBS days long before the dawn of the Web. I was working in that BBS environment, so I participated in communities of practice and such.

Web 3.0, which I've seen mentions of, but no definition of, is the next thing on they hype cycle. The hype cycle is not the technology adoption lifecycle.

You can still innovate. The shift to conservative economics damped things. SOX and the stock option accounting rule changes has forced innovators into the blue chips, and they don't go about things the way Christenson describes them in his books. The latest book by his firm has him disclaiming the separate entity rule. It didn't sell to the blue chips. And, even Moore has moved on to talk about the mass market side of technology adoption lifecycle, the technology post-startup.

So startups are down. But, startups and innovation are exactly what the economy needs, and not the blue chip, or direct to late market (pseudo-) kind.

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