It Is A Company's Customers Who Effectively

In My First Career I Had Founded My Own Company, With A Group Of Mit Professors, Before Coming To Harvard To Finish My Doctorate, And So I Had A Deep Respect For The Brains, Talent, And Dedication Of Managers. That Made It Hard For Me To Believe The Attributions In The Business Press That Stupid Management Was To Blame. So I Looked Elsewhere For An Explanation.

In The First Stage Of Insight-building, All That Researchers Can Do Is Observe Phenomena. Second, They Classify The Phenomena In A Way That Helps Them Simplify The Apparent Complexities Of The World So They Can Ignore The Meaningless Differences And Draw Connections Between The Things That Really Seem To Matter. Third, Based On The Classification System, They Propose A Theory. The Theory Is A Statement Of What Causes What And Why, And Under What Circumstances.

Generally, The Technology That Enables Disruption Is Developed In The Companies That Are The Practitioners Of The Original Technology. That's Where The Understanding Of The Technology First Comes Together. They Usually Can't Commercialize The Technology Because They Have To Couple It With The Business Model Innovation, And Because They Tend To Try To Take All Of Their Technologies To Market Through Their Original Business Model, Somebody Else Just Picks Up The Technology And Changes The World Through The Business Model Innovation.

How Could Digital's Collapse Be So Precipitous? It's Because, In Many Ways, Financial Performance Data Is Misleading. As You Move Up To The Top Of The Market, You're Getting Rid Of The Less Profitable Products At The Low End And Adding Business With More Attractive Margins At The High End. The Rate Of Unit Volume Growth Might Be Tapering Off As You Pursue These Smaller Markets, But Your Margins Actually Look Better. So Wall Street Rewards Your Stock Price Until You Hit The Ceiling.

Every Disruptive Innovation Is Powered By A Simplifying Technology, And Then The Technology Has To Get Embedded In A Different Kind Of A Business Model. The First Two Decades Of Digital Computing Were Characterized By The Huge Mainframe Computers That Filled A Whole Room, And They Had To Be Operated By Phd Computer Scientists. It Took The Engineers At Ibm About Four Years To Design These Mainframe Computers Because There Were No Rules. It Was An Intuitive Art And Just By Trial And Error And Experimentation They Would Evolve To A Computer That Worked.