Prof. Clay Christensen's Visit

' Disruption always attacks from beneath!'

On the 25th of April, Clay Christensen, the authority of Disruptive Technologies graced our Disruptive Tech class. 'In his book, he hac defined a Disruptive Technology as a trivial technology that disrupts an existing well established business model.

Disruptive Technology is a misnomer', he admitted. Andy Grove,Intel's former CEO convinced Clay that what the latter meant was a 'Disruptive business Model'. A disruptive technology/business model creates a new market, thus creating a disruption and hence a new business model, and brings along with it new metrics of measurement. It is a simple affordable technology as compared to the well established incumbent.

Examples of these business models are those created by the PC and Voice over IP market. The Cisco router could not be used in Lucent Circuit switches. when they first came out. As VOIP got better, Lucent lost customers.

The components of firms can be classified into resouces, processes and values. Resources include products, technology and brands. These are the easiest to copy. Processes/Business processes like the South West Airline Business model are hard to copy. Values like innovation is where the disruption takes place.

Compaq was first approached by Flextronics with a proposal that the latter would manufacture their circuit boards. Through this deal, Compaq saw that it would get the same revenue but could minimize cost. Compaq accepted.
With similar proposals, Felxtronics graduallly acquired Compaq's Logistics, Supply chain and design. Then Flextronics approached Best Buy to carry its own brand, thus eating away from Compaq's market. In effect, they commoditized their customer. If Compaq had not outsourced at the beginning, it would probably have faced extiction earlier. Sure enough,it could not buy Flextronics as it was on a mission to write off its huge assets from its balance sheet.

Hyundai and Kia have stolen market share form Toyota causing the latter to eliminate its Corona and Tercel models. Christensen warns that all automobile manufacturers must be worried about cars manufactured in China and India.

Wimax can cause a disruption to Broadband and Vanu can disrupt Bose's market with its software radio.

For the most part I did become a believer that Prof Christensen's theories held true many times, but:

Counter example1:
A quote from the CEO of Dyson,maker of the cyclone Vacum cleaner, probably a disruptive vacum cleaner.
'Dont design down to price. Let the product do what it needs to do.'

Some Chrsitensen statements:
1.The probability of something new growing out of something old is zero.
As Prof. Utterback pointed out, IBM 360 and 3M products serve as counter examples.
2. Established companies never innovate in a disruptive manner.
Again As Utterback mentioned the IBM 360 was the first solid state computer.

3. New company innovation is always driven by a crisis. Is this true?

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