Comments on: The Innovator’s Dilemma http://www.hartnall.com/2009/02/the-innovators-dilemma/ Attempting to convert random thoughts into sentences. Sat, 04 Sep 2010 06:47:46 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Kelvin Hartnall http://www.hartnall.com/2009/02/the-innovators-dilemma/comment-page-1/#comment-22 Kelvin Hartnall Tue, 03 Mar 2009 23:59:20 +0000 http://www.hartnall.com/?p=140#comment-22 Hi Jeff, thanks for your insightful comment. Yes, I agree, the space of possible breakthrough technologies would be large for any company and it would be nearly impossible for them to devote resources to explore them all. And it is always easy to suffer survivorship bias and question in hindsight why a company failed to foresee the now obvious development, forgetting that the development was only one of many possible. It is also easy to assume that a company is twiddling its thumbs while the development takes place - in reality they are already competing fiercely in a competitive marketplace trying to stay one-up on their closest competitors and therefore there is a true opportunity cost to diverting resources to numerous other possible avenues. However, I suspect that the possible space of disruptive technologies for their specific industry is not that large. I also think that if companies allocated resources to these technologies before it was too late, they would have such significant advantages due to their existing resources that they could win and lead the market. For example, the book ‘The Innovator’s Dilemma’ considers the hard-drive industry and how there have been four generations of hard-drive each disrupted by smaller dimension, small capacity, and lower margin hard-drives. In each case the leading firm was disrupted by the new technology. A similar example could be the computer industry that has gone through generations of lower margin products, from mainframe to minicomputer to PC to Netbook. The companies that dominated the mainframe market were disrupted by the leaders of the minicomputer market, and the leaders of the minicomputer market were disrupted by the leaders of the PC market. It will be interesting to see who will lead the next lower-margin market of Netbooks. So I’m not sure that the space of disruptive technologies for a specific industry is that wide, but that it is difficult for a multi-billion dollar company to allocate resources for a low-margin market. So it is difficult for PC developers who make good margin on laptops to allocate significant resources to the low-margin Netbook market. Hi Jeff, thanks for your insightful comment. Yes, I agree, the space of possible breakthrough technologies would be large for any company and it would be nearly impossible for them to devote resources to explore them all. And it is always easy to suffer survivorship bias and question in hindsight why a company failed to foresee the now obvious development, forgetting that the development was only one of many possible. It is also easy to assume that a company is twiddling its thumbs while the development takes place – in reality they are already competing fiercely in a competitive marketplace trying to stay one-up on their closest competitors and therefore there is a true opportunity cost to diverting resources to numerous other possible avenues.

However, I suspect that the possible space of disruptive technologies for their specific industry is not that large. I also think that if companies allocated resources to these technologies before it was too late, they would have such significant advantages due to their existing resources that they could win and lead the market. For example, the book ‘The Innovator’s Dilemma’ considers the hard-drive industry and how there have been four generations of hard-drive each disrupted by smaller dimension, small capacity, and lower margin hard-drives. In each case the leading firm was disrupted by the new technology. A similar example could be the computer industry that has gone through generations of lower margin products, from mainframe to minicomputer to PC to Netbook. The companies that dominated the mainframe market were disrupted by the leaders of the minicomputer market, and the leaders of the minicomputer market were disrupted by the leaders of the PC market. It will be interesting to see who will lead the next lower-margin market of Netbooks. So I’m not sure that the space of disruptive technologies for a specific industry is that wide, but that it is difficult for a multi-billion dollar company to allocate resources for a low-margin market. So it is difficult for PC developers who make good margin on laptops to allocate significant resources to the low-margin Netbook market.

]]> By: Kelvin Hartnall http://www.hartnall.com/2009/02/the-innovators-dilemma/comment-page-1/#comment-21 Kelvin Hartnall Tue, 03 Mar 2009 23:53:56 +0000 http://www.hartnall.com/?p=140#comment-21 Shane, I agree that I’m always surprised with the rapid increase in demand for hard-drive space. I remember when I got my first hard-drive with 2GB of space and it was fantastic. Now I need more than that just to install Windows! However, in the 90s it seemed that people were continuously upgrading their hard-drive since you could never really have enough space. Now I think it is only a fringe market that wants terabyte hard-drives. In 5 years time I’m sure there will be a market for the 10 terabyte drives, though I imagine that the majority of the market will be quite satisfied with 500GB drives to store their high-definition videos, 20 mega-pixel photos, etc... Of course, I wouldn’t be at all surprised if I am wrong and we sit around in the future reminiscing with nostalgia about the day when hard-drives were measured in GB and somehow that was enough! Shane, I agree that I’m always surprised with the rapid increase in demand for hard-drive space. I remember when I got my first hard-drive with 2GB of space and it was fantastic. Now I need more than that just to install Windows! However, in the 90s it seemed that people were continuously upgrading their hard-drive since you could never really have enough space. Now I think it is only a fringe market that wants terabyte hard-drives. In 5 years time I’m sure there will be a market for the 10 terabyte drives, though I imagine that the majority of the market will be quite satisfied with 500GB drives to store their high-definition videos, 20 mega-pixel photos, etc… Of course, I wouldn’t be at all surprised if I am wrong and we sit around in the future reminiscing with nostalgia about the day when hard-drives were measured in GB and somehow that was enough!

]]> By: Jeff Rose http://www.hartnall.com/2009/02/the-innovators-dilemma/comment-page-1/#comment-19 Jeff Rose Tue, 03 Mar 2009 11:02:32 +0000 http://www.hartnall.com/?p=140#comment-19 It doesn't seem unimaginable that a company could continually try to plot the various dimensions of their products and services, and then sponsor longer term work that tries to improve across some of them. My guess is that the real issue here is a state space explosion problem, where there are just too many avenues to explore. Even Microsoft would find it impossible to devote major resources to every possible avenue of research that could potentially be important if some breakthroughs were made. My guess is that the real successful businesses today are those that know how to spot the key dimensions in time to catch-up, but as the time from conception to release of new technologies shrinks, this will become an increasingly difficult pursuit. Eventually companies will be shorter lived entities that come and go as the evolutionary landscape in which they operate changes shape around them. Some niches will support longer term businesses, but wherever there are a lot of ways to skin the cat, it will probably be impossible for any one business to keep up with the space exploration capabilities of the rest of the world. Old, inefficient businesses should just die, so their resources can be better utilized by the new generations, and rather than trying to keep them around, sucking more resources from everyone else, the focus should be on keeping people light on their feet and rapidly re-trainable. It doesn’t seem unimaginable that a company could continually try to plot the various dimensions of their products and services, and then sponsor longer term work that tries to improve across some of them. My guess is that the real issue here is a state space explosion problem, where there are just too many avenues to explore. Even Microsoft would find it impossible to devote major resources to every possible avenue of research that could potentially be important if some breakthroughs were made. My guess is that the real successful businesses today are those that know how to spot the key dimensions in time to catch-up, but as the time from conception to release of new technologies shrinks, this will become an increasingly difficult pursuit.

Eventually companies will be shorter lived entities that come and go as the evolutionary landscape in which they operate changes shape around them. Some niches will support longer term businesses, but wherever there are a lot of ways to skin the cat, it will probably be impossible for any one business to keep up with the space exploration capabilities of the rest of the world. Old, inefficient businesses should just die, so their resources can be better utilized by the new generations, and rather than trying to keep them around, sucking more resources from everyone else, the focus should be on keeping people light on their feet and rapidly re-trainable.

]]> By: Shane Legg http://www.hartnall.com/2009/02/the-innovators-dilemma/comment-page-1/#comment-15 Shane Legg Sat, 28 Feb 2009 20:55:13 +0000 http://www.hartnall.com/?p=140#comment-15 Great post. I think this is better explained here than any time you have explained it to me in person. In particular I now see how they can overshoot the market's demand at which time the importance of improvements in that dimension basically go to zero, leaving the other (previously unimportant) dimensions being the key ones. One complexity in all this is that it's hard to estimate the market's demand for something. For example, in the days of text files being the main type of computer file by size a 100 MB drive was totally massive and would over shoot the market. Then high res pictures came along. Then mp3s. Then people started storing whole movies. Now, as HD is becoming standard for TV and movies, people will start storing HD movies on their hard drives from Blu Ray discs. I think they are about 20 GB a movie. So, 100 movies will be 2 TB of disk space. Now, I don't know why everyday people would want to store things bigger than HD movies... but then maybe 5 years from now there will be some new use for massive storage that I haven't thought of? It's hard to know. Great post. I think this is better explained here than any time you have explained it to me in person. In particular I now see how they can overshoot the market’s demand at which time the importance of improvements in that dimension basically go to zero, leaving the other (previously unimportant) dimensions being the key ones.

One complexity in all this is that it’s hard to estimate the market’s demand for something. For example, in the days of text files being the main type of computer file by size a 100 MB drive was totally massive and would over shoot the market. Then high res pictures came along. Then mp3s. Then people started storing whole movies. Now, as HD is becoming standard for TV and movies, people will start storing HD movies on their hard drives from Blu Ray discs. I think they are about 20 GB a movie. So, 100 movies will be 2 TB of disk space. Now, I don’t know why everyday people would want to store things bigger than HD movies… but then maybe 5 years from now there will be some new use for massive storage that I haven’t thought of? It’s hard to know.

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