> A disruptive innovation occurs when long-standing assumptions in a marketplace are tested and successfully challenged by upstarts.
A disruption innovation is a new way of doing things, often based on technology (but can be a different business model), that at first is not good enough for mainstream users. So it is no threat to incumbents, and no competitive response is provoked. But it is good enough for some other users and usages, and it can gradually improve in this safe backwater... until one day, it is good enough for mainstream users - but it also has some other benefits (that appealed to those other users), and so, suddenly, they switch. This is a disruption.
The difficulty for incumbents is that (up til then), their customers didn't want it. They might even have tried to force it on their customers, but with no response. Because good management will listen to customers, and try to serve them, it makes it even harder for them to deal with approaching disruptions, even if they see them clearly.
Another problem is that while incumbents may keep on improving their product (so it is still clearly, overwhelmingly superior to the disruption), the key to the effect is that their product has become more than good enough. So it doesn't matter that it's better it's like offering ever more water to a man who was thirsty, but is now full.
Note that there are many parts to this scenario, and a candidate innovation might fall down at many points - it might not be possible to improve it enough for mainstream users; there might be a way for incumbents to co-opt it; a great company can sometimes disrupt themselves (cannibalizing their own sales); yet another disruption might improve enough before this one did, etc.
Two big take-homes for me:
- to be aware of what people want, not just making better widgets.
- making a product that some people want, but that is not yet perfect and not yet ideal for them, is a good thing.
To reify this, my favorite example from The Innovator's Dilemma:
After WWII hydraulic excavators were introduced to the market. They could only move a quarter of a cubic yard at a time, the sort of work that had previously been done by men with shovels. This nicely fit with the explosion of suburbs where these excavators could efficiently dig small trenches for water and sewer access.
The steam shovel companies ignored this, catering to their markets for bigger trenches for main water and sewer pipes and larger scale excavation (e.g. digging out foundations).
The companies making hydraulic excavators steadily improved, to the points where they could handle the above applications. At those points they quickly wiped out their entrenched steam shovel competitors, for they didn't have chains that could snap and lash back at the operator.
For the general reasons mentioned by the parent posting, these competitors woke up to the threat way too late, didn't have the expertise necessary to quickly compete and I'm pretty sure most/all that tried ran out of money before they could make the transition. One of the deadly things about disruptive innovation is that they can crater your revenues faster than your corporate culture can respond.
ADDED:
All that said, after reading the article, while the author does not clearly make the case, I get the feeling that "Teen Knowledge Work" as enabled by the Internet is indeed something like a disruptive innovation.
The Internet has massively leveraged would be and current "knowledge workers". Let's look at our ability to self-educate: previously, it was hard to be an autodidact if for no other reason than it was hard to find out the books you ought to read. Now that meta-information is easily available, in on-line course book lists, Amazon.com reviews, Wikipedia articles and of course many less formal venues.
With these resources, not a whole lot of cash (and things like forums where one can questions) the self-directed self-disciplined learner can get a pretty good education. It won't equal the one you can get from rubbing shoulder with a few thousand of the best and brightest at MIT or an IIT, but I suspect it's enough to start a serious knowledge worker career.
So to get back to the disruptive innovation concept, teens who previously (with rare exceptions) just couldn't come up to speed before they exited their teen/early 20s years, who were able to do lower quality "knowledge work", are now able to do much higher quality knowledge work.
(One detail that you need to take into consideration of all this is how the college degree has replace the now worthless high school degree and now illegal recruiting testing. And now things like a portfolio of accomplishments presented on the Internet can replace the college degree as a signal.)
The internet is definitely disrupting education; especially some organizations that use it (Christensen has a chapter about it in Seeing What's Next, and in fact a whole other book Disrupting Class, specific to it http://www.claytonchristensen.com/books.html - I've read the former).
You make an interesting point: as education has become more widely available, it's lost its quality as a signal because everyone goes there; and it does appear that quality has gone down (I guess it must, if you cater for everyone). Odd: it's usually the disruptions that go down-market, targeting non-consumption. One can see the net as an extension of this downward/expanding trend of education.
But I do think it's an extremely rare person - maybe just as rare as autodidacts of years past - who has the self-discipline/interest and wisdom to use these resources. It's not easy (in fact, my PhD supervisor liked to say that the purpose of a PhD was to enable you to learn how to learn - I wouldn't go that far, and indeed haven't completed). Most people look at videos of cats online - a sort of downmarket TV.
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BTW: If you're interested in reading Christensen's other books... they are co-authored, and he's also running a consulting business. And sadly it shows. His first book was beautifully written, forming a compelling and inspirational narrative (really), and rigorously supported by data. His later ones aren't. They are written like a cross between undigested research paper (but without data or support) and an overly casual self-help business book. I suppose it's too much to expect even of someone as brilliant as Christensen, a Rhodes Scholar, to do the equivalent of a PhD for each of his books (his first one was based on his PhD). They have interesting ideas, but they are complex and not supported, leaving me with the sense that they little more reliable than plausible ideas. Actually, they are pretty good, but just irritating, disappointing and confusing.
He's refined terminology for his theory (e.g. target non-consumption; asymmetrical motivation between poor entrants and rich incumbents) which I think is good. He also relates it back to the basics, of succeeding by meeting customer needs/wants, and generalizes. It's a bit insular, self-indulgent and inward looking, focusing on his theory instead of data in the world. Solipsistic, in a wordy word.
You're right, in that a bachelor's degree per se no longer means what it did, but my point about high school diplomas is that what most everyone got, as of say the Silent Generation (my parents'), used to mean quite a lot. However, by or sometime after say 1955 when Why Johnny Can't Read was published it apparently wasn't even a guarantee of functional reading (I wouldn't directly know, having grown up in a city that Reader's Digest reported on a year or two later with the title "Why Johnny Can Read In Joplin").
Ny point here is that "everybody goes there" wasn't to the best I can tell a factor in the degradation of the high school diploma. I'm pretty sure the expansion of colleges and universities due to the G.I. Bill etc. didn't result in too much of a loss in higher education, that seemed to arrive in the cultural '60s (due to draft deferments and the general Zeitgeist) and very few if any colleges avoided some grade inflation and watering down of the curriculum or its rigor (not even MIT).
Anyway, I don't see these formal educational developments really fitting into the Christensen framework, it's not like the real world where an excavator or a disk drive must perform at some minimal level to get the job done.
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Thanks for the warnings on the subsequent books, which I haven't read. The first is indeed a jewel, and thanks to my background I could tell that his primary data set on disk drives was spot on, as seemed to be his conclusions. I'll be careful if I decide to go back to the well.
Make that a provisional EF4 in Joplin, 116 confirmed dead so far, hundreds injured. 2,000 structures damaged, including my apartment building and apartment.
Oh please. The overwhelming urge to label everything a movement is ridiculous. The internet is allowing intelligent young people to start building value without the years of network building. Of course some of them will be standouts.
I agree with you that many journalists are perhaps a bit quick on the draw to label any little murmur a "movement" or "trend." However, I do believe that the phenomenon of young people questioning formal higher education and striking out on their own---while certainly not at critical mass yet---will truly quality as a true trend/movement to watch in the coming years.
There are just too many structural factors coming together at once: skyrocketing tuition costs; combined with a lackluster economy; combined with unsustainable levels of indebtedness compared to starting salaries; combined with cheap and easy ways to educate yourself on the Net; combined with a cultural trend towards young CEOs (many of whom are dropouts) becoming the new "rock stars"; combined with dramatically lower start-up costs for entrepreneurialism, which usually doesn't require formal credentials; combined with a "red ocean" effect in the oversaturation of BAs on the job market---all of these are pointing to what I think is likely to be a groundswell of young people questioning formal higher education in the next 3-5 years.
Watch this space. I believe it will be an absolutely undeniable movement within a few years.
Become a part of the disruptive generation creating workable, realistic self-employment on the free-agent knowledge market.
I really, really don't even know how to respond to this article. I guess the biggest issue, beyond the over-use of vague buzzwords, is that it picks at it's central example someone who doesn't seem to have really made any considerable accomplishments or achieved any tangible success.
I'd say it's a bit harsh to say Dale Stephens hasn't achieved "any tangible success," Michael. He supports himself fully as a professional public speaker, at age 19, and he does so without being "famous" (movie star, athlete, musician, etc.)
Tens of thousands of professional speakers, many into their adulthood, would kill to have the professional life he has. Indeed, as someone who supports himself fully as a freelancer, I'd say that's already a level of success that many adults seeking to strike out on their own dream of.
True, he's not a gazillionaire, but I specifically chose to write about him for that reason. Had I written about, say, the usual suspects when giving examples of successful young people without college degrees (Mark Zuckerberg, etc), someone else might have said, "But they're the outliers! Average kids can't expect to be like them!" He has reached a level of success which I believe is impressive for his age, and which many adults would envy.
BTW, he was just named one of the Thiel Fellows, and was chosen as one of 24, among 800 applicants, to win $100,000. I'd say that's a pretty impressive accomplishment, compared to what many 19 years have accomplished so far.
(I'm the author of the article you're critiquing here.)
I wonder if a degree will go the way of some of the Industry Certs like CCNA and MCSE. 10-15 years ago the only people who got those were people who were serious about IT and often had been working on those platforms for years.
Then the dot-com boom happened and people just bought study guides to get the certs and you got complaints about people with the certs who didn't know what they were doing.
2 results of that are that the certs got harder and employers started ignoring them since they were not a good predictor of job performance.
Similarly with a degree, 40 years ago a degree meant you were top 10% and got you on the management track (or equivalent).
These days it is a much weaker signal, you're probably above average but maybe only a little bit. The top 20% of degree-less people probably beats out the bottom 20% of those with degrees.
A disruption innovation is a new way of doing things, often based on technology (but can be a different business model), that at first is not good enough for mainstream users. So it is no threat to incumbents, and no competitive response is provoked. But it is good enough for some other users and usages, and it can gradually improve in this safe backwater... until one day, it is good enough for mainstream users - but it also has some other benefits (that appealed to those other users), and so, suddenly, they switch. This is a disruption.
The difficulty for incumbents is that (up til then), their customers didn't want it. They might even have tried to force it on their customers, but with no response. Because good management will listen to customers, and try to serve them, it makes it even harder for them to deal with approaching disruptions, even if they see them clearly.
Another problem is that while incumbents may keep on improving their product (so it is still clearly, overwhelmingly superior to the disruption), the key to the effect is that their product has become more than good enough. So it doesn't matter that it's better it's like offering ever more water to a man who was thirsty, but is now full.
Note that there are many parts to this scenario, and a candidate innovation might fall down at many points - it might not be possible to improve it enough for mainstream users; there might be a way for incumbents to co-opt it; a great company can sometimes disrupt themselves (cannibalizing their own sales); yet another disruption might improve enough before this one did, etc.
Two big take-homes for me:
- to be aware of what people want, not just making better widgets.
- making a product that some people want, but that is not yet perfect and not yet ideal for them, is a good thing.