We work with a lot of different organisations and people from start-ups to large corporations, and what they all have in common is the need to innovate. The start-up is a start-up because they are creating something new and have found a hole in a market or a new way of doing something. The corporation is trying to maintain its competitive advantage and lead the market.
But not all corporates think like this and a lot of them, as time has shown, allow opportunities in the market to pass them and they end up disappearing. In those organisations that cannot see that change is coming or fail to embrace it may force staff to go out on their own and chase the ide, as a start-up, that the organisation fails to see.
This is where the Innovator’s Dilemma comes up. Organisations are structured in a certain way and their good management of yesterday mostly becomes the good management of tomorrow.
Normally when innovation occurs the management style and organisation hierarchy have to change and this is a large challenge when an organisation is set up the way that it is, and continues to operate until its too late.
Everyone thinks that these organisations fail because of a lack of technological innovation or fail to see the changes. However, the opposite is true, they can see the innovation and new technologies but are unable to apply them to their current customers and management style.
When innovations are first released they are normally immature compared to existing organisations existing offering. This makes it difficult to bring innovation into the business and sell it to existing customers.
It is, for this reason, start-ups can enter the market and begin selling the innovation and get new customers, and it doesn’t affect the large organisations until it does. While a startup starts gaining momentum and customers it’s then able to invest more into its product and create a more mature offering that over time can better compete and start stealing customers.
This has been seen time and time again:
- Kodak invented the Digital Camera in the ’70s
- Xerox Parc invent the Graphical User Interface and modern computer environment
- Sony invent the MP3 player
But these new products were immature and involved a lot of risk for little return. The start-ups that ran with those ideas are now thriving and some of the largest in the world. Those original organisations are no longer in the markets at all or in some cases no longer with us.