Tuesday, November 16, 2010

SC keynote: How to Create New Growth Businesses in a Risk-Minimizing Environment

Clayton M. Christensen (author of The Innovator's Dilemma) talked about descriptive technology. This is new product which simplify and drastically change the user experience which go on to kill big players.

Discussed DEC as a example, how Apple PC, and then PC killed all mainframe players. Stressed that  at start PC looked like a joke, none of the users thought that PC is useful. So listening to users did  not helped the companies at all. Manager did all the right things (from business school point of view), but did not worked. Other examples, Steel (integrated plants-> Mini plants), Vacuum Tubes->transistors

Point is listening to your customers does not going to help you. Because they do not understand the process they are following and nor they understand how to improve it. Instead try to understand what he is actually trying to do and improve it. Argued that understanding should be done based in function, emotions, and social aspects of the product.

Also stressed that going for only things that let you maximize profit and outsourcing can let other players enter the market and topple you (big player eventually). It is more or less local vs. global (short term vs. long term) optimization argument. Gave dell and Azure as an example.

Apparently IBM is one of the companies that has been able to make through from main frame era to PC era and beyond. Argued  that they did so by shutting down business units and letting new business units to take over so that in overall the company can survive.

Final note, on a survey, 93% of entrepreneur succeeded on a different idea than that what they started, which suggests success depends on ability to understand and reposition themselves.

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