Before I went to EMC World and marveled at how the management was missing the boat on the cloud and was diving wholesale into Case Management, I was told that I had to read this book. After EMC World, I broke down, purchased it, and then fought to find time for it. The book is over a decade old, so what was the rush? Let me tell you, I am glad I found the time.
I was told before I read the book that it was going to make me a little sad and despair for the future of Documentum. It did in a way, but it also helped explain everything that was happening. It actually increased my opinion of some people at EMC. I am going to talk about the specifics to EMC, and other legacy Content Management vendors, in a subsequent post. For now, let’s dive into the book itself.
Pass the Disk Drive
Christensen starts by explaining the basic problem. Well managed companies have no problem keeping up with sustaining technologies in the market. Need better performance? We can innovate that for you. The issue is around disruptive technologies.
He observed that no matter how good management was, there was an inherent inability for companies to respond for disruptive technologies. In fact, it was because they were good managers that they were unable to respond effectively to the disruptive technologies.
Disruptive technology, by there very nature, do not fit in existing markets. They start small and do not provide the capabilities required by existing customers or the profit-margins required by companies. They don’t lead to double digit growth so they don’t get picked for investment.
When evaluating sustaining technologies these market and profit concerns are dead on, but they lead to very smart companies missing the boat on the technologies that will one day supplant them as leaders.
This point is driven home, ad nauseum, by Christensen using the disk drive industry. I now know more about that industry than I ever wanted. I also know that this is a problem that can impact any company, and will likely impact all companies. Starting from a disruptive technology past does not immunize you from the risks.
To be sure, more examples from other industries are used as well. It doesn’t matter if the innovation is fast (disk drives) or slow (excavators), disruptive technology has a way of wiping the previous generation off of the playing board.
One reason is quite simple. Products add more functionality and capability with each new version. Typically this occurs faster than change in the minimum consumer requirements. This change does lead to more customers that need more, but adds capabilities that go unused by most of the market. While leaders are making products better, the disruptive technology appears and offers lesser functionality, but in a more convenient and reliable package. This new product finds a new market, which allows the the product to evolve and gain functionality until it hits the minimum requirements of the mainstream market.
When this happens, it is too late for the existing leaders. If they haven’t successfully attacked an upper market, the attack from below may wipe them out completely. Regardless, they will lose their mainstream market lead.
I’m over-simplifying quite a bit and leaving out details, but that is why there is a book.
Do We Just Quit Now?
So the obvious question is, What can be done? Well, that depends on the nature of the disruptive technology. How does it fit in the organizations values and processes? How accepting will the value network (suppliers and distribution network) be to the change? There are a lot of questions to be answered before deciding on the appropriate action.
The simple, generic solution seems to be to create a spin-off or to acquire a company to run as a subsidiary, thought this approach is not always the answer. With a little Enterprise 2.0 mythos, Christensen says that the resulting organization needs to be able to fail, and in fact, it will fail along the way. The key is to not fail so big so there are enough resources remaining to take the lessons learned and make course corrections.
The book is relatively light on recommendations and spends more time talking about the perils and less upon the remedies. I guess that is why he wrote more books later. That said, if you can’t identify a problem, the solution will do you no good.
Who Needs to Read This?
Simple. If you run (i.e. in management) an established product company, physical or software in nature, you need to read this. If you are in Marketing in one of those companies, you need to read it. If you are in Sales, it wouldn’t hurt.
If you are running a start-up, I wouldn’t worry too much at this time. Just keep in mind that if you are successful, then it will apply to you one day unless you take a buyout before it matters.
If you are in a leadership position at a legacy Content Management company, and you haven’t read this book already, go buy it from your local bookstore or download a copy Now! Don’t wait for shipping, it is too important.
In my next post, I’ll tie this more directly into the Content Management industry, with a focus on EMC because I am most familiar with them. Keep in mind, every first-generation Content Management company is in the same situation.