Disruptive innovation is the business idea that every so often a new innovation comes along that completely changes the marketplace, knocking the old market leaders from their perch and giving rise to new ones. […] Because they take advantage of these radical innovations, new entrants to the marketplace are essentially competing against “non-consumption” while the innovation continues to improve. Once the new innovation has matured, these companies are in a great position to compete with the established market leaders, and therefore they nearly always win.
They then use the story of Digital Equipment Corp and perceptions of how they thrived and then suddenly failed due to management practices that were once seen as sound, but later seen as poor. The article comments:
“How can smart people suddenly get so stupid?” Christensen asked. His answer: It wasn’t management’s fault; it was disruptive innovation. […] The early PCS weren’t very good, which is typical of the first wave of products to take advantage of any innovation. And as all good companies do, Digital listened to its customers, who were saying this very thing. As a result, Digital decided it wasn’t worth changing its business model. In effect, the company’s managers had to choose between making good products with a high profit margin, using a well-established business model; or scrapping that model – an extremely risky move – and making flawed products with a much smaller profit margin. Of course, sound business management practices said they should choose the first option … and the rest, as they say, is history.
Does this sound familiar to anyone? E-textbooks? E-readers? The future of the college store??? Hello, McFly? Bueller? Bueller? Anyone? Bueller?
Finally, he talks about the innovation S-curve – one of my favorite concepts in innovation:
Whenever a disruptive innovation occurs, the pattern in which the new model replaces the old one follows an S-curve that can be calculated mathematically. At first, as suppliers of a new innovation work out its flaws, adoption is fairly flat. But then, as the innovation improves to the point where it’s widely accessible and delivers a satisfactory experience, adoption spikes rapidly. This mathematical model has proven to be remarkably consistent throughout history.
And to paraphrase or reword in our context: if that historical patterns holds true, then the latest disruptive innovation affecting college stores – digital course materials – is set to take off dramatically.
The article is a good read, and the book an even better one. Disrupting class also has a blog with some provocative ideas. It should be a must-read for stores.
