Disruptive Innovation

Transcription

1 Disruptive Innovation Robert Cummings & Stefan Schaffer SAP AG Winter Semester 2006/2007 WS 2005 / 2006 Seite 1

2 Information Systems and Organization Description In this session we introduce concepts about disruptive innovation and discuss the impact of of such innovation on on business processes. These concepts can be be transferred to to various scenarios introduced in in further sessions of of this class. Goal To understand the characteristics of disruptive innovation, its impact on businesses and business processes and the possibilities for companies to deal with it. Seite 2

3 What has Happened? And How? Seite 3

4 Innovator s Dilemma Disruptive Technologies Performance Analog cameras Demand Average Consumer time Seite 4

5 Innovator s Dilemma Disruptive Technologies Performance Analog cameras Demand Average Consumer Non-Buyers (too complex, too expensive) time Seite 5

6 Innovator s Dilemma Disruptive Technologies Performance Analog cameras Digital Cameras Demand Average Consumer Non-Buyers (too complex, too expensive) time Seite 6

7 More Examples? Seite 7

8 Examples UNIX Seite 8

9 What can we lean from this regarding the impact of IT innovation on business processes? WS 2005 / 2006 Seite 9

10 A quick history of Digital Photography? 1960s: NASA converted from analog to digital transmition of photos 1972: Texas Instruments patented a first film-less camera Mid 1970s: KODAK invented several sensor techniques 1981: Sony introduced the first commercial electronic camera in the world (display via VCR on TV) 1986: KODAK invented first mega-pixel sensor 1991: KODAK released first professional digital camera 1994/95: Apple and KODAK launched first digital consumer cameras. KODAK, Microsoft and Kinkos collaborated to develop the first kiosks for developing digital pictures Seite 10

11 What did this mean for the Film Development Industry? Number of pictures overall to be developed goes down by 1/3 in 5 years Numbers of digital pictures developed skyrocket from 23 million in 2000 to 1.5 billion in 2005 Price war started by discounters (1 Cent per Picture), many small photo shops closed 50% of German development laboratories closed KODAK sold off their photo development business Massive investments required by survivors Seite 11

12 What was the Impact on Business Processes? Sales channel changed Kiosk systems (60%) Internet (25% Internet) CDs sent in (15%) This lowered entry barriers for new entrants / expansion of existing players Development laboratories become visible to consumers Try to avoid price wars and differentiate by additional services Printing on T-shirts, cups, PC software, albums, Seite 12

13 The revolution eats its children Seite 13

14 The next disruption is coming (at least for the camera providers) Source: Economist, 2003 Seite 14

15 Airport Check-in Kiosks RFID Blackberry Internet Procurement XML Internet Shopping Supply Chain Optimization Web Conferencing Portals Voice over IP WS 2005 / 2006 Seite 15

16 How to prepare for Disruptive Innovation: New Entrants How to leverage disruptive innovation against established competitors? Actively search for new technologies that are already available but hidden in many cases Seek for small market niches that do not use the existing products because they are too heavy and expensive and that are not target of the established player s sales channels Taylor a specific offering and sales strategy for this niche Keep it simple and cost conscious Know your market: Do not fall into the trap of following the big guys priorities Enhance the product s capabilities step by step Seite 16

17 How to prepare for Disruptive Innovation: Established Players How to leverage disruptive innovation against established competitors? Actively search for new technologies that are already available but hidden in many cases Leverage acquisitions Eat your own children or somebody else will eat them Provide a protected room for innovation Separate from established business with own measures of success How do you defend yourself against disruptive competition? Be paranoid Know your strengths and weaknesses Defend your space, also at the low-end Leverage acquisitions Seite 17