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Bild_Innovators Dilemma

In the middle of the Innovator's Dilemma

About the Innovator's Dilemma

In The Middle of The Innovator's Dilemma
Bild_Innovators Dilemma

It's been repeated for centuries: big, seemingly invincible companies are being overrun by newcomers and start-ups. And as an observer, you ask yourself: Why didn't they see this coming? Probably someone was in an innovator's dilemma ...

Business is booming, the orders are coming in. Large orders with exactly the services that one masters. Well, the customers always demand lower prices, that's what you're used to. Yes, okay, the customer can always find someone who can deliver the same thing in the same quality, but cheaper. Then you also have to lower the price. After all, the capacity utilization is right and the overhead costs are better distributed over the masses. That's fine.

What is this dilemma?

Clayton Christenson invented it. Or rather - he was the first to describe it:

Company A manufactures a product - let's take a candle as an example. Customer X is very satisfied. But next time he wants a better or at least a cheaper candle. So company A improves its product and delivers a slightly better candle. And then maybe a mega candle. And then a kerosene lamp. And then a petroleum lamp with compressor and heater and mantle and other gimmicks. It really exists, by the way, the Petromax 250.

So the company, its engineers and managers, do nothing for years but think about optimizing the candle and thus the fire. However, the fact that the customer is not necessarily interested in fire solutions at all, but in light, easily escapes perception. Especially because the fire business is doing so well: High market share, value chain under control, processes in place, margins high.

Now comes company B. So usually not a company, but a free spirit and inventor - let's call him Thomas in our example. Thomas doesn't like fire, or is a notorious lateral thinker, or simply has ideas and invents the light bulb. It also makes light. Company A thinks to itself: Oh, Thomas, let him do it. Fire has been around since Adam and Eve, and will always be around. Besides, this incandescent lamp is darker, breaks down quickly and also needs electricity - and who has electricity? In any case, you can't earn money with it - because we earn that with petroleum in the meantime.

It's too late when you can feel it

And the end of the story? Of course there is still the fire and even the Petromax 250, especially in the military. And of course candles are still made. Even the Petromax can still be bought. It costs 149€ at the vintage outfitter Manufactum. But what kind of business can be done with it? And what about the value chain before and after? Since the invention of the light bulb by Thomas Edison in 1880, the energy industry has really taken off: Power plants have been built, lines have been laid, grids have been regulated - the incandescent lamp is just the appendix of a business that was created within a few years.

In short, by the time more incandescent lamps are sold than Petromax models, it is already too late. By then, the power lines have been laid, the value chain has been redistributed, new markets have emerged. Reorganizing Company A now, firing the fire engineers and hiring electricity engineers instead, reorganizing sales, adjusting suppliers and costing models, etc. is clearly too late.

And the Americans?

They're struggling just like everyone else. Kodak is one such example, and what about Oracle? Even some of the high-tech elite are thinking outside the box, almost in panic: Uber, for example, is worried about self-driving cars.

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Written by

Gregor Schumacher
Experte für Cloud