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Exploring Solution Spaces, Keith Ray's blog on Software development and other topics.
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2003.Nov.16 Sun
After my wife read the book A Housekeeper Is Cheaper Than a Divorce, we hired a maid-service to clean our place once a week. Marina has been reliable and helpful. Now she has her own website: http://www.myhousecleaner.com/.
Innovator's Dilemma and Solution
I've read The Innovator's Dilemma and I'm reading The Innovator's Solution. I recommend reading these books.
The authors main points are that (1) established companies almost always get "trapped" by their customers into only supporting "sustaining" innovations - incremental improvements in their products or services, and (2) only (for the most part) new companies are able to take advantage of "disruptive" innovations that create new markets and eventually take over established markets "from below".
For example, in the steel-mill arena, Minimills using a new, cheaper, process were at first only able to sell into the lowest-quality product area: rebar. The established companies stopped producing rebar because of the low margins, and concentrating on satisfying their most "demanding" customers in profitable high-quality product areas. But the minimills continued to improve their quality, and eventually took over more and more product areas - always coming in from below, always taking lower-margin business away from established players. At any time, the established traditional steel mill companies could have bought one of the existing minimill companies, or established their own minimills, but the lower margins are too unattractive for people used to higher margins. It seems likely that minimills will eventually take over the entire steel industry, and the people used to high margins will have to get used to no margins at all.
Disruptive Innovation can also create new markets where none were before. The established companies, particularly large ones, do not have an incentive to sell into a new market, because the new market is so small compared to their existing markets. Sales would be 1/100th or smaller in comparison, and not attractive to people used to making larger sales numbers. Apple experienced this with the Newton. It pretty much established a new market and sold more Newton MessagePads in two years than they had sold Apple IIs in its first two years. The difference is that Apple was a much smaller company when it was selling Apple IIs (and had invested less money in Apple IIs than it had invested in Newtons.) A small company (like Palm originally was) would spend less on the product's development, and be more satisfied with sales totals that a large company would find to be too small.