Wednesday, April 19, 2017

The Innovator's Dilemma and Facebook's New Technology

Bloomberg Technology is reporting Facebook is working to make it possible to type using only brain waves. They hired former Google engineers to research and develop the effort.  The service being worked on will let you send texts or post online without getting out your mobile phone. This is an effort to pioneer disruptive technology that will free people from their devices. The social media giant is investing significant resources into a service which customers are not currently demanding, that lacks an attractive profit margin.  This stood out as a clear example of how a great firm is engaging in what Christensen calls, the innovators dilemma.

The Bloomberg article briefly explains Facebook’s (FB) goal of being able to type using brain signals at a rate of 100 words per minute. This would be useful for people who are deaf or disabled as well as simply being able to send an email at a social function. Other than this vision, market applications for the service are still unknown and won’t be identified until commercialized. Facebook’s strategy is to learn and discover rather than execute commercialization.

The company’s mission is to give people the power to share and make the world more open and connected. By separating the device from the social network, FB is creating a more open application. This move signals that Facebook recognizes the uncertainties of this market but is managing innovation to continue to be the industry leader. Hands-free typing applications are not high performing in today’s market but FB is applying resources to discover how the disruptive technology will be performance-competitive tomorrow.

This CNN Money article explains that at the time (2 years ago), Facebook had 1.4 billion users and 1.2 billion were mobile users. Additionally, 69% of advertisement sales were from mobile ads. This shows the mobile market as an attractive target that goes against the new service being developed.  By this I mean, reducing the need to open the Facebook app on a mobile phone will negatively impact advertisement revenue in its current form.

With that said, the move to explore a new service market is the correct move to make. This is because Facebook is investing in a purely disruptive technology. Investing heavily in technology is not necessarily a recipe for future success. Sustaining technologies foster improved product performance and are the primary focus of managers. The dilemma is that many competent managers worry about short term competition and invest in sustaining technologies to maintain competitive leadership. FB is using the more effective strategy of managing the forefront of its market, working to understand and harness potential disruptive technology. This strategic move may allow FB to continue to thrive in the fast-moving social media market.

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