Blog #4: How much should you listen to customers to detect disruption?

An interesting contradiction presented itself in this week's readings: how much should companies listen to their customers in order to detect disruption? According to Christensen, in The Innovator's Dilemma [1], investing too much in what your customer wants is a recipe for missing out on disruptive technologies. In contrast, according to Chambers, the CEO of Cisco, you must listen to customers in order to identify disrupting technologies [2]. The truth is that it's not whether you listen to your customers that matters, it's that you must listen selectively.

Christensen argues that customers value sustaining technologies, or those technologies that will help them improve an existing product. By definition, a disruptive technology is something that few customers will recognize the value of at its inception. Therefore, if a company listens to its customers and invests in what the customer wants, the company will be investing in sustaining technologies. This approach can lead to the core busines being undermined by advancing disruptive technologies, without enough opportunity to capitalize on that technology.

Chambers has a very different perspective. He credits Cisco's success to listening to its customers. According to Chambers, customers are aware of disruptive technologies and will clue you in to their arrival. You can use this customer insight in market shifts to invest in the next big thing.

Both authors reference Digital Equipment as an example of a company that lost out big to a disruptive technology. This example is personal. My father was laid off from Digital during its collapse, and his layoff marked a year of unemployment and future career struggles that had a lasting impact on my entire family. It made me wonder - did Digital listen too much or too little to their customers? What would have been needed in order to keep the business thriving and my father employed? I found the answer to my question in Edgar Shien's book, DEC is Dead, Long Live DEC [3]. Digital listened too much to some customers and not enough to others.

Digital’s fall is credited to its over investment in the minicomputer at a time when PCs, run by microprocessors, were the future of computing. DCU had the opportunity to see this market shift, yet didn't react quickly enough. According to Shien, "Sophisticated...customers were organized into a users’ group, and this group continued to love DEC products." Digital managers focused intently on the wants of this group and neglected customers who complained of product problems. Shien concludes that, "a successful company has to pay more attention to its critics and to the customers it loses. It is dangerous to listen only to the customers who love you." If Digital had listened to and strategically planned around customers outside of those in the users' group, Digital could have been where IBM is today.



[1]http://web.a.ebscohost.com.proxy.library.cmu.edu/ehost/ebookviewer/ebook/bmxlYmtfXzE5MTc2NDdfX0FO0?sid=5c17f30a-dc3e-45bb-9079-5fa8b2d319fe@sdc-v-sessmgr01&vid=0&format=EK&lpid=nav7&rid=0
[2]https://hbr.org/2015/05/ciscos-ceo-on-staying-ahead-of-technology-shifts
[3] https://learning.oreilly.com/library/view/dec-is-dead/9781605094083/xhtml/ch14.html