Ryan Gallagher
After reading the excerpt from Christensen’s “The Innovator’s Dilemma”, I had a really strong connection with his third principle : market’s that don’t exist can’t be analyzed. As an analyst myself, a large portion of my position is to understand market data, analyze trends and report these findings to quantify future business decisions. However, all of the research that is done happens on events that occur in the past while new and disruptive technologies can lead to new market offerings and entirely new markets which occur in the future. Christensen’s principle is not meant to belittle or discourage the role of research or analysts, but more to highlight that we cannot always rely on events of the past to influence future decisions.
Researching additional viewpoints on this idea, I stumbled upon a short podcast from Motley Fool (a finance/investing advice company) where two of their analysts talk about this exact book and principle. When you actually break it down and think about the principle logically, it makes a lot of sense. Disruptive innovations occur when incumbents have determined a portion of the market is not as profitable as their current customer base which leads for the opportunity for new offerings and/or markets to arise. New offerings and new markets by definition don’t have large amounts of data about them for that exact reason; they are new. A great example of this that they cited in the podcast was from AT&T back in 1980. At that time the idea of a cellular phone was in its first stages and AT&T hired top consulting firm McKinsey to conduct a study to estimate how many cell phone users there would be in 2000 (20 years later). McKinsey estimated that there would be around 900,000 users while the actual number of cell phone users in the United States alone in 2000 was 109 million. The TOP consulting firm was nowhere close to estimating the prevalence of this technology only 20 years later. If there were tons of data pointing to the potential of this market, every company would’ve invested into it. For Motley Fool’s full breakdown, you can view their podcast (link in the footnotes)[1].
As we have discussed and learned throughout the course so
far, strategy, analysis, and evaluation are key components to a company’s health
and are critical to its success. However, the importance of leadership cannot
be understated. As Christensen pointed out, market followers tend to do
relatively as well as leaders in sustaining innovations however they don’t
share in the advantages of the first-mover[2].
The difference between the followers and the first-movers can be as simple as executing
a vision/hunch even when there aren’t the statistics/date to support the strategy.
The decision to follow these visions/hunches more times than not comes down to
leadership which is why it is so important. Although statistics, market data,
and trends are excellent tools to support decision-making, they can’t be the
end-all be-all. If they were, then no
future innovations would ever come to fruition.
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