Monday, September 3, 2012

The Innovator's Dilemma: Chapter 8

Companies are susceptible to losing their customers as a result of disruptive technologies. In The Innovator's Dilemma, Christensen demonstrates that companies are overtaken despite doing everything right - listening to customers and investing in the highest-return projects. By studying the disruptive process, Christensen shows how companies can defend themselves from disruptive technologies.

Organizations have distinct capabilities that differentiate them. Christensen argues the RPV framework is the best way to view such capabilities. The RPV framework consists of the following categories:

1) Resources (people, equipment, cash, customers etc.)
2) Processes (the means by which resources are transformed into products and services)
3) Values (which determine how employees respond to problems/opportunities)

Through this framework, the author analyzes DEC's inability to succeed in the PC market, despite its one-time leadership in computers. While DEC certainly had the resources, it did not have the processes (requiring cost-effective outsourcing of parts, rather than proprietary design and integration of sophisticated devices) or the values (PC gross margins were lower, which is not the kind of business DEC was willing to chase).

To take on a disruptive challenge, therefore, Christensen discusses 3 options facing a company: acquiring a different organization where processes and values match the new task, changing the processes and values of the current organization, and separating out an independent organization with new processes and values.

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