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1. how to overcome the innovators dilemma

How to Overcome the Innovator’s Dilemma

In his landmark book “The Innovator’s Dilemma” Clayton Christensen showed how the once innovative and by now successful companies can do everything “right” and yet still fail – as new, unexpected competitors rise and take over the market.

Thanks to Clayton Christensen the world became aware that relying on the standard set of strategy tools does not suffice. He went far beyond Porter and portfolio management. As the titles of his great book “Competitive Strategy” suggest Michael E. Porter tried to support strategists in dealing with their direct rivals. Furthermore, he gave as the means to analyze the attractiveness of industries. For this Porter’s “Five Forces” became kind of a standard. But it is all about comparing Pepsi with Coke, Mc Donald with Burger King, BMW with Audi and Mercedes and their respective industries. In short it is about benchmarking. How to break rules or how to reinvent the rules of the game is not of interest. And this is also true for all the portfolios that were introduced by Boston Consulting, McKinsey & Co. Clayton Christensen invented the term “Disruptive innovation”. It refers to an innovation that creates a new market and relies on a new business model and eventually disrupts an existing market and existing value networks, displacing established market leading firms and products.

However, despite its subtitle “The Revolutionary Book that Will Change the Way you Do Business” the Innovator’s Dilemma is falling short of providing advice how companies can actually come up with ground-breaking innovations.

Several authors tried to overcome the shortcoming. First W. Chan Kim, and Renee Mauborgne with “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant” in 2005., Alexander Osterwalder in 2010 with ”Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers” In 2015 Oliver Gassmann with “The Business Model Navigator: 55 Models That Will Revolutionise Your Business”.

No matter how convincing all these approaches appear to be, they have not made established organizations more innovative. The examples in this presentation make this more than obvious. Despite all insights and approaches the established are still trapped in the innovators dilemma. To do the new they need to sacrifice the given. To make the jump they need to be confronted with what could put them out of business, what would shut them down.

However, established organizations are able to make the jump when they become aware of their Nightmare Competitors at an early stage. We help them to design their own Nightmare Competitors. This creates the urge to occupy the market first.

To learn more, have a look at presentation 2: “Disrupt before being disrupted”. A more extensive description is provided in “Rocking the Ship: Turning Corporate Managers into Business Model Mavericks” published on October 6, 2017 by Uli Grothe and Mat Lock.

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1. how to overcome the innovators dilemma

  1. 1. Rocking Business Innovation | 1© NC-Creators 1. How to overcome the Innovator’s Dilemma
  2. 2. Rocking Business Innovation | 2© NC-Creators Why was Ryanair not invented by flag carrying airlines? Why was Skype not invented by the telephone companies? Why was Body Shop not invented by the cosmetics industry? Established players struggle immensely to come up with ground-breaking business innovations Why was Salesforce not invented by the B2B software industry? Why was Instagram not invented by camera manufacturers? Why was Craigslist not invented by newspaper companies? Why was Starbucks not invented by traditional coffee companies? Why was the iPhone not invented by mobile phone companies?
  3. 3. Rocking Business Innovation | 3© NC-Creators Uber is revolutionizing short distance rides Whole Foods shows that organic nutrition can be delicious Double Robotics is making traveling obsolete Whereas start-ups seem to be able to redefine whole industries with great ease Airbnb is giving the global accommodation industry a hard time PayPal has made online payments a pleasure Spotify is changing the way we listen to music SpaceX is turning satellite launches into a commodity Tesla is leading the world into the age of electro mobility
  4. 4. Rocking Business Innovation | 4© NC-Creators Clayton Christensen demonstrates how the once innovative and by now successful companies can do everything “right” and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market. However, despite the claim “The Revolutionary Book that Will Change the Way you Do Business” the book falls short of providing methods how companies can innovate. It is simply explaining the dilemma. Clayton Christensen describing the phenomenon in his landmark book “The Innovator’s Dilemma” as early as 1997
  5. 5. Rocking Business Innovation | 5© NC-Creators It becomes apparent that the standards tools of strategic management are not part of the solution. They are rather part of the problem
  6. 6. Rocking Business Innovation | 6© NC-Creators Tools for Business Innovation were designed to overcome the problem
  7. 7. Rocking Business Innovation | 7© NC-Creators Applying the traditional tools of strategic management has not enabled established companies sufficiently to come up with ground-breaking new business models. Most resemble powerful, huge spaceships bound to follow the once defined direction In a world where it is more and more about disrupting or being disrupted this is no longer sufficient
  8. 8. Rocking Business Innovation | 8© NC-Creators “We need to identify the things that would shut us down and then try to do that because that is what is happening tomorrow” Attendee Nightmare Competitor Workshop
  9. 9. Rocking Business Innovation | 9© NC-Creators Go to to download core elements of the Nightmare Competitor Approach
  10. 10. Rocking Business Innovation | 10© NC-Creators