Joshua Gans

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">The Problem The defensive playbook for confronting</h4>
 <div class="ideainbrief-contents">
  <h5>The Problem</h5>
  <p>The defensive playbook for confronting disruptive innovations calls for companies to set up separate units to develop competing technologies. In practice, though, companies struggle to transfer new innovations and capabilities back into their mainstream operations.</p>
  <h5>Why It Happens</h5>
  <p>Many disruptions necessitate changes to the basic architecture of a product—the way it’s put together. Adapting to this requires deep organizational integration across tasks and functions, but most large companies organize R&amp;D and operations around product components.</p>
  <h5>The Solution</h5>
  <p>Incumbent firms that survive changes to product architecture usually owe their success to one or more of three key factors: an integrated organizational model, ownership of a feature important to the end customer, and a strong sense of corporate identity.</p>
 </div>
</article-ideainbrief><p>Since Clayton Christensen published <span class="mediatitle">The Innovator’s Dilemma,</span> in 1997, management scholars have focused on innovations that disrupt customer demand patterns. The story usually plays out like this. A new entrant develops an innovative product that is initially attractive only to a niche segment of customers and may underperform mainstream products on traditional measures. At first, customers reject the innovation, but as it improves rapidly along performance dimensions that they care about, they begin to embrace it, and the new entrant becomes a real threat to incumbents.</p>

X1y/vURZPDAx04NmugbNWj43GnjdlGPZqmK9SxUkOFyTLCIwAsneoerH1NYd9d/QFsY2EoHcSHPYAHAAPrNpM02N0YUfsl4buymd4sWgJSlT+DkEEtEiMaaI4dMktlhR

<p>Most managers are well versed in the defensive playbook for confronting disruptive innovation. Most commonly, they either acquire the new entrants or &#8220;disrupt themselves&#8221; by setting up autonomous units charged with developing their own new technology that can be rolled into their principal operations once the disruptive innovation begins to dominate the industry.</p>
<p>But quite often, adopting a new technology requires companies to fundamentally change their mainstream operations&#8212;the way they manufacture and distribute their products. In these cases where the organizational model changes along with customer expectations and preferences, the playbook often falls short.</p>
<p>In this article Joshua Gans of the University of Toronto&#8217;s Rotman School of Management identifies three prescriptions for surviving &#8220;supply side&#8221; disruption: Companies must have an integrated organizational model, ownership of a product feature important to the end customer, and a broad and flexible sense of corporate identity.</p>
<p>Though less commonly understood, supply-side disruption is arguably more dangerous than the kind described by Clayton Christensen in <span class="mediatitle">The Innovator&#8217;s Dilemma</span>; indeed, disruption of a product&#8217;s architecture threatens a company&#8217;s very survival in a way that changes in customer demands do not.</p>

The Other Disruption

Most managers are well versed in the defensive playbook for confronting disruptive innovation. Most commonly, they either acquire the new entrants or “disrupt themselves” by setting up autonomous units charged with developing their own new technology that can be rolled into their principal operations once the disruptive innovation begins to dominate the industry. But quite often, adopting a new technology requires companies to fundamentally change their mainstream operations—the way they manufacture and distribute their products. In these cases where the organizational model changes along with customer expectations and preferences, the playbook often falls short. In this article Joshua Gans of the University of Toronto’s Rotman School of Management identifies three prescriptions for surviving “supply side” disruption: Companies must have an integrated organizational model, ownership of a product feature important to the end customer, and a broad and flexible sense of corporate identity. Though less commonly understood, supply-side disruption is arguably more dangerous than the kind described by Clayton Christensen in The Innovator’s Dilemma ; indeed, disruption of a product’s architecture threatens a company’s very survival in a way that changes in customer demands do not.

The Other Disruption

Summary.

Partner Center