Innovation: Two Routes to Success

DQI Bureau
New Update

Clay Christiansen, academician, thinker and author of two best

selling books on innovation-The Innovator's Dilemma and The Innovator's

Solution- is an amazing man. At six foot and plenty of inches, he would make

you believe that he would have a powerful style of teaching. But his delivery is

almost monotonous, and if it were not for his insightful content, one would

believe that he would lose his audience, which typically consists of CEOs and

extraordinarily ambitious and articulate MBA students. And his ideas are so

different that it forces one to not just listen to every word but also reflect

on one's own views on success through innovation.


Take the case of the steel industry, for example. The decimation

of the traditional steel mills by the mini mills was a process that was not one

of breakthrough product or process innovation but a steady replacement in key

market segments. It started with a move into the "rebar" construction

segment which needed low quality steel and the traditional mills were happy to

leave it to the mini mills. But soon, the mini mills started improving their

quality enough to challenge the incumbents in the angle iron segment. The

competition was again moving upward into the structural steel segment to finally

complete the conquest with the takeover of the sheet steel segment. This model,

which is what Clay calls the ability of innovators to beat their larger

competition with the "asymmetry of innovation", is one of great

learning for all of us who are playing the Innovation game in the IT industry.

Ganesh Natarajan

Clay's approach

calls for giving the innovation group air and spinning it off as a

different unit which can set its own agenda and even its own culture

to succeed in a new market

The possibility of a new method or product, which would call for

new learnings and force "the elephant to dance" would be squashed

early in the game by both the firm and its incumbent supplier. However, when

disruptive technologies are introduced slowly, and almost invisibly, at the

lower end of the pyramid, the new entrants have a much better opportunity to

succeed since they are able to establish their "proof of concept" in a

lower stakes game and iron out the chinks and refine their value propositions to

ready themselves for the bigger battles for customer mind and wallet share.


Sometimes, the ability to address over-served customers with a

different business model, even if it provides higher quality or lower cost, can

be less evident than the ability to generate new market disruptions by competing

against non-consumption rather than the eight hundred pound gorilla incumbents.

Clay's approach calls for giving the innovation group air and

spinning it off as a different unit, which can set its own agenda and even its

own culture to succeed in a new market, this may seem to be the obvious

solution, but there is a different school of thought, led by another celebrated

academician and thinker Michael Tushman, who recommends the "leverage"

solution-use all the abilities of the larger organization and still create a

layer of independence on top of this interdependence to enable new ideas to be

tested out, both on new customers and existing customers of the organization. As

we research and disseminate ideas about the development of innovation in Nasscom-through

the Innovation Forum, and large companies like Accenture and TCS beginning to

share a platform to discuss innovation with the startups and mid-size firms-one

thing is clear: one size cannot fit all and each firm will have to make a

considered choice of what works best for it.

Finally, back to Clay and his intriguing comment on the Indian

offshore firms. He cautions American firms that while they, and, indeed, Wall

Street, may love it if they keep eliminating assets and people in the process of

comprehensive outsourcing, a day will come, very similar to what happened with

Flextronics and many of their PC OEM customers when all the value migrates to

the outsourcer. Are American firms listening? One would hope not!