Friday, August 15, 2008

Don't listen to your partners

Most high tech technical executives know Clay Christensen’s 1997 book The Innovator’s Dilemma. In it, he argues that under certain codntiions — basically when a high priced product category is supplanted by a commodity product category — it’s dangerous for a firm to listen to its existing customers.

In those cases, the customers will say “give us more of the same” and “no, ignore that cheaper, less capable technology.” This is exactly how mainframe and minicomputer makers underestimated the PC.

Wednesday, at the next-to-last session of the 2008 Academy of Management (my last session before Disneyland), Prof. Allan Afuah offered early results from his study that extends this idea in a new direction: the risk of listening to partners. Allan’s study looked at videogame console makers trying to make a transition across technology generations that requires an architectural innovation (as defined by the famous Henderson & Clark paper on this subject).

For a Wednesday morning session, this was an astonishing turnout — 7 on the program but 17 in the audience. In addition to Allan, there were other interesting papers on innovation topics. The one where I had greatest personal interest was by Oliver Alexy (of Technische Universität München) with his paper on how the announcements of open source revenue models affect stock prices.

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