Those Netflix Envelopes Will Be Disappearing In The Blink Of An Eye – And Netflix Was Already Ready!
The two most important attributes of effective leaders are their abilities to predict and to delegate.
Verne Harnish, Mastering the Rockefeller Habits
If you, if we, could only predict the future…
Do you remember when everyone wore a wrist watch? They are disappearing, being replaced by cell phones.
Do you remember one hour developing — two copies of each print? This has been replaced by digital cameras.
Do you remember Beta and VHS? They have been replaced by DVDs, and now with streaming.
The list is long, and it will continue to grow.
One of the most e-mailed articles from the New York Times this morning is Always Pushing Beyond the Envelope by Damon Darlin. Here’s a lengthy excerpt:
Blockbuster saw the change coming. It even took action, setting up its own mail service. But seeds of destruction had been sown, and Blockbuster is now financially troubled. Netflix, meanwhile, is already embracing technology shifts that will make those red envelopes a quaint memory.
Creative destruction has such a cataclysmic sound. But the term, coined by the Austrian economist Joseph Schumpeter to show how capitalism destroys companies as more innovative ones succeed, describes a process that is more like a slow-motion train wreck.
Consider silver halide photographic film, a technology cited in “The Innovator’s Dilemma,” Clayton M. Christensen’s 1997 book about established companies’ struggle with disruptive technologies. Kodak saw digital photography coming. It even invented some of the earliest such technology, in 1975.
Kodak just misjudged how fast consumers would give up on film and start snapping up digital cameras. And it misjudged its ability to outrun both trends.
“It’s kind of alarming,” said Henry C. Lucas Jr., a professor of decision, operations and information technologies at the Robert H. Smith School of Business at the University of Maryland. “It’s not like they had to turn around overnight.”
Even when Kodak wanted to change, it couldn’t, said Mr. Lucas, who has studied the company. “It was so large and had been so successful for so long that it was difficult to bring in people with a digital background.”
The innovator champion predictor Gold Medal has to go to Reed Hastings. He saw the future even as he introduced a new/current product, and named his company not for its current product, but for its future product. From the article:
The company was formed in 1997 with the idea of sending movie DVDs, then a new technology, through the mail. But Reed Hastings, the founder and chief executive, and early employees, recognized that delivery of movies over the Internet would replace the mail carrier soon. They named the company Netflix, not Mailflix or DVDs by Mail.
“DVDs by Mail would have been an easier concept to understand in 1999,” said Steve Swasey, the company’s chief spokesman.
So – here is the burning question for today – what will be the products, the services, the innovations that will dominate the landscape tomorrow. If only we knew!
Someone’s going to make a whole lot of money with the answer to that question.
Great timing department: Bob Morris just posted Clayton Christensen asks, “How will you measure your life?” (Christensen is the author of The Innovator’s Dilemma) on our blog this morning.
Here is an excerpt from an article written by Clayton Christensen for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.
Editor’s Note: When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. They’ve spent the past two years recalibrating their worldview and their definition of success. The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers.
The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use. And so we asked him to share them with the readers of HBR. To learn more about Christensen’s work, visit his HBR Author Page [click here].
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Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”
I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel mini-mills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.
When I finished the mini-mill story, Grove said, “OK, I get it. What it means for Intel is…,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.
I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.
That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.
My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.
On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.
As the students discuss the answers to these questions, I open my own life to them as a case study of sorts, to illustrate how they can use the theories from our course to guide their life decisions.
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To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.
Clayton M. Christensen (firstname.lastname@example.org) is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School as well as the author or co-author of several books that include The Innovator’s Dilemma, The Innovator’s Solution, Seeing What’s Next, The Innovator’s Prescription: A Disruptive Solution for Health Care co-authored with Jerome H. Grossman M.D. and Jason Hwang M.D.. and most recently, Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns co-authored with Curtis W. Johnson and Michael B. Horn (to be published later in 2010).