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Disrupting the Disruptors

I’m not going to go into a long tutorial on Clay Christensen’s theory of disruptive technologies and disruptive innovations.  Wikipedia has a decent introduction which, above all, avoids the sin of calling jsut any new technology “disruptive”.

A true Christensenian disruptive technology is a technology inferior to the incumbent but “good enough” to suffice some corner of the market.  Gradually, the disruptive technologies bores from below and eventually the disruptee has to cede the whole market to the innovation.  Southwest Air disrupting the Uniteds and TWAs and Pan Ams of the world is a great example.

One big theme of discussions about disruptive technology is, in effect, “why the h**l did the market leader ‘allow’ themselves to be disrupted”?  Market leaders have it all: resources, customer traction, buzz.  Are they doomed to be disrupted?  Are there any that have fended off disruptive threats?  Is there a theory of “disrupting the disruptors”?

I don’t know if they are all disruptive, but one pattern of successful new product lines in established companies is what we might call the Stealthy Skunkworks.  An internal unit is set up to incubate the innovation, but it is hidden from the rest of the company.  It goes under a different name; it lives in a different location; it reports through a separate chain of command.

This is how Jobs incubated the Macintosh at Apple, whose gorilla at the time was the hugely successful Apple II.  The Mac group went off to a separate building.  They reported only to Jobs.  They worked in secrecy.

We tried the opposite when I worked at Intuit.  We had a “Quicken Killer” project to produce the disruptive innovation that would kill Quickn.  As Intuit founder Scott Cook (correctly) said, if we don’t do it someone else will.  But the project was not stealthy; it worked in full view of the Quicken team.  What happened was the Quicken team cannabalized any innovations and put it into Quicken, and ceaselessly lobbied against the necessity of having a separate project at all.  Guess what happened.  Mint killed Quicken, not our home-grown Quicken killer.

Thoughts on stealth and disrupting the disruptors?

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About the author

an Gordon is Research Director for Valhalla Partners, a Northern Virginia venture capital firm. Dan has twenty-eight years experience working with technology, as a computer scientist, software developer, manager, analyst, and entrepreneur. Prior to joining Valhalla Partners, Dan was a Director and senior staff member at the PricewaterhouseCoopers Global Technology Centre, analyzing technology trends and consulting on technology-oriented strategies in the software, e-business, wireless, optical, networking, semiconductor IP, and life sciences arenas. He worked with clients from North America, Europe, the Middle East, and Australia. Dan was a Contributing Writer and Contributing Editor to the Technology Centre’s annual Technology Forecast, and a frequent speaker at industry and general business meetings. Before joining PwC, Dan spent 20 years in Silicon Valley as a software technologist, manager, director, and entrepreneur, including senior technical roles at well-known Silicon Valley firms like Symantec, Intuit, and Oracle. Dan has also been involved in startup companies in the applied Artificial Intelligence and Web applications fields. Dan has a B.A. (cum laude) from Harvard University and an M.S. from New York University in Computer Science. He is a Professional Member of the IEEE and ACM. Dan lives in Washington, D.C. with his wife and two children.
  • Sean Pool
  • fitzpatl

    What was the thinking behind making the quicken-killer unstealthy? The quicken example sort of proves the Richard Foster/Christensen point that the ‘entrenched’ product has tremendous clout within the organization to prevent money from diverting into the disruptor exactly when it should be.

  • Dan Gordon

    I’m not sure we were thinking too clearly, although I wasn’t privy to the discussions that led up to the project.  It’s a textbook case of “Entrenched Product Strikes Back”.