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The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business
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they created a market and it's economics and now they're being attacked by the next generation of market entrants who've structured their businesses to _specifically_ attack those economics
⬐ MauranKilomDid you purposely link to it on Amazon? :)⬐ netcanThis is a good point but... Innovation without disruption tends to get underlooked, being less dramatic.
Think of the old auto companies over the years. They start off making tractor-like cars. They survive through the cars-as-fashion eras, the internationalisation of manufacturing, etc. If old auto companies emerging from the 80s were new, we'd call it disruptive innovation.
That said, both disruption and innovator's dilemma are real.
The innovator dilemmas also roughly corresponds to stuff early economists wrote about. Peak markets. Markets are great as they grow. When they reach their terminal size (eg most people already own cars), profits go down, stagnation can occur. That stagnation, especially if the market declines in size, leads to crashes and new paradigms eventually emerge. Marxists sometimes take this to a systemic extreme, with "peak capitalism" and derivative concepts. On the conservative side, you'll find these ideas at the heart of austrian business cycle theories and Schumpeter's "creative destruction."
The digital economy is cushioned by tremendous potential for growth, so far. FB, for example, knows that it's not cool anymore. They can just buy whoever is cool.⬐ ipaddr⬐ Joe8BitThat reminds me of music industry and the constant buying of smaller labels. Owning distribution is the key and facebook has a massive platform for that.⬐ ethbr0Slight historical note: most Japanese auto manufacturers started off making motorized bicycles and small utility vehicles, then pivoted up into retail cars.Hah, thanks! My comment was fairly blatantly stealing from the book!
It's so interesting from an incumbents internal POV (I saw it a few times during my time at McKinsey) as changing an organisations economics is often the unstoppable force that meets the immovable object of internal politics.
There's a really interesting ongoing example of this in the the UK as 'attacker' banks (e.g. Monzo, Starling) challenge the economics of incumbents. It's not quite the same, as these attackers are removing back-end cost (e.g. branch networks) from an already 'free' product (e.g. retail banking) but it's meant that big banks are looking at their balance sheets and seeing a set of gaping money pits that will require fundamental change in their operating models to be able to get rid of/compete with.
Let's say the OP is correct. It doesn't matter — Whomever is using the word is using it how they want to and the recipient will understand the correct and incorrect meaning. If I was the CTO at a bank and I told the OP we were building a private blockchain for asset management, he would know what I mean. Now since the op is technical, he would probably ask more questions to figure out that what I really want is an openly audit-able immutable database, but his intellect would allow him to drill down further.
This fallacy the same thing that happened for the word "Disrupt"/"Disruption"/"Disruptive Technology". Even Clay Christensen, the creator of the phrase, says most people misuse the phrase "disruption" when compared to his explanation in the Innovators Dilemma. There are Tons of people complaining that the term is misused. In the end, if you casually tell someone you've got an idea for a Taco Food truck that's going to disrupt the food truck industry, people will know what you mean.
The definition of this word "blockchain" is being misused so much that it is changing faster real eduction can help. I think posts like this are great if you're technical, but as I said above — It doesn't matter what the fallacy is.
⬐ dsr_If it's private, it isn't auditable. You can keep a journal of all transactions, and when you decide that history needs to be changed, you make the change in your journal and roll it forward from there. If the auditors have half a clue, you can't do this for events that happened before the most recent previous audit, but if they have a whole clue, they won't accept the current state of your system as anything more accurate than your attestation.
The counterargument to "words mean what people agree they mean" is that "to computers, instructions mean what they have already been defined to mean". If you change Python's meanings, you need to tell everybody that you're using Python 3.5-Joe, not Python 3.5.⬐ dboreham>If it's private, it isn't auditable
Clearly true, but in this field "private" is really being used to denote "not a Public Blockchain like Bitcoin and Ethereum".
It doesn't mean "actually private". It means "we built our own rather than pay to use Ethereum".⬐ berkesNo, because that would be another public blockchain.
Private really means what you think it is "a blockchain that only a small selected group can access". A lot of "Private blockchains" are just Ethereum-nodes running behind a firewall and with a secret genesis-block.
It does not, however, mean that it cannot be peer-reviewed. Allthough that still leaves the problem of not knowing if what you've reviewed is what is running.
For anyone interested in reading more about this, Clayton Christensen covers this area in The Innovators Dilemma.
The Innovator's Dilemma:
Well, The Facebook company can feel rather juvenile to deal with. Some of their decisions in dealing with other businesses sometimes feel like they are being made by fifteen year old kids with no life or business experience.
In terms of the Facebook product one cannot deny the obvious: They touched THE nerve on the internet. World wide. Across languages and cultures.
I don't like the embodiment of the product at all. At the very least it has usability and privacy problems. Yet more people use it successfully than any other web app in the world. So, what do I know? What do experts know?
A similar thing could be said about CraigsList. It's 2014. Every time I use the site I cannot believe what I am looking at. Yet I and lots of other people keep using it. It works.
Facebook has a general lack of elegance (whatever that means). The kind that happens when a product is thrown together and evolved over time. Evolving anything over time means the output "naturally selects" (subverting the theory here) to the environment created by it's users.
They survive because they optimized for what is important to their users. Grandma couldn't care less about UI issues or searchability. She wants to see her grandchildren's pictures and videos. And for that it works very well for a huge percentage of the planet.
At some point it becomes almost impossible to break the mold and clean-up what might be less than ideal. Why would you? It works. Another "Innovator's Dilemma"  situation to a large extent.
⬐ JoeAltmaierGlad somebody said that. Facebook is clumsy and weird. It looks like a legacy system, which I suppose it is. I don't even understand the basic premise. You have a 'wall'? Is that a thing anymore? Maybe its a feed now, or a timeline or something. Whatever; its not obvious from the front page. Not obvious what to do, or where to go, or how to friend people, or what will happen if you do that.
I don't think we disagree. As I pointed out, they excel at execution. Few ideas in electrics are new. This could very well segue into a discussion about patents, because some of the same issues exist there.
Given enough funding, a team of capable engineers and a solid vision (both of which are present at Tesla and other companies) the expectation of results should be the norm, not the exception. We, as engineers, are trained to solve problems using the scientific process.
To use battery packs as an example, there are probably thousands of engineering teams around the world who could design excellent battery packs that could withstand the rigors of automotive use. Tesla (and others) don't happen to have the only 12 engineers in the world who can do that. The same could be said of motors, electronics, software, suspension systems, chassis systems, etc.
I --and this is just my own bias-- am not impressed by what I consider to have to be the normal result of posing a problem to a capable group of engineers. That is to be expected. If you can't expect that out of engineers there's something seriously flawed with the way we are trained.
Of course, there's a continuum of capabilities out there. There is such a thing as lousy engineers with no imagination and a lack of understanding of reality despite years of schooling. Hiring is important. A company forming a substandard team will produce substandard results.
The patent segue is that there really isn't a lot today that most of us would consider to be true invention. Most everything being patented are implementations, which is a tragedy.
What is hard in the context of an organization, despite money and possibly vision is to execute on a consistent basis, keep focus on a reasonable mission and do so on a timely manner and within a reasonable budget. A good comparison of a polar opposite to a company like Tesla is just about any government-run organization where money is never a problem yet they fail to deliver consistently on even the simplest projects.
Tesla doesn't walk on water, but they have been executing a vision in what appears to be a constant series of flawless moves. They have good people who obviously work well together, they seem to know very well where they are going and, of course, they have the drive and funding to make it happen. Larger car companies could very well have to try to push the same ideas forward while mired with unmotivated and inefficient teams that just can't get anything done at the same time scale. And then there's the organizations themselves getting in their own way, AKA, "The Innovators Dilemma" . There's plenty of history on that last point.
To some extent Tesla doesn't have to be a super organization, they just have to keep to their mission and they will outplay everyone else who is still failing through good management while trying to sell 5.25in drives because that's what their customers tell them they want (a reference to the book).
...and the website is not the worst part of the ACA ride we are now on.
Part of me has been ignoring a lot of the chatter around the ACA as potential right wing fabricated drama. Too much noise and bilateral bullshit being thrown about these days.
That was until a few days ago, when I would learn our insurance has both more than doubled in cost and is also scheduled for cancellation. Doubled and cancelled. All as a direct result of the ACA. Brilliant! To say this was shocking is an understatement. Our annual cost will go well past $15K.
There's a tragedy of unintended consequences, side effects and direct effects, being played out in the background that hasn't completely come to the surface yet. We certainly can't be the last family to get news of this kind. That means in the coming months it is likely hundreds of thousands, if not millions, of additional individuals and families are going to receive these dreaded letters. Apparently hundreds of thousands already have. Last week was our turn.
At one point this and other issues will be difficult to ignore. And they will dwarf the IT issues. The website, as much of a disaster as it is, is likely to pale in comparison to all of the other, non IT, issues.
Some of what's happening is related to the incredible disconnect between Washington and technology. All you need to do is listen to some of these folks talk about the website issue to see how little they understand. I heard one senator say something akin to "they just have to re-enter a list of five million codes". In other words, the term "code" to some of these guys means "numbers" and that someone made a data entry error in copying "codes" into the website.
BSS (Balaji Srinivasan) covered some of this in his excellent Startup School talk:
A talk which, he comments, has been mutated into something far different from what he said by the modern equivalent of the "broken telephone" game.
I agree very much with his suggestion that an "exit" is required. Not meaning that we ought to pull-up roots and go, but rather that the tech community ought to almost ignore the dinosaurs and go ahead and evolve a society more aligned to modern realities. In his talk he gives examples of various US cities that have been "exited" to some extent through technologies developed in the free market.
To some extent, it's an Innovator's Dilemma kind of a problem.
The only way to make step changes is to do it well outside of the organization looking after the status quo, because that's all they know and that's all they can focus on.
⬐ tunesmithThis is a huge story that is really difficult to get a handle on, because the premiums changes are affecting everyone very differently, and the patterns behind them are very tough to tease out. I myself saw my premium go down by over 20%, with better benefits. I've also seen a lot of accusations of lying on either side, which isn't helpful either.
Some factors to keep in mind:
Health insurance plans have to be ACA-compliant. Plans that aren't have to be canceled and replaced.
Just because your new plan is ACA-compliant doesn't mean it's on the exchange. Check the exchange, too, as the price differences could be extreme.
Some companies (Humana in particular) have been sending out inaccurate cancellation letters, with inaccurate "new premium" amounts. They got in trouble a few weeks ago in Kentucky for implying that people had to switch to the replacement plan even before the Kentucky exchange was up. Humana also recently got in trouble in Colorado and had to send out a second letter retracting their first one.
It's possible that some companies may be sending out inflated premium amounts to lower risk, while knowing they will have to send out refunds in a year.
Your old plan may not have been ACA-compliant. Specifically, it may have had annual or lifetime maximums (where the insurance company says, "Sorry, we have spent enough money on you; you are on your own now.") These are now prohibited. Even though this raises premiums, this is a good thing.
Some states have crappy competition - Wyoming for example. There's no one else there to encourage an expensive hospital to lower prices, which means expensive premiums. That's a failure of the free market, not a failure of the ACA. (I say that because if the solution to an ACA's woes would mean MORE ACA instead of less - say a public plan - then it doesn't really fit the narrative of the ACA causing these problems.)
And most importantly, the chief goal of the ACA was not to lower your premium! It was to lower health care costs over time (not compared to now, but compared to what they would otherwise be). It was to raise society's health over time (compared to now). And it was to protect people from going bankrupt from health care costs. (This is already successful thanks to the elimination of pre-existing condition rejections, and the elimination of annual/lifetime maximums.)⬐ mynameishere⬐ hgaIt was to lower health care costs over time
I'm not sure how this is possible. The other goals you mention are feasible, but only to the extent that they prevent cost saving.
the chief goal of the ACA was not to lower your premium
Well, it was intended to lower some, and raise others. People with preexisting conditions cannot be insured. They can only be subsidized with something falsely called "insurance". The losers in ACA are pretty much the same as with single payer: The young, healthy, and productive. Call it fair or unfair, the situation is much different than with single payer in that ACA is going to let people see just how much they themselves are getting boned.⬐ tunesmithI think the CBO has already projected a lowering of the future "cost curve". I guess we'll have to see how it actually plays out."as potential right wing fabricated drama"
Perhaps you might want to start looking at reputable alternative news sources that e.g. would have told you you're among the 16 million who's existing policies were outlawed by the "Affordable Care Act" ... 3 and a half years ago.
To those of us who've been paying attention, this is no surprise at all ... maybe not even an unintended consequence, e.g. why aren't you part of some collective (company or whatever) getting group insurance? Yeah, that's going in the direction of "right wing" fever swamps ... but entirely consistent with a lot of undisputed things we know about Obama et. al. E.g. could you be considered a modern day kulack?
As for getting out of the game? I think not. E.g. assuming you and yours are less than 50 years old, one of the things you'll be paying for in whatever policies you get (note, when someone spent some quality time with an ACA calculator he could find no scenario where being married didn't result in a higher total bill) is the expensive 50-64 set. And you're not saying you can't afford paying twice as much ... you think the Federal government will make it easy for milch cows like you to escape?
I agree with the vast majority of your points. Didn't even bother to look at the broken-telephone links. Why bother.
What you are talking about sound very much like what's covered in The Innovator's Dilema .
I am not entirely sure I understand your position with regards to government. It seems you are suggesting the only way to evolve things is to "exit". I took this as perhaps going to the extent of physically relocating to a country where what you want is either accepted or already there. You gave the example of your parents. As the son of immigrants I too have similar examples. Can you clarify this point?
There's a huge divide between Washington's understanding of the ever-evolving world of technology and that reality. Watching the various layers of Washington discuss what they perceive to be the issue with the ACA website is proof enough of that.
⬐ tikhonjPart of the talk was to contrast voice and exit. I don't think the point was that exit is the only way to evolve government; rather, exit is often the best way to create significant change, get out of deadlock or try less popular ideas. Voice (eg voting) is still an option.
Moreover, physically leaving the country is not the only way to "exit". Another example was Bitcoin--a currency that the government may not even be able to fully regulate! The internet and BitTorrent are more popular examples. So technological innovation can also help create an exit, and is perhaps more appropriate for "Sillicon Valley".⬐ robomartinAgreed 100% then.
What's happening to us and other societies is exactly the innovators dilema. It is beyond obvious that, in the case of the US at least, what has worked well for the last 237 years is coming to an end. The divide you mention in your talk between tech and Washington is hurting not only us but, in my opinion, the rest of the world as well.
Frankly it is hard to imagine anything that might compell our society to change quickly enough. In my view the natural consequence of this effect is that any other society smart enough to embrace change could easily position itself to lead the world into whatever form the next world order might take. If in 100 or 200 years we still have countries, poverty, ignorance and war humanity will have failed miserably.
Many seemingly easy to clone businesses get dominated by startups. Facebook copied SnapChat, but had to buy Instagram. Why?
The Innovator's Dilemma explores this question in detail. The gist is that the processes at big companies are very well suited to certain kinds of innovations, while they preclude other kinds (known as "disruptive innovations"). One example (not the only one) has to do with margins. Big companies tend to assume that their cost structures are more or less fixed, and will tend to pass over products that seem to be lower margin than their current business. For example, home computers seemed to be much less profitable than mainframes, so a lot of manufacturers missed the boat on the personal computer revolution.
It's worth reading the book and learning which ideas are likely to be copied by big companies, vs. which ideas big companies will fail at executing.
This turns out to be a key component of Clay Christensen's original theory of "disruptive technology" (before it became a buzzword.) The theory is that the disruption comes in part because existing producers ignore the new technology, since initially it is only of use to a tiny niche in the market that doesn't care about performance. The niche is left to bit players, but it turns out to provide them enough oxygen that they can invest in R&D and improve the technology, eventually to the point that it's the best choice for all but the highest-end applications.
congratulations (no snark) - you're Clay Christensen
⬐ 31reasonshaha thanks. That book is on my list for years!
The Innovators Dileamma.
As far as I am concerned, required reading for every entrepreneur, manager and executive today.
⬐ mark-rIt's bigger than that.
In the film era, they were collecting a tax on every single picture taken. What part of the digital imaging process could they have taken over that would have replaced that entire revenue stream? I'm taking 100x the pictures I took 15 years ago because the incremental cost has all but disappeared. They were doomed before they even started, and I doubt there's a management decision that could have prevented it.
1. I don't believe it's an accurate statement to say Nokia is dead (if even as a stand-alone company). They have several great things going for them today, it's just hard to see if you're not looking beyond the current quarter or two (which I've found is a common symptom of blindness).
2. I don't believe it's an accurate statement to say they flushed every piece of software they have ever built down the toilet. Firstly, they're still releasing non-WP phones. Secondly, a lot of their skills are in innovating within hardware, which they're very much still doing great stuff with.
3. The takeaway from the article is that if you are a tech company, you shouldn't become a media company (or get into media). Firstly, wouldn't Apple, Google, and Microsoft have never entered the media industry if they would've followed this? Secondly, this takeaway is a great example of the innovators dilemma . The two opposing strategies could just as well lead to failure -- a. Following this "takeaway" advice and being too afraid to join new "value markets" (e.g. innovating within media), and so you just keep on running with what works [3a]; and b. Not following this takeaway advice because you realize you can't stay on top forever with your current strategy, and so you make an attempt to enter new disruptive markets even if it means cannibalizing yourself [3b].
[3a] I think this blanket advice has problems -- media may have been a good thing to get into because the media integration could have caused (or did?) a major disruption in the existing market (I believe this was Nokia's belief and a cause for why they did what they did). Thus not trying new things like this could cause failure as well, as new players enter the market and take their marketshare (e.g. Apple with music and media at its core).
[3b] Though Nokia failed at it.
⬐ daliusd1. I'm pretty sure that officially Nokia can be announced dead only when it will bankrupt or will be bought but currently it is walking dead man. In my opinion Microsoft will buy Nokia while everything might be more fun actually. There is nothing anymore what could make Nokia profitable again as it is. At least I don't see anything.
2. What new apart PureView technology I have in my Nokia 808 I could not get in other phones and still consider innovative in hardware? I really find PureView interesting but overall I'm not satisfied with it - it is not that much better than N8 (http://www.allaboutsymbian.com/features/item/15051_Nokia_N8_...). I really would love to see PureView in DSLR camera but not in smartphone.
I love Nokia phones but let's be fair - Nokia as we know is dead. Future of Windows Phone Nokia is uncertain and personally I as developer don't care about it being successful.
- Happy Nokia PureView 808 owner⬐ chris_wot⬐ duskwuffNot much better than an N8 = run a mile from the phone!⬐ daliusd⬐ aik?⬐ lebski88He's talking about the pure view camera. The N8 has an exceptionally good camera for a phone.⬐ chris_wotAh... I didn't realise. I have to agree with that. The hardware components are excellent.Concerning 1: What about their Lumia and future Windows Phone line? Or their future tablets? I agree that the future of Windows Phone is uncertain, but it has been gaining a lot of popularity, press, and very high customer satisfaction lately. With Windows 8 and Windows Phone 8 coming out soon, I believe it has a lot of potential. For example, I often speak with Android users and I don't often come across an Android user that loves their device (unless they're very techy). Meaning, it just doesn't seem to be for the mass market. Alternatively, WP phone is extremely simple.
The reason I say this is because if the above is true, there's a good possibility Nokia will be the ones selling the vast majority of WP phones, and there's a seriously large market for the range of devices WP can run on.
Concerning 2: Just curious, what's the main thing about PureView that got you interested in it and got you to buy it?⬐ daliusd1. We will see. I really don't know but I really don't care as well. WP7 is already nice - I have played a little bit with it but I don't care about it. It is good but it is boring. I don't like it (N950 with poor hardware is much more interesting). My next phone will be Android most probably (while BlackBerry 10, Tizen or bada are considerable options as well). I'm open source/free culture geek and if I can I will avoid walled gardens what WP is.
2. I don't bought it I won it in Nokia's PureView competition. I personally wouldn't spend 700$ on this phone - there are better ways to spend such amount of money that I consider big enough for me. I could buy Samsung Galaxy S3 for this amount of money.> 2. I don't believe it's an accurate statement to say they flushed every piece of software they have ever built down the toilet. Firstly, they're still releasing non-WP phones. Secondly, a lot of their skills are in innovating within hardware, which they're very much still doing great stuff with.
Ehh... While Nokia does still have a significant number of non-WP phones, most of them are "feature phones" (non-smartphones). With the price differential of smartphones plummeting at its current rate, even as the phones become more powerful, I strongly suspect that the "feature phone" market is going to largely evaporate outside developing nations within the next few years.
(The remainder of Nokia's phones are running Symbian OS, which is widely regarded to be an evolutionary dead end. Nokia, unaccountably, still has some phones in the pipeline which will use Symbian, but I doubt there will be many more, nor that they will be very popular.)
As far as hardware innovation goes, as long as Nokia sticks with Windows they're going to be pretty limited in that respect. My understanding is that Microsoft has some pretty strict hardware guidelines for WP7+ devices.⬐ beagle3> I strongly suspect that the "feature phone" market is going to largely evaporate outside developing nations within the next few years.
I strongly suspect that's going to happen in developing nations as well.
You can get an unlocked 3G Huawei android 2.1 phone for $80 in the US. The cheapest usable unlocked feature phone you can get in the US is $15-$20. (You can occasionally get a $10 2-band GSM phone that has no screen and can't do texts -- I'm ignoring that)
Feature phones are going away. Developing nations will just have less capable smartphones, with lower resolution screens, slower processors and old operating systems. But they'll be almost entirely smartphones.⬐ gaiusWhile Nokia does still have a significant number of non-WP phones, most of them are "feature phones" (non-smartphones)
Arguably anything running Symbian is a smartphone, Nokia just put a crippled featurephone user interface on it. They were way ahead of the smartphone curve, unfortunately way ahead of the market too.⬐ _djo_⬐ aikNone of Nokia's feature phones run Symbian, they run Series 40, a Nokia developed software platform and UI. Series 40 is not capable of the functionality that true smart phone OS's like Symbian, Maemo or Windows Phone 7.
I'm also not sure it's true that Nokia were way ahead of the market, as their competitors (such as Ericsson) were producing smart phones every bit as impressive as Nokia's early efforts. They did make a good start, but they were not unchallenged.I agree most of the non-WP phones are feature phones (though the Aisha line is on the border from my understanding), and that feature phones are going to evaporate outside developing nations, however the "developing nations market" is still very large and potentially very lucrative.⬐ sharemethe fastest growing market in developing nations is the low cost smartphone at $50 or less. Nokia is getting killed in all three areas equally, combined that with being Osborned once by the CEO and once by MS as a partner and you have the current Nokia junk bond status situation.
If this is true, then he (Craig Newmark) really needs to read the innovator's dilemma (http://www.amazon.com/The-Innovators-Dilemma-Revolutionary-B...). TLDR: If you allow yourself to become a prisoner to your success, you're actually making your continued success unlikely. You can solve the dilemma by spinning out a smaller, irreverant version of yourself & giving them what they need to destroy the old company.
In craigslist's case, he could include a link on the old site that allows users to upgrade to a more modern version, and have the modern site basically consume an api/scrape the old CL till it gained momentum.
"What I don't understand, is why Google never attempted to enter new markets with different business models"
Google has always been attempting to enter new markets, but the new attempts amounted to a lot of moderately useful utilities, some questionably useful toys and curiosities, and a lot of misses. Mostly, the attempts seemed like random offshoots -- the products of a company that was supremely dominant in its position, flush with cash, and free to experiment in any way it so chose.
As I mentioned in a previous comment, it's very easy in hindsight to blame Google for having essentially rested on its laurels, squandering its lead and its position. And it's very easy to claim that certain threats (i.e., Facebook) were "always" obvious. They weren't. There were certainly some critical junctures at which Google should have focused its efforts on expansion in one or two directions. But Google was making attempts at expansion -- just not the right ones.
Harvard's Clayton Christensen famously described this situation as "The Innovator's Dilemma." There is a well-documented and almost axiomatic pattern, throughout history, of innovative companies rising to the top and then failing to predict who or what would eventually disrupt them. (If disruption were easily predictable, after all, it wouldn't be disruptive).
It's worth checking out.