13. • Perceived by some as “good enough”
• Converts some mid‐market customers
from incumbent
• Others notice and may follow
• Eventually, begins to threaten
incumbency
The Innovator’s Dilemma Visualized
$ (Cost, Price, etc.)
Features, Value, etc.
Incumbent
New Entrant
• Inertia, slow to change
• Fear cannibalization
• Lower customer satisfaction
• Loss of market share
• Struggle to recover
14. The Innovator’s Dilemma Case Study: 5.25/3.5 Inch Disks
• The 3.5” drive was first developed in 1984 by Rodime, a Scottish entrant.
• Sales not significant until Conner Peripherals, a spinoff of 5.25” drive makers Seagate and Miniscribe, started shipping in 1987.
• Conner had a small, lightweight 3.5” drive much more rugged than the 5.25”.
• It handled functions electronically that had been managed with mechanical parts.
• The Conner drives were used primarily in new laptop machines, where customers were willing to accept lower capacities and
higher costs per megabyte to get lighter weight, greater ruggedness, and lower power consumption.
• Seagate engineers were not oblivious to the 3.5” drive!
• In early 1985, less than one year after Rodime introduced the first 3.5” drive and two years before Conner started shipping
product, Seagate showed working 3.5” prototypes to customers!
• The initiative for the new drives came from Seagate's engineering organization.
• Opposition to the program came primarily from the marketing organization and Seagate's executive team; they argued that
the market wanted higher capacity drives at a lower cost per megabyte and that 3.5” drives could never be built at a lower
cost per megabyte than 5.25” drives.
• Seagate's marketers tested the 3.5” with customers in the desktop computing market it already served (IBM, and value‐added
resellers of full‐sized desktop computers).
• They indicated little interest in the smaller drive. They were looking for capacities of 40 and 60 megabytes for their next‐
generation machines, while the 3.5” could provide only 20 MB at higher costs.
• In response to lukewarm reviews from customers, Seagate's program manager lowered 3.5” sales estimates, and the firm's
executives canceled the program. Their reasoning? The markets for 5.25” products were larger, and the sales generated by
spending the engineering effort on new 5.25” products would create greater revenues for the company than would efforts
targeted at new 3.5” products.
• Seagate finally began shipping 3.5” drives in early 1988, the same year in which the performance trajectory of 3.5” drives
intersected the trajectory of capacity demanded in desktop computers.
• By that time, the industry had cumulatively shipped $750 million in 3.5” products!
16. Organizational Maturity Model: Projects, Products, or Solutions?
(The fractal that is usually much bigger than you!)
• Recognize that everyone says they want a solution
• Projects
– Customer says “Jump!”, and company says “How high?”
– Company brand centered in capability to execute
• Products
– Company willing to gently say “no” to customers
– Typically “market” driven
• Solutions
– Company says, “We are all things to all people.”
– Bring together People, Process, Technology
– Professional services consumes/customizes company products
– Typically viewed as “end‐to‐end” by customer
• Question: Which type is your personal sweet‐spot? Is it aligned with the company’s?
Note: Projects and products do not typically play well together
if they share execution resources.
17. Project, Product, Solution Visualized
Typical Incumbent Strategy:
‐ Sustain Market Share
‐ Sustain Customer Satisfaction
ID Impact:
‐ Lose Market Share
‐ Decrease Customer Satisfaction
‐ Struggle to Recover
“Project”
“Product”
“Solution”
• Build whatever customer specifies
• “Recreate the wheel” several times
• Eventually, claim a “product”
• Suffer code fragmentation
• How do we contend with NRE‐based business scaling issues?
• Build what the “market” wants
• OK. We need a “platform” and API gate‐keeper
• Truly, have a “product”
• Still, can we service mass customization?
• Core engineering builds product
• Professional services handles customization
• Business scales in products and services
Leadership Changes
Typically Required
Organizational Scale (and typically, Time)
29. Key Fractals: Execution and Communication in Context
• Understand
– Industry trends and causal relationships
– Competitive, revenue, profitability, and growth impacts
– Don’t use technology just for its own sake
– Product cannibalization fears!
• Get into stakeholder’s heads
– The CEO’s
– The customer’s
– Others (internal and external)
• Navigate any dual/mixed C‐level roles
– CIO reports to CFO
– Dual CTO/CEO role
– EPMO vs. silo PMs
• Who really drives change/innovation?
– Engineering vs. product management
– CEOs want minimal features, power users want everything
• Be forward thinking, but balance tactics and strategy
– If you only listen to customers, then you will only be as smart as them
– For disruptive innovation, paradigm shifts must be “on the table”
– Is failure really allowed? Because…
31. Key Fractals: Know Thy Personal and Company Culture
• Alignment is essential in any organization
– Clear definitions of roles and responsibilities
• Project administrators vs. project managers
• Useful process vs. worship of process
• “Centers of excellence” processes, delivery, and metrics
– Commensurate responsibilities and authority
• Misalignment can lead to overly political environments
• “Heroes vs. Villains” Culture
– Matched commitment and accountability
• Too much management tends to inhibits engagement
• Is it a Project, Product, or Solution based company?
– Core to understanding what/how change and innovation will/won’t occur
34. Key Fractals: Bring It Together With “Joined Up” Thinking
• Understand existing company projects, products, and solutions
• Leverage knowledge of present “organizational maturity”
– In company cultural context, is the change/innovation realistic?
– Is it worth the professional risk?
• Truly “partner” with people/teams/organizations to bring it about
– Think like a developer, project manager, marketer, CEO, etc.
• Politics of change: Create buy‐in
– No buy‐in = No change
– Assert with passion and create excitement
– Be proactive, not reactive
– Take reasonable risks, but mitigate
– Change is hard: Empathize, but don’t fully sympathize
– Appeal to the “arrogance” of opponents (by making it their idea!)
– Ultimately, “Developers own the code”
Projects
ProductsSolutions
Fractals suggest behavior trumps process, particularly at SMB scale!
36. Summary: Agent of Change Key Fractal Behaviors
• Regularly evidence deep understanding to Execs/C‐levels
• Know what it takes to execute an idea in a company/industry context
• Know thy personal and company culture
• Create a shared sense of urgency through communications
• Maintain awareness of existing “fractal” behaviors and weigh desired
outcomes
• Of course, execute: generate iterative results
• Consider the consigliere as an innovator model
• Remember, “joined up thinking” makes it happen!
• If you do the above, then:
– Projects, products, and solutions can execute with highest success probability
– Company and deliverables are crisply branded
– Gain executive sponsorship vs. “sleepership”
– Build resilient trust with Execs/C‐levels