Innovate or Die, a favorite Business Book by Steve Jobs, this paper summaries the 2 types of innovations and how companies should organize and structure accordingly.
The two types are
Sustaining and Disruptive innovation.
Sustaining innovation is the kind of innovation most company engage in when upgrading a service or adding new functions and features. Obviously if you don’t improve you risk losing your customer base and eventually your business. Disruptive innovation is more drastic change as of when you introduce brand new technology, product or market.
Sustaining innovation is the kind of innovation most company engage in when upgrading a service or adding new functions and features. Obviously if you don’t improve you risk losing your customer base and eventually your business. Disruptive innovation is more drastic change as of when you introduce brand new technology, product or market.
3 Factors of Organization
Capabilities;
1)
Resources: people, equipment, technology, cash and other
non-tangible resources such as product design, information, brand and customer
relations
2)
Processes: Decisions and processes that transform resources
into product and services.
3)
Values: Not to be confused with ethical values. Values here relate to the
standards where the company and employees set priorities if an order, idea, profit
margins, product or customer is important to purse or not.
The 2 kind of values:
The 2 kind of values:
a.
How company assess growth market values.
b.
How big an opportunity has to be before it can be pursued.
Example; Digital
Dilemma:
A good example
why Digital business (Mainframe and Mini computers included) in the eighties
couldn’t win the race against PC market is the differences between the two
factors Processes and Values.
Processes: Digital’s processes were taking long time to come up with
products while PC were capturing different components with much quicker turn
around.
Values: Digital profit margins had to be over 40% to be considered good
business, PC industry values were very narrow and much less.
The 3
Organization styles that are used in the structural table below
(A) New organization space within corporate boundaries with “Heavy weight
teams”
(B)
Spin out independent organization.
(C)
Acquisition with a different company’s values that are closer to the new task
Questions
organizations need to answer:
1)
Are the current processes appropriate for
this new problem/task?
2)
Will the values of the current organization
cause the new initiative to get high priority or relinquish it?
Deciding on
organization structure:
The first table
below discussed the recommendations based on Processes and Values.
The second table
goes deeper and involves the kind of innovation.
First Table:
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