Article | What I learned in Supply Chain
The Innovator's Dilemma
March 2nd, 2021
5 minute read
The great Eric Johsnon recently wrote a post about whether any ideas are new & the resulting tension created between startups and incumbents.
You can read his full post here →
His post got me thinking more broadly about this issue. Why didn’t GM create Tesla or Expeditors build GTNexus? GM had every advantage as a long time leader in their respective industry, as does Expeditors. Both are great companies with great brand names & tons of resources, clients, & money. Both have decades of experience in their respective fields.
I believe it comes down to principles outlined in the classic “The Innovator’s Dilemma” by Clayton Christensen, which can be boiled down to the decisions that businesses must make between catering to customers' current needs vs adopting new innovations & technologies which will answer future needs.
In my experience working for big companies, this simple principle means the odds are stacked heavily against innovation since all of the gears in the company are lined up to keep growing and supporting tried & true products & services.
To overcome this, some companies created innovation labs or new divisions. GM created Saturn, but eventually couldn’t resist imposing their will on it. Expeditors created an innovation lab but has staffed it primarily with long-time veterans.
So eventually new companies come along who are unencumbered to pursue old ideas in entirely new ways, as we saw with Tesla and GTNexus — as well as Uber in the taxi industry, AirBNB in the hospitality industry, Paypal in the banking industry, Waze in the navigation industry, and so on.
Unless companies start to push forward when it comes to innovation & breakthroughs, they’re going to start seeing less and less traffic to their sites & services. When was the last time you hailed a cab vs. when is the last time you’ve opened the Uber app? Have you plugged in your bulky Garmin GPS recently, or do you just open up the Waze app on your phone? Innovation moves practices, businesses, & society into the future, whereas the “same old, same old” tends to get left in the past.
I believe it comes down to principles outlined in the classic “The Innovator’s Dilemma” by Clayton Christensen, which can be boiled down to the decisions that businesses must make between catering to customers' current needs vs adopting new innovations & technologies which will answer future needs.
In my experience working for big companies, this simple principle means the odds are stacked heavily against innovation since all of the gears in the company are lined up to keep growing and supporting tried & true products & services.
To overcome this, some companies created innovation labs or new divisions. GM created Saturn, but eventually couldn’t resist imposing their will on it. Expeditors created an innovation lab but has staffed it primarily with long-time veterans.
So eventually new companies come along who are unencumbered to pursue old ideas in entirely new ways, as we saw with Tesla and GTNexus — as well as Uber in the taxi industry, AirBNB in the hospitality industry, Paypal in the banking industry, Waze in the navigation industry, and so on.
Unless companies start to push forward when it comes to innovation & breakthroughs, they’re going to start seeing less and less traffic to their sites & services. When was the last time you hailed a cab vs. when is the last time you’ve opened the Uber app? Have you plugged in your bulky Garmin GPS recently, or do you just open up the Waze app on your phone? Innovation moves practices, businesses, & society into the future, whereas the “same old, same old” tends to get left in the past.
