On an Incumbent’s Advantage as a Foil to Innovator’s Dilemma

I’ve spent a lot of time sitting inside large traditional enterprises across many different industries. Often I’ve been horribly frustrated at the seeming inability of these organizations to innovate with any degree of success – even when change is staring them in the face, and innovators are popping up all around them – lethargy and inertia often stop them doing what they need to.

This trait was well explained by Clayton Christensen back in 1997 in his book The Innovator’s Dilemma where he discussed exactly why incumbent companies often miss the cues to innovate and what leads to disruption.

In reflecting on what he sees in his travels, and in light of Christensen’s book, Vinnie Mirchandani wrote an excellent post that posited something else going on here, that is the advantage that large incumbents have. Vinnie pulls no punches saying that:

I think we need to acknowledge how companies which should long have been disrupted and dead continue to survive and, in many cases, even thrive. An incumbent can coax, coerce, even cheat a path away from oblivion.

Of course Vinnie is correct – we only need to look at the airline industry, the telcos, the banks to see examples of incumbents who, in a pure innovator’s dilemma analysis would no longer exist – but they do. And it’s their size that allows them to do so – after all, it may take a lot to change an oil tanker’s course, but once its moving, there’s plenty of momentum there to push on through.

So the real question to be asked here is when does the pace of societal, technological and economic change become sufficiently great that it outruns the ability of an incumbent to avoid being disrupted through brute force – in other words when does brains finally overcome brawn?

It’s not a simple question but some work I’m doing at the moment around organizations of the future – and the macro trends that the world is facing, suggest that this day of reckoning isn’t all that far away. There is an almost perfect storm of disparate influences building, things like:

  • Global economic turmoil
  • An ever-increasing need for organizational agility
  • Generational changes in the form of the rise of the millennials
  • Democratization of technology (consumerization, cloud, social)

All of these trends go together to suggest that the organization of the future will be fundamentally different from the one that we know today and that under this new model, an incumbent’s advantage will be rendered ineffectual.

I’ll be publishing some work over the next little while that speaks to these factors specifically – as always I’m interested to hear other’s thoughts about the topic.

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