The_Innovators_Dilemma__Clayton

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data, Disk/Trend Report, published annually by Disk/Trend, Inc., of Mountain View, California, listsevery model of disk drive that has ever been offered for sale by any company in the world, for each ofthe years from 1975 to the present. It shows the month and year in which each model was first shipped,lists the performance specifications of the drive, and details the component technologies used. Inaddition, every manufacturer in the world shares with Disk/Trend its sales by product type, withinformation about what types of customers bought which drive. Editors at Disk/Trend then aggregatethis data to derive the size of each narrowly defined market segment and publish a listing of the majorcompetitors’ shares, carefully guarding all proprietary data. Manufacturers in the industry find thereports so valuable that they all continue to share their proprietary data with Disk/Trend.In each edition, Disk/Trend publishes the actual unit volumes and dollar sales in each market segmentfor the year just past and offers its forecasts for each of the next four years in each category. Given itsunparalleled access to industry data spanning two decades, this publication offers an unusual chance totest through unfolding market history the accuracy of past predictions. Over all, Disk/Trend has aremarkable track record in forecasting the future of established markets, but it has struggled to estimateaccurately the size of new markets enabled by disruptive disk drive technologies.Figure 7.1 The Four Years after the First Commercial Shipments: Sustaining versus DisruptiveTechnologiesSource: Data are from various issues of Disk/Trend Report.The evidence is summarized in Figure 7.1, which compares the total unit volumes that Disk/TrendReport had forecast would be shipped in the first four years after commercial shipments of each newdisk drive architecture began, to the total volumes that were actually shipped over that four-year period.To facilitate comparison, the heights of the bars measuring forecast shipments were normalized to avalue of 100, and the volumes actually shipped were scaled as a percentage of the forecast. Of the five118
new architectures for which Disk/Trend’s forecasts were available, the 14-inch Winchester and the 2.5-inch generation were sustaining innovations, which were sold into the same value networks as thepreceding generation of drives. The other three, 5.25-, 3.5-, and 1.8-inch drives, were disruptiveinnovations that facilitated the emergence of new value networks. (Disk/Trend did not publish separateforecasts for 8-inch drives.)Notice that Disk/Trend’s forecasts for the sustaining 2.5-inch and 14-inch Winchester technologieswere within 8 percent and 7 percent, respectively, of what the industry actually shipped. But itsestimates were off by 265 percent for 5.25-inch drives, 35 percent for 3.5-inch drives (really quiteclose), and 550 percent for 1.8-inch drives. Notably, the 1.8-inch drive, the forecast of whichDisk/Trend missed so badly, was the first generation of drives with a primarily non-computer market.The Disk/Trend staff used the same methods to generate the forecasts for sustaining architectures asthey did for disruptive ones: interviewing leading customers and industry experts, trend analysis,economic modeling, and so on. The techniques that worked so extraordinarily well when applied tosustaining technologies, however, clearly failed badly when applied to markets or applications that didnot yet exist.IDENTIFYING THE MARKET FOR THE HP 1.3-INCH KITTYHAWK DRIVEDifferences in the forecastablity of sustaining versus disruptive technologies profoundly affectedHewlett-Packard’s efforts to forge a market for its revolutionary, disruptive 1.3-inch Kittyhawk diskdrive. 1 In 1991, Hewlett-Packard’s Disk Memory Division (DMD), based in Boise, Idaho, generatedabout $600 million in disk drive revenues for its $20 billion parent company. That year a group ofDMD employees conceived of a tiny, 1.3-inch 20 MB drive, which they code-named Kittyhawk. Thiswas indeed a radical program for HP: The smallest drive previously made by DMD had been 3.5-inches, and DMD had been one of the last in the industry to introduce one. The 1.3-inch Kittyhawkrepresented a significant leapfrog for the company—and, most notably, was HP’s first attempt to leadin a disruptive technology.For the project to make sense in a large organization with ambitious growth plans, HP executivesmandated that Kittyhawk’s revenues had to ramp to $150 million within three years. Fortunately forKittyhawk’s proponents, however, a significant market for this tiny drive loomed on the horizon: handheldpalm-top computers, or personal digital assistants (PDAs). Kittyhawk’s sponsors, after studyingprojections for this market, decided that they could scale the revenue ramp that had been set for them.They consulted a market research firm, which confirmed HP’s belief that the market for Kittyhawkwould indeed be substantial.HP’s marketers developed deep relationships with senior executives at major companies in thecomputer industry, for example, Motorola, ATT, IBM, Apple, Microsoft, Intel, NCR, and Hewlett-Packard itself, as well as at a host of lesser-known startup companies. All had placed substantialproduct development bets on the PDA market. Many of their products were designed with Kittyhawk’sfeatures in mind, and Kittyhawk’s design in turn reflected these customers’ well-researched needs.The Kittyhawk team concluded that developing a drive that met these customers’ requirements wouldbe a demanding but feasible technological stretch, and they launched an aggressive twelve-month effortto develop the tiny device. The result, shown in Figure 7.2, was impressive. The first version packed 20119
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Copyright © 1997 by the President
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In GratitudeAlthough this book list
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IntroductionThis book is about the
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There are two ways to resolve this
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Most new technologies foster improv
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Chapter 6 examines the emerging per
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To maintain their share prices and
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another—changes. When the perform
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published has been the number of pe
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HOW DISK DRIVES WORKDisk drives wri
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Some have attributed the high morta
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SUSTAINING TECHNOLOGICAL CHANGESIn
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The same pattern was apparent in th
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The trajectory map in Figure 1.7 sh
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with increased capacity at a lower
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commercially mature in its new appl
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entrant firms to topple the incumbe
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technology disk drives.11. This sta
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In assessing blame for the failure
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Source: Reprinted from Research Pol
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with its own value chain, 10 is ass
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Source: Data are from company annua
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Figures 2.5 and 2.6 illustrate clea
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analysts, therefore, joined their m
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engineering workstation, and mainfr
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procure the component flash chips;
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Figure 2.8 Comparison of Disk Drive
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in commercializing such technologie
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products can be interactively devel
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Source: Osgood General photo in Her
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mechanical excavators by their reac
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Source: Brochure from Sherman Produ
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Page 77 and 78: Compare that conversation to the ma
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Page 85 and 86: 1970).3. The use of the term system
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Page 89 and 90: CHAPTER FIVEGive Responsibility for
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Page 97 and 98: Figure 5.2 Gains in Discount Retail
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Page 117: CHAPTER SEVENDiscovering New andEme
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We need a strong motivation to acce
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16. This list of smaller, simpler,
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Third, just as there is a resource
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The Innovator’s DilemmaBook Group
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lead to success with sustaining tec
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recognizing that different technolo
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