Seeing What’s Next- Post 3

Interestingly a company often reacts much like a person would when threatened by an unknown force entering the market. The fight or flight dynamic that arises in humans also exists in their decisions when viewing new entrants and possible industry changing innovations. The most common of these reactions is the flight or avoidance method that we see in the history of most displaced previous industry leaders. Companies such as Sears, that couldn’t adjust to lower priced retail entrants are struggling to keep afloat in a dynamic marketplace.

               These changes in industries are by no means instantaneous or unpredictable, but they do require that managers and investors to follow the logical steps that can predict what will give disruptors the advantage in the industry. Christensen suggests that we can look at a company’s values and processes to predict if and how they might react to any given situation.

               One might logically conclude that the firm must create the disruptor itself if it wishes to remain at the top of an industry. According to Christensen however, this approach normally leads to a doubling down by the firm on its most lucrative market segment and a branching or creation of a disruptor, led by previous employees of the incumbent market leader. This is because the mainstream channels that the firm may use to push this new disruptive innovation are by their very nature already satisfied by the existing offering. This means that it would take a new approach and market breakdown to reach the customers that would have the interest or need for the innovation.

               Another interesting segment of the chapter revolved around the idea of processes. These problem-solving methods speed a firm’s response time to previously encountered rising predicaments but also indicate where a firm might be venerable. Christensen suggests that new problems that arise can become or highlight a firm’s weak points to competitors. I disagree with the notion that these encounters with the unknown are inherently problematic, as the very nature of the unknown is how a firm expands its understanding of the market in the first place. This would be evident in the firm’s creation of processes and changing of asset distribution. If a firm faces a new challenge that highlights weaknesses or shortcomings it can be an opportunity for the firm to reallocate resources to reach a segment of the market that it previously has neglected. Of course, the problem with this reallocation could be a parting from the firm’s core values so it must be done with precision.

               This breakdown of the processes does seem a little over simplistic in nature. Of course, a firm will attempt to follow the most lucrative paths based on its revenue channels. The fight or flight analogy is also perplexing as it simplifies the firm’s decisions down to a binary choice. It would seem to me that the firm that is already situated in each market has an almost insurmountable resource advantage in today’s context. This means that new entrants are often bought up before they can reach a disruptive level. It is almost as if the new entrant is running experimental trials on behalf of the incumbent rather than working to displace them within the larger market. On the other hand, this may be an indication that modern firms are using previous shortcomings by industry leaders to remain dominant in their market space.