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Gary Edwards

How Useful Is the Theory of Disruptive Innovation? - 0 views

  • The turmoil of business competition has often been likened to a stormy sea. “Gales of creative destruction,” economist Joseph Schumpeter wrote, periodically sweep through industries, sinking weak and outdated companies.1 In the mid-1990s, the winds of change appeared especially powerful, threatening even some of the strongest businesses. Enter Clayton M. Christensen, a professor at Harvard Business School who is now considered one of the world’s leading experts on innovation and growth. In his 1997 book, The Innovator’s Dilemma, Christensen provided an explanation for the failure of respected and well-managed companies
  • Good managers face a dilemma, he argued, because by doing the very things they need to do to succeed — listen to customers, invest in the business, and build distinctive capabilities — they run the risk of ignoring rivals with “disruptive” innovations.3
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    "Few academic management theories have had as much influence in the business world as Clayton M. Christensen's theory of disruptive innovation. But how well does the theory describe what actually happens in business?"
Gary Edwards

Businesses spending more on tech, worrying more about IT disruption | CIO - 0 views

  • The good news is that the vast majority of decision-makers expect to maintain or increase their 2016 IT budgets. Forty-eight percent are planning IT budget growth at an average increase of 22 percent over last year, according to the study, while just six percent of companies are planning to spend less on IT than last year. Medium-sized companies are growing their tech spending most aggressively, with 60 percent planning to increase their budget by an average of 17 percent over 2015. The study found 42 percent of small companies are planning to increase their budget by an average of 27 percent over 2015, while 44 percent of large companies are planning to increase their budget by 18 percent over 2015.
  • Adoption of new cloud technologies and solutions will continue at a rapid clip in 2016. The study found 89 percent of technology influencers cited cloud computing as the innovation that has had the most significant impact on technology today and 84 percent plan on investing in cloud services in 2016. Software as a Service (SaaS) is likely to lead the way with 54 percent planning to invest, followed by Security as a Service, with 49 percent planning to invest.
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    "Technology leaders are disenchanted with the current state of their IT infrastructure. According to a study released Tuesday by global technology provider Insight Enterprises, tech leaders give their companies' current IT infrastructure a "B minus" grade. For its first Insight Enterprises Intelligent Technology index, Insight Enterprises used Market Intel Group to conduct an online survey of a random sample of 403 IT professionals with decision-making responsibilities between Nov. 30, 2015 and Dec. 8, 2015. How to use Windows 10 backup and recovery features Sooner or later, you're going to experience a hard drive failure, usually when you least expect it. READ NOW The study found that 55 percent of respondents felt the current technology in place at their business was a hindrance to incorporating or adopting new technologies, even as 65 percent of respondents were worried about disruption from technology innovation. While 65 percent of tech leaders overall were worried about the prospect of disruption, tech-decision makers at larger companies are especially feeling the pressure: The study found that 74 percent of tech influencers at large companies and 75 percent of tech influencers at medium-sized companies were concerned about disruption. "
Gary Edwards

The Real Power of Platforms Is Helping People Self-Organize - 0 views

  • It’s also interesting to note that Uber doesn’t expect exclusivity from its extended labor force. Many people who drive for Uber also drive for competing services like Lyft. That lifts a key constraint — namely that the company must optimize a fixed amount of a worker’s time. Drivers opt-in to drive the schedules that work best for them — maybe the free time they have between dropping kids off at school and then picking them up. For others, they may opt to work 12-hour-long days. There is no central actor setting the rules such as having to manage artificial constraints like a fixed eight-hour workday. Nothing is pre-planned and everything is left to the market to come up with efficient solutions.
  • they focus on creating a market where people with cars can connect with people who need rides.
  • How does Uber handle the holiday crunch? They let the market solve that issue through surge pricing. At peak times, prices rise — which reduces demand AND increases supply of drivers. Sure, some folks consider this price gouging at times. But it’s interesting to see how the higher fares create incentives for more drivers to hit the roads to meet that demand. Problem solved, again without any preplanning.
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  • It so happens that open source software works very similarly to Uber in terms of stoking active participation beyond any one company’s boundaries. Contributors choose to participate on a project. They may have a job or be in school. Regardless of what they do, they voluntarily opt in to a system, which self-organizes based on the need at hand. As with Uber, there is no preplanning of resources or scheduled shifts; everything is self-organized by volunteers interested in tackling that job at that time.
  • If these participative systems can solve complex optimization problems without central planning, like managing Uber’s logistics or developing the open source Linux kernel, what else can they do? Traditional institutions as we know them today will not exist in their current forms in twenty years. The boundaries of the traditional corporation are becoming more and more porous as the value of centralized planning and coordination declines. That’s a truly disruptive development and something that every organization, regardless of industry, should be paying attention to.
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    "Uber, the car-sharing service, has become ubiquitous. It's now a multi-billion-dollar global business. It's even become a noun of sorts - uberization - which people use to describe a disruptive change to a staid industry ripe for innovation (though, to be sure, the popularization of the word "disruptive" means that it is often used in ways that the concept's author, Clay Christensen, didn't intend). But I would argue that the real reason Uber is disruptive is because it is reshaping how we can think about organizing people, not cars. Uber has shown how you can actually empower many thousands of people to self-organize to tackle a task (shuffling people to their destination in this case) without the preplanning that is the norm in traditional enterprises. Put another way, Uber's business model extends a very complex supply chain beyond the boundaries of a corporation in a way that creates real results without any planning in advance. That is a remarkable example of how technology will reshape how we organize to get work done at scale in the future. For context, I worked at Delta Air Lines for many years before I joined Red Hat, the open source software provider where I am now CEO. When I was at Delta, we spent enormous resources in terms of time and money on planning. Airline operations are a huge optimization challenge. There are hundreds of planes, thousands of pilots, flight attendants, mechanics, and ground crews that must be properly deployed for the system to work efficiently. We needed to process reams of data using expensive and sophisticated software and computers to predict demand, know the capabilities of each aircraft type, and to understand each work group's constraints. We also had an army of PhD-caliber people whose full-time jobs involved figuring out this puzzle in a way that we could still make money. Uber's value chain has a similar optimization challenge - it needs to deal with variable demand, thousands of drivers,
Gary Edwards

The biggest threat to patent reform: The Apple/IBM/Microsoft coalition | VentureBeat | ... - 0 views

  • The cost of trolling, on the other hand, is minimal. Trolls also typically render themselves litigation-proof by creating shell companies with no assets, should they fall into legal trouble from a wrongful suit.
  • Fee shifting It is nearly impossible for a startup to find the resources to fight a patent suit. The promise of seeing some of that money back at the end makes securing the resources easier. Meaningful fee shifting will discourage the most egregious actors — those without meritorious cases — from suing in the first place; and joinder provisions are necessary to make sure that the real party in interest — the one that really owns the patent — can be held liable for the trolling activities of shell entities are also essential. In other words, no more hiding behind shell companies.
  • Heightened pleading Patent trolls benefit greatly from asymmetry of information. They are able to file suits with vague and limited information, leaving companies with no choice but to consult a lawyer about the scope of the threat they face. Most startups don’t have an in-house lawyer at all, let alone one who specializes in patents. Those bringing suits should set forth the basic framework of their case — who owns the patent, what product allegedly infringes the patent, and what parts of the patent are at issue. This would, at minimum, give startups a basic and common-sense understanding surrounding the threat, allowing them to make more informed decisions on how to proceed.
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  • Fee shifting It is nearly impossible for a startup to find the resources to fight a patent suit. The promise of seeing some of that money back at the end makes securing the resources easier. Meaningful fee shifting will discourage the most egregious actors — those without meritorious cases — from suing in the first place; and joinder provisions are necessary to make sure that the real party in interest — the one that really owns the patent — can be held liable for the trolling activities of shell entities are also essential. In other words, no more hiding behind shell companies.
  • Heightened pleading Patent trolls benefit greatly from asymmetry of information. They are able to file suits with vague and limited information, leaving companies with no choice but to consult a lawyer about the scope of the threat they face. Most startups don’t have an in-house lawyer at all, let alone one who specializes in patents. Those bringing suits should set forth the basic framework of their case — who owns the patent, what product allegedly infringes the patent, and what parts of the patent are at issue. This would, at minimum, give startups a basic and common-sense understanding surrounding the threat, allowing them to make more informed decisions on how to proceed.
  • Discovery reform Discovery is one of the most onerous and expensive parts of patent litigation. When startups face companies solely in the business of licensing and litigation (e.g., oftentimes a patent troll), they find themselves facing outrageously expensive motion practice that has little to no impact on their adversary. Reasonable limits on initial discovery will help incentivize startups to fight the trolls in court. This will, by default, incentive those trolls to only bring meritorious suits.
  • Demand letter reform Patent trolls are legally able to send vague licensing demands, full of threatening legalese, and startups are again left with no information to understand the scope of the threat they face. Demand letters should include concrete information on the patent holder’s claim to give recipients needed information; and demand letters sent in bad faith should be actionable. Those senders should not be able to take advantage of the patent system and extort money from high-growth companies that are rebuilding the economy.
  • Customer stay exception Startups can sometimes find themselves facing expensive litigation for a product they obtained from someone else, or they might find their customers facing suits for using their products. In either instance, startups need tools — like robust stays — so manufacturers and suppliers can step in and join the defense. The harm resulting from the patent troll epidemic does not just impact startups; it creates an environment where startups have a negative impression of the patent system and are therefore significantly less likely to positively engage. A recent study from the National Sciences Foundation found that in the information sector (which includes software, Internet, and Data processing) only 10 percent of companies found utility patents either “very” or even “somewhat” important. We need comprehensive patent reform to level the playing field for all innovators so they are no longer victimized by a litigation system stacked in favor of trolls. The legislation must realign the patent system with its founding principles — to incentivize innovation and the progress of technology. This includes protecting patent owners’ rights along with the rights of those facing patent threats. To be clear, there is nothing in the Innovation Act, or other proposed legislation, that would stop a legitimate patent holder from bringing a meritorious case for infringement.
  • Final word So why are companies like Microsoft, IBM, GE, and Ford trying to slow down this legislative process? Simply put, spending millions of dollars on patent resources has proved a good way to make money and to shut out their competition — high-growth, disruptive, and nimble startups. We must not let these entrenched interests get in the way of fixing a broken system.
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    "There's a new coalition in D.C., and big players like Apple, DuPont, Ford, GE, IBM, Microsoft, and Pfizer have all signed up. Unfortunately, launched on the day the Senate was supposed to take up the latest effort to reform the patent system, the coalition's sole purpose appears to be an effort to derail the important strides we've made toward fixing the patent troll problem via the proposed Innovation Act legislation. So what is it about the Innovation Act (and other legislative proposals being discussed in the Senate) that this coalition thinks will harm both their businesses and ability to build innovative products? These companies were all startups themselves once, and protecting startups that cannot afford to protect themselves from patent trolls is at the heart of the Innovation Act. The startups being targeted by patent trolls have less than $10 million in revenues. They are in no position to hire a patent lawyer to understand the scope of the threat they face - let alone pay the millions of dollars it would cost to take case to court. Even worse, startups are too often short on talent, so they do not have the luxury of using their current employees to read and understand vague patents with "fuzzy boundaries". Today's trolls send out scores of demand letters that make vague assertions of patent infringement while requesting "licensing fees" of $100,000 or more. The cost of trolling, on the other hand, is minimal. Trolls also typically render themselves litigation-proof by creating shell companies with no assets, should they fall into legal trouble from a wrongful suit. We need real reform that will stem the tide of the troll epidemic, while maintaining protection for patent holders to enforce their legal rights. This is precisely what the current proposals would do."
Gary Edwards

VC: Dropbox's recent moves show why big companies fail to innovate - Business Insider - 0 views

  • The stack fallacy Sharma first came up with the term "Stack Fallacy" in a blog post earlier this year. Soon the theory was picked up by Wall Street Journal columnist Christopher Mims and Andreessen Horowitz investor Steven Sinofsky. Sharma describes Stack Fallacy as "the mistaken belief that it is trivial to build the layer above yours." In plain English, there are many "stacks" of technology that sit between the foundational server and the end customer. So the server would be one stack, the network would be one, the database and app would each be one, and so forth. Sharma says that a lot of companies often overvalue their level of knowledge in their core business stack, and underestimate what it takes to build the technology that sits one stack above them.
  • For example, IBM saw Microsoft take over the more profitable software space that sits on top of its PCs. Oracle likes to think of Salesforce as an app that just sits on top of its database, but hasn't been able to overtake the cloud-software space they compete in. Google, despite all the search data it owns, hasn't been successful in the social-network space, failing to move up the stack in the consumer-web world. Ironically, the opposite is true when you move down the stack. Google has built a solid cloud-computing business, which is a stack below its search technology, and Apple's now building its own iPhone chips, one of the many lower stacks below its smartphone device.
  • Sharma argues that companies fail to move up the stack because they're too familiar with "the building blocks of the layer up," mistakenly believing they have it all figured out to create a better product. On the contrary, it's far easier to move down the stack because companies are already a customer of the lower stack product and understand what the customers want in that specific layer of technology.
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  • "The bottleneck for success often is not knowledge of the tools, but lack of understanding of the customer needs."
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    "Dropbox made a number of headline-grabbing moves over the past few weeks, but Storm Ventures partner Anshu Sharma's more concerned than impressed. He sees a company that's failing to figure out what customers truly need - falling for what he calls the "Stack Fallacy," a term he coined to describe how successful companies in one area often overvalue what they know and misjudge what they need to build next. "Companies fail when they take the 'what' for granted," Sharma told Business Insider, referring to companies that falsely believe that they already know "what" customers want. "
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