I started my career at NBI, an early provider of word processing and office automation systems. (NBI was literally Nothing But Initials. We were totally cool.) Our systems consisted of character-mapped screens, a few file servers connected via Ethernet, and some really good software for creating and managing documents. Our systems were the best at creating complicated, frequently revised, multi-author documents. Our customers included government agencies, law firms, pharmaceutical companies, and Wall Street underwriters.
When the PC came along, we didn’t worry a bit. We focused on doing one thing really, really well. The PC could do more things but the word processing software of the day couldn’t touch us. We said things like, “Word Perfect is a joke”, “Word Star doesn’t do WYSIWYG”, or the “The PC is a toy — it’ll never replace professional word processing”. Yet, at the same time I was using cheapo word processing software at home on my Heathkit desktop computer. I thought, “Wow… it’s not bad … and the price is right” and wound up writing most of my dissertation on it.
That “not bad” reaction is a hallmark of disruptive innovations. The innovation may not be quite as good as what you’re already using but it may well be simpler, cheaper, and easier to use. In short, it’s good enough. In the case of NBI, the PC was more than good enough. Indeed, it put us out of business. Even today, PC-based word processing software can’t match NBI’s feature set for creating long, multi-author documents. But really, who cares? It’s good enough.
Though we got our heads handed to us by the PC, we didn’t really understand why. That’s because it happened before Clayton Christensen wrote his book, The Innovator’s Dilemma. Christensen lays out in great detail how a new technology can disrupt an established technology, even though it’s not as “good”. The established company dismisses the innovation as a toy and then watches helplessly as the toy destroys its franchise. Not long ago, I wrote about Blackberry’s new ad campaign built around the slogan, “We need tools, not toys.” It’s ironic but Blackberry’s campaign is advertising its own defeat.
Examples of disruptive innovations abound. In the video, I summarize the example of wireless communications — the great disrupter of landline phones.The example comes directly from Christensen’s book, which you can find here on Amazon.
Bottom line: if the executives of your company dismiss a competitive innovation as a “toy”, run for the exits.