Frankie, today is a really important day for us because we're going to present The
Survival Model. The model that you helped me develop
through various conversations for a book that I wrote a while ago.
And this is important because it's going to be a model that we use throughout the
course to try to analyze some of the companies and industries that we look at.
So, as the lead TA for the course, it's important for you to review this so that
you're familiar with it and you're going to answer questions.
And so, I'm just going to ask you to sit down here and relax, and we'll go through
the survivial model so that everyone will have an opportunity to understand what
we're trying to do here. So what's going on?
First of all, we need to talk about a disruptive technology and define it in
some way. It's an innovation that provides a
product and service that's so compelling that everyone rapidly abandons their
current way of doing things and flocks to this new approach.
Now we talk a lot about innovators and, and we should ask the question of whether
or not the innovator is the inventor and the answer to that question is really no.
you can innovate based on somebody else's invention.
An innovator is someone who applies a new idea.
If you think about Facebook, Mark Zuckerberg is an innovator.
Is he an inventor? Well there's some dispute about that.
If you watch the movie the Social Network, there were two characters in
that movie who thought they actually had the idea for Facebook.
But for us it really doesn't matter. We're interested in the role of the
innovator. Now, the innovator effects one or more
incumbents. Okay?
And the incumbent has an organization, and that organization influences how that
incumbent is able to respond. There's usually a board of directors,
which tries to set overall strategy and direction.
There's a Chief Executive Officer who in the United States is a very important
position. And there are employees.
Senior level managers, we sometimes call the C gang for Chief Financial Officer,
CFO. Chief Operating Officer, CIO.
Chief Information Officer. There are middle managers.
And the middle manager's role is to filter information and send it up in the
organization. And also to take the objectives and the
strategy of the firm and to see that all workers in the organization are in tune
with that. And there's a structure of some kind for
any kind of organization you want to look at.
For a profit making organization like a business.
For a non-profit like universities. For government organizations and for
non-government organizations. They all have structures, they all have
various employees or staff members and they influence how an organization is
able to respond to a disruptive technology.
So we have here, is we have our incumbent, okay.
Who is going merrily along and then we have a wave of new technology, which
comes along. And that has an impact on the incumbent,
and quite frankly, the incumbent is less happy than it was before because of the
impact of this new technology. And it's trying to figure out what do we
do. And that really is the objective of our
course here. Now there have been some theories and
organization studies which have tried to explain what happens when a technology
comes along. one of the ones that I like is called
Punctuated Equilibrium. It says that an organization is or an
industry for that matter, is in sort of an equillibrium period, and then there's
a big shock when some sort of new technology comes along, then you go back
to a period of equillibrium. So if we look at this point, one of the
examples that I'd like to use is the airline industry.
In the 1960s and 1970s, The airline industry was converting from propeller
driven aircraft to jet aircraft. The changes were dramatic in the sense
that they were going to have more passengers, they had to develop
computerized reservation systems to handle the volume, they had more flights,
but it was a matter really that they scaled up, okay?
They still were an airline. They still put passengers on planes.
They flew them places. They flew their luggage.
they, they made reservations. they did all the things that, that an
airline did in those days. They even gave you food on the airplane
in those days, if you can believe that. These are all competence enhancing
changes for the airline. They kept on doing what they were used to
doing. just with a new scale, and a new move
sense of technology. If we think about a company like Kodak,
which we'll use as an example alot in this course.
Kodak was a film and camera business, Okay, and it was decidely not a digital
business. So when digital photography came along it
was competence Destroying for Kodak. Kodak really never managed to recover
from that. So, what's going on today?
I think that this continuities happen more frequently in the past and that the
step function is steeper. So, if we use to have a situation, where,
maybe an industry going along like this, with some.
Does continuities in it, I think what you're seeing today is much steeper kinds
of changes happening much more frequently.
Look at Facebook. One million users by the time of its IPO.
That's incredible growth. We have the great design of the i
devices, the iPads through the iPhones. I'm not sure any of us ever knew we
needed these devices. I wasn't sure I needed an iPad.
Once I had one I didn't understand how I'd been able to live without it.
So the devices created their own demand, an incredible story of success for Apple.
So, what we want to do is we want to see a disruption when it's coming, and we
want to make it competence enhancing for us in some way.
So I developed this model, along with Frankie[LAUGH] for a book.
and, and it's trying to describe how one might go about surviving a disruptive
technology. We start out with the technology and an
innovator uses that to create new products, new services or a business
model and we want to focus on the dilemma of the incumbent.
And these are factors here that inhibit the ability of the incumbent to respond
to the innovator. First factor is denial.
Humans are very good at denying things. Managers[LAUGH] deny that a new product
that another company is producing will affect them.
they deny that economic circumstances are going to have an impact on them.
it's a, it's a human trait. Now that's very difficult to overcome.
There's history, Kodak filed for bankruptcy in 2012.
It had been in business for 120 years; absolutely incredible.
There aren't very many companies that last that long.
There's resistance to change. I confess that I suffer from this just as
many other people do. I will tell you that what's going on
right now in the educational world is a little scary to me.
I've been teaching for a long time, I've been following the model that faculty
have used for 200 or 300 years or more. Now I've been teaching an online class
with all classes online with students appearing in on my screen and individual
windows k, using a product called Adobe Connect and we actually had class
discussions this way so I could see the students and they could see me.