Information technology is innately in a constant state of flux, both driven by research/ideas breakthrough and pulled by consumer demands. As such, technology companies who have been dominant in one generation are not guaranteed to repeat their success in subsequent generations. Clayton Christensen, Professor of Business Administration at Harvard Business School, calls this the innovator's dilemma, whereby companies are only able to make evolutionary changes to their products or services rather than revolutionary changes. This is because their knowledge and perspective are restrained by their current market and they are unable to perceive the relevance of newer technologies.
A current example is the decline of RIM's Blackberry smartphones in the face of the massive popularity of Apple's iPhone as well as Google's Android phones. Blackberry had enjoyed prime status as as the standard corporate mobile communications device. It earned the nickname 'crackberry' for its seemingly addictive email and messaging capabilities which were enhanced by its widely praised keyboard. It also had robust back-end security features, making it ideal for corporate IT.
In contrast, the iPhone was launched as a consumer device and initially dismissed as a contender in the corporate market. However the advent of the consumerisation of IT, whereby employees are allowed to bring their own preferred devices - without the cost being borne by their employers - and supported by the corporate IT infrastructure changed the tide in the iPhone's favour.
Due to the success of the Blackberry's keyboard, RIM were reluctant to develop a touchscreen-based smartphone even though the market was shifting in that direction. Its business focus also meant RIM did not emphasise Blackberry's multimedia and entertainment capabilities so as not to dilute the brand and alienate their established corporate market. In hindsight, this further eroded their market share.
In order to foster an environment of continuous innovation, successful companies have to adopt Steve Job's famous line, "stay hungry, stay foolish". Given the barriers highlighted in the innovator's dilemma, a starting point would be the creation of an entrepreneurial culture where employees are encouraged to develop new ideas and rewarded when such are feasible. This is exemplified by Google's 20 percent time, with engineers given time off their regular responsibilities to work on their dream projects, potentially leading to technological breakthroughs and/or new markets. Some of the better known products of the initiative include Gmail, AdSense and Sky.
Even where a company-wide culture of entrepreneurship is lacking, a separate unit could be formed and charged with researching and developing new products or services, such as Xerox PARC which developed the graphical user interface (GUI). Incidentally, Xerox PARC exemplifies the innovator's dilemma; the parent Xerox Corporation failed to recognise the disruptive potential of the invention because it was evaluated through the prism of their phenomenally successful photographic equipment business. They could not connect the dots to foresee the GUI/PC eventually eroding their traditional market in a matter of decades. Hence it is not enough to form separate R&D units; they need to be given commercial status in order to monetise their innovations, perhaps as a separate brand from their parent company.
Conversely, asset-rich companies could use their shares and/or cash to acquire newer, smaller companies in a new market. An example is SAP's acquisition of Success Factors to gain a foothold in the growing enterprise social network market, another product of the consumerisation of IT and which differs from their ERP and business analytics suite. Additionally, SAP Ventures have invested in Box (cloud storage) and Lithium Technologies (social CRM), bolstering their ability to compete against Salesforce.com's cloud services. Initially, Salesforce.com was a niche player being more suitable for SMEs, a market that was not very attractive to SAP. However as cloud computing and the software-as-a-service (SaaS) model has taken off, large enterprises such as Hewlett Packard have been forgoing expensive software licences and their associated infrastructure and personnel costs to adopt Salesforce.com's services, at the expense of SAP, Oracle and similar companies.
In order to foster an environment of continuous innovation, successful companies have to adopt Steve Job's famous line, "stay hungry, stay foolish". Given the barriers highlighted in the innovator's dilemma, a starting point would be the creation of an entrepreneurial culture where employees are encouraged to develop new ideas and rewarded when such are feasible. This is exemplified by Google's 20 percent time, with engineers given time off their regular responsibilities to work on their dream projects, potentially leading to technological breakthroughs and/or new markets. Some of the better known products of the initiative include Gmail, AdSense and Sky.
Even where a company-wide culture of entrepreneurship is lacking, a separate unit could be formed and charged with researching and developing new products or services, such as Xerox PARC which developed the graphical user interface (GUI). Incidentally, Xerox PARC exemplifies the innovator's dilemma; the parent Xerox Corporation failed to recognise the disruptive potential of the invention because it was evaluated through the prism of their phenomenally successful photographic equipment business. They could not connect the dots to foresee the GUI/PC eventually eroding their traditional market in a matter of decades. Hence it is not enough to form separate R&D units; they need to be given commercial status in order to monetise their innovations, perhaps as a separate brand from their parent company.
Conversely, asset-rich companies could use their shares and/or cash to acquire newer, smaller companies in a new market. An example is SAP's acquisition of Success Factors to gain a foothold in the growing enterprise social network market, another product of the consumerisation of IT and which differs from their ERP and business analytics suite. Additionally, SAP Ventures have invested in Box (cloud storage) and Lithium Technologies (social CRM), bolstering their ability to compete against Salesforce.com's cloud services. Initially, Salesforce.com was a niche player being more suitable for SMEs, a market that was not very attractive to SAP. However as cloud computing and the software-as-a-service (SaaS) model has taken off, large enterprises such as Hewlett Packard have been forgoing expensive software licences and their associated infrastructure and personnel costs to adopt Salesforce.com's services, at the expense of SAP, Oracle and similar companies.
