India's Innovator's Dilemma?

The term innovator’s dilemma is applied when talking about how a company handles disruptive technologies that could cannibalize their existing revenue streams. Innovator’s Dilemma is also the name of a book written by Clayton Christensen where the term originally came from.

Kodak is a company that couldn’t handle the innovator’s dilemma and recently filed for Chapter 11 bankruptcy. As crazy as it sounds but Kodak actually invented the digital camera. However, it didn’t commercialize the technology because it couldn’t look past the highly lucrative camera roll and printing business. Those revenue streams would have been killed but it potentially could have made a killing with it’s latest innovation – the digital camera.

Another recent example is Cisco. Since the early 2000’s Cisco has been selling internet telephony products which were complex and required a lot of expensive equipment. In the meantime, Skype was building a consumer product that was easy to use and cheap. Ideally, Cisco should have bought Skype but it couldn’t look past its enterprise customers that were buying expensive equipment. And remember, back then Cisco was looking to be a consumer focused company by acquiring brands such as Linksys and Pure Digital, the makers of the Flip camera. Instead, Microsoft saw an opening and eventually acquired Skype. Now Cisco is challenging the Skype/Microsoft merger because it fears its own video conferencing solution may be blocked and enterprise customers would opt for a Skype/Microsoft solution.

This brings me to India, which I believe is stuck in it’s own version of innovator’s dilemma. Inefficiency, middlemen and leakage are all words for the same thing – corruption. When technology is pitched as a solution to curb corruption people come out of the woodwork and say how the proposed system is too expensive or too difficult to use or politically motivated. The reason for the bad press is because no one really wants to change the way they work.

One example is the government’s plan to move to an electronic system of government subsidies and social welfare payments using Aadhaar linked accounts. Initially it would appear that the middlemen would be completely cut out from the process, however by having money go directly to bank accounts many other industries/services might benefit from it. Services such as micro insurance, micro payments, micro financial services, etc… The dilemma is that the middlemen will have to do more work to benefit from these new opportunities and usually that is not taken very well. Hence, all the trash talking about how bad Aadhaar is for the country and people’s privacy will be at risk. This is a classic case of innovator’s dilemma – the middlemen are happy with status quo because they can’t think beyond their current revenue stream.

The above example is par for the course all over India. People don’t like technology because it speeds up everything, makes people accountable and introduces transparency. People are afraid of technology because they feel they will become irrelevant, but you become irrelevant if you ignore technology.

The above article was syndicated on VCCircle.com.

 

White Hot Growth

Whether you are a CEO, sales guy or entrepreneur the fantasy of exponential growth is what we all strive for. However to experience white hot growth is a myth. Over the past 2 weeks I’ve been seeing headlines of the white hot growth of Pinterest. (Yes, it’s heralded as the next “big thing” but I have zero use for an online scrap book. That maybe a simplification of Pinteret but that’s not the point of this post.)

Pinterest is the latest in a series of similar stories such as “XYZ is growing faster than Facebook did in its first 18 months” or “XYZ has more 1/4 the page views of Twitter”. The headlines are supposed to grab the attention of the reader and I assume make the reader want to get on the latest bandwagon social platform. The thinking is “wow I’m on Facebook and if XYZ is hotter than Facebook then I should be on XYZ.”

If you look at the early growth curve for Facebook or Twitter in retrospect it was good but not phenomenal. Twitter was slow and steady in the early years in the past 2 years the growth has really accelerated. In fact, when Facebook was launched it was not for you and me, it was targeted at the Ivy League schools.

Recently, Dennis Crowley of Foursquare summed it up best:

Everyone thinks the Foursquare experience is this rocket ship that started at SXSW 2009 and it hasn’t let up, when in reality it was a little spike and then a summer of nothing

The truth is Dennis can say this now and be open about it, back then if it said the same thing it would have surely killed the enthusiasm. Because, from a startup perspective you want everyone to believe that your company REALLY is the hottest thing since Facebook or Twitter. Which is exactly what Pinterest is doing. The question is, will they be around to be as honest as Dennis is.