Innovator's Dilemma: When New Technologies Cause Great Firms to Fail/The Innovator's Solution: Creating and Sustaining Successful Growth, The

Academe, Jan/Feb 2005 by Birnbaum, Robert

But the situation changes dramatically when a new technology is introduced. Strength becomes weakness, and the same factors that initially drive a company's success become responsible for its ultimate failure. Adopting new technologies would require traditional suppliers to engage in expensive retooling, would produce products not initially seen as useful by major customers, and would appeal only to a segment of down-market users more concerned with low cost than with quality. The profit margins derived irom serving this group would be so low that the cost of entering this new, small market could not be fiscally justified. Industry, customers, and suppliers resist. The company's very strengths-the abilities to develop reliable suppliers, listen to the needs of customers, and maximize profits-which formerly served it so well, now become barriers to change and the agents of its demise.

The dilemma is this: the structures, processes, and values that support the development and enhancement of an organization's core technologies at the same time prevent it from exploiting new technologies. "The very processes and values that constitute an organization's capabilities in one context define its disabilities in another context," Christensen writes. He suggests that organizations can resolve this dilemma only by developing alternative structures that can operate in small, down-scale markets with comparatively smaller profit margins, and that can make autonomous decisions independent of the main organization.

To illustrate the ubiquity of the emergence of disruptive technologies, The Innovator's Dilemma provides a list of fields, including communications, financial services, retailing, aviation, and medicine, in which established technologies are now threatened. The list is expanded in The Innovator's Solution to include several examples of disruptive strategies in higher education, such as community colleges, nontraditional law schools, and academic programs offered on weekends or over the Internet for working professionals. An additional example of a disruptive technology related to higher education, cited but not discussed in The Innovator's Dilemma, juxtaposes "classroom and campus-based instruction" (a sustaining technology that I shall call "traditional education") with "distance education, typically enabled by the Internet" (a disruptive technology that I shall call "virtual education"). I will use this example to focus on the potential applications of these books to academia.

The possibility that traditional education may be challenged, or even, eventually, replaced by virtual education cannot be dismissed. Virtual enrollments are growing, particularly in the proprietary sector, and many established public and independent institutions have made significant investments in distance education technology. Author Peter Drucker's well-known prediction that within a generation virtual education will reduce universities to relics can be seen as a logical consequence of extending The Innovator's Dilemma's model to higher education. The growth of virtual education fits several aspects of the model. Doth The Innovator's Dilemma's and The Innovator's Solution note that disruptive technologies are frequently cheaper, simpler, smaller, and more convenient to use than original technologies, characteristics that give them a competitive advantage when their performance comes to match that of the original technologies. Virtual education can certainly claim to be simpler and more convenient than traditional cducation. Comparisons of cost and of effectiveness, on the other hand, have yet to be resolved. It is still unclear whether virtual education is really less expensive, and attempts to assess comprehensively the effectiveness of educational programs have been unavailing.