Then, looking uneasy, the waiter comes over and says there is a man called Zollo outside.
He has a gun and a sword and a decision for you.
If you chose the gun, you must play Russian roulette. If you chose the sword, he will chop off your arm.
There is no third choice.
Faced with such an unpleasant choice, the natural human reaction is to delay it for as long as possible.
A less drastic choice would give you two options:
- You give me $50 or
- You toss a coin. Heads you pay $0. Tails you pay me $100.
Research the world over has shown people will overwhemingly opt for option 2.
“People systemically underestimate the probability of the probabilistic loss,” according to Ankush Chopra in his book The Dark Side of Innovation (Raphel Marketing, 206 pages).
Chopra, a professor of Strategy & Management at Babson College in Boston, uses the examples to tee up a deeper examination of disruptive innovation from the incumbent’s perspective.
More importantly, the book offers a framework strategists can use as they survey uncertain environments.
Very often, disruptive innovation is celebrated. It is the heroic entrepreneur as David taking on the established Goliath.
It is that new invention that starts off weak but begins to nibble the incumbent’s share at the lower-end of the market.
As it improves, costs tumble, incumbents crumble and a new era of improved technology dawns. Lower costs or higher productivity herald higher living standards.
But for the tens of thousands of workers at Kodak or in the Swiss watch industry, a way of life was destroyed. Communities were upended and shareholders wiped out.
All too often, and with the benefit of 20-20 hindsight, these stories of decline are presented as tales of executive stupidity or hubris.
But Kodak didn’t get to be the world’s number 1 film maker by accident. As Chopra points out, Kodak beat off chemical giant DuPont in the 1960s when it tried to muscle in on the market.
Kodak had mastered a hugely profitable consumer and professional business, chemical manufacturing, and a sophisticated supply chain.
It was also foreward looking. Kodak was at the forefront in researching digital photography. It invented the digital camera and filed over 1,000 patents related to the new technology.
The analogy Chopra uses is of a Formula 1 driver at the top of his game at 200 mph. “At those speeds, focus and tunnel vision are necessary for victory.”
But what if the audience and other competitors change the rules in the middle of the race to dirt biking?
Chopra lays out the framework to identify those game changers. He outlines the questions to ask and how to identify the market forces at work.
The Dark Side of Innovation is a must read for strategists charged with monitoring the competitive landscape. For just $10 on the Kindle, it could prevent your company from falling in to the efficency trap and getting “Kodaked.”
- Image of decision doors courtesy of The Hiking Artist on Flickr.
- Image of Ankush Chopra copied from Babson College website.