is disruption inevitable?

Reading the mainstream press you would think so… “hey we’re going out of business because we got disrupted”….Kodak, Dell, Borders…. all poster child examples of it…

But is it inevitable?

I think the first thing to get clear on is what is disruption. I summarised it (a long time ago using Clayton Christensen’s model), But it is light on an incumbents inertia to change (hey, i’ve learnt a bit since then). It appears that product disruption is slightly more granular…
There ARE unpredictable technology advances ….but in writing this, I was struck by how hard they are to identify… to me there aren’t really that many. I’m thinking truly revolutionary stuff – the printing press, electricity, 3D printing, the wheel, lasers.  I think they are truly disruptive because they caused a large discontinuity in the natural evolution of the product.. For instance, could companies who make eye glasses have reliably picked lasers would compete with them (LASIC), do builders/OEM think 3D printers are a threat to them?  For printing its an evolution, for them… thats different.


Being disrupted by unpredictable market change is part of business BUT ….. being disrupted by a predictable market change is a sign of woeful strategic failure

But then there is a bunch of things that are labeled disruptive (including by me), but really are predictable. Digital printing (kodak invented it), streaming content, cloud computing, IP telephony…. all predictable evolutions. Failure in these instances is a management failure…but its more convenient and easy for management to blame disruption or an outside force, than it is to accept responsibility.

Inertia…it definitely exists, i’ve pushed against it for years. But again its a scapegoat kind of word. All change is hard, changing the what a company does, how and why .. the fundamentals is even harder. But given the stark choice of obsolescence, or taking on hard stuff.. what are you gonna do?

How to deal with predictable disruption is also pretty well documented, (he’s my quick summary). However it is not convenient, easy or without risk… CEO’s prefer not to battle politics rather than fund a step out, they’d rather milk the cash cow than canabalise their existing revenues. (interestingly, hard ass CEO’s of great companies do this)

What is your strategy…

you know,  the real one. The one that your company is actually implementing …. I guarantee you its different from the one you wrote.

Most companies have a strategy, its either a:

deliberate strategy – the annual plan using facts and analytics and assuming that we can foresee and somehow control what the next 12-60 months will be like, or

an emergent strategy – a rapidly evolving strategy based on quick feedback  from the real world and agility within the organisation

Everyone has a plan until they get punched in the nose – Mike Tyson

Both are valid forms of market response.  However I think theres a third category… your real strategy.

Strategy is determined by what comes out of the resource allocation process, not by intentions and processes that go into it

Clayton Christensen

Think about that statement. Where you actually focus your people, spend your money or development time is what your real strategy is.  And in many instances…there is a missmatch between the intended strategy and what actually happens

Some examples

Stated ” we want to be #1 in a growth market”   ———- > vs  giving people KRA’s with the first item being “protect the legacy revenue” – What you are actually saying if in doubt sell the old stuff before the new stuff

Stated ” lead in customer service”        ————-> vs ” lower costs in operations and build core products” – What you are actually saying don’t automate, don’t invest in customer service tools and squeeze more service down the existing channels… nice

Stated ” your local bank”    ————> vs “consolidate branches and drive people online” – What you are actually saying yeah local to a 50km radius, you really care

Stated ” We’re all in with the cloud”    ————> vs “release on premise products first and make it difficult to transfer licenses to the cloud model ” – What you are actually saying  whatever we say, we will force you to keep using our onprem products

Stated “Increase sales acquisition” ————> vs   ”  maintain sales opex” – What you are actually saying  miracle up more business for same spend and whatever you do, do not bump commissions!!

See the absolute dichotomy of these things. You are setting yourself up to fail, confusing the troops and wasting the market opportunities

A wise man told me once, to win, you need to get all the wood behind the arrowhead.

If you aren’t getting the results you want, perhaps looking closely at what policies, drivers, KRA’s and investment decisions you actually have running thru your organisation will give you some insight into why.

Compromise is a dirty word in the resource allocation process

Compromise, we all have to do it. Apparently its the way business works (sure does in my personal life!), staff engagement is driven thru buy in, everyone has a voice, and when you have a bunch of equally senior folks with conflicting drivers, you need to hammer it out… reach a compromise.

The only problem with compromise is just that, you don’t have clarity, you have a compromise. A middle ground of nothingness, a buggars muddle.

Strategy is determined by what comes out of the resource allocation process, not by intentions and processes that go into it. Clayton Christensen

As a strategy guy, I’m not a fan of compromise. I’ve seen too many good strategies get watered down by compromise. People insert wriggle room into the plan and you end up with a half baked delivery… Steve Job’s was a lot of things, uncompromising one of them, yet you can’t argue with the success he drove… is there a correlation? Apparently yes according to McKinsey‘s.

In a startling finding [that is sarcasm] , apparently if you adjust your resources depending on the initiatives relative market potential (that is put your resources behind the strategy, not everywhere) you get good results…. like 40% better total shareholder return. Empirical fact based evidence that compromise is bad for business.

So go forth, stay true to the direction, make choices!!!   be uncompromising,   get better results

the sucking mehness….

First up these are my opinions, i mean no disrespect to anyone who values some of my examples here.

I should explain why i’ve been absent online. My hiatus from blogging has been for several reasons, it lost its appeal when work decided I should blog for them, more importantly I was disillusioned by how  trivial most of the topics were. I call it the sucking mehness….

I was attending conferences that were still explaining what cloud computing was, arguing about the definitions of what cloud is, whether it was secure …. All the while the world around us was undergoing such rapid turmoil… it just didn’t feel right.

Compared to the major events like the Arab spring, climate change, the Christchurch and Japanese earthquakes, the absurdity or the US default crisis, the European debt crisis and the social change drive by the occupy movement,  I couldn’t muster the enthusiasm to blog about technology. I was worried, worried about this globe of ours and worried about what world my children will live in…

Coupled with that, I’ve been researching some thought provoking topics. Ken Robinson’s the element, Clayton Christensen, HBR, Dan Pink and several others….They all share similar characteristics. They challenge the status quo, but from a point of view of changing the world….

All of this has been going around in my head for a while, and I can’t help thinking that at its highest level, the system is broken…

That the rich get richer is more than a proverb, it is a proven fact, but the hidden subtext is that the rich are also consolidating power.  The age old societal promises are breaking down, and I hope more people like me are starting to question their role in this process, and ask if there is a different way.

I think we seriously need to question many of our underlying assumptions.

Do we truly live in democracies, or is most of it a charade, more an exercise in mass crowd control… and if we seriously question this would we like what we see scenarios like  the police shooting rubber bullets at peaceful protestors in the US being barely newsworthy, and how is that different to the Arab states?

Is all the time effort and rhetoric of organisations like the WTO, UN etc even worth the effort when clearly they are so politically influenced (or compromised, again and again )…

Should companies focus on profits, what role do I play in the many bad behaviours we see because i’m a shareholder expecting ever higher returns

Why aren’t we seriously tackling the role of advertising on our society? Are we really ok with the subtext that they portray and what it does to our children, women and society

What impact have unions really had over the last 100 years? Apparently nothing, why?

Why do we pay CEO’s so much money based on a promise, and yet marginalise their employees who actually deliver?


I don’t have the answers.  I do have some thoughts

Lets get real. Openly acknowledging political systems for what they are, same is true for the financial systems.

Seriously look at lobbying and the impact of business on politics. This is a form of corruption. End of story.

In fact seriously look at politics FULL STOP. Any system that perversely rewards itself (if i make poor decisions that you like, you will keep me in my high paid important position) should be changed..

If you run a company, having openly states goals wider than profit that you are held accountable too might be a start.. i don’t know for sure. Start it up with equality in mind. Not exploitation

If you own shares, think about what your expectations as an owner are actually driving. You cannot seriously demand increasing profits then moan when another company downsizes, cuts costs at locals expense, takes cheaper inputs with dubious environmental impacts …

Also recognise that if the person in charge of the company tells you that they are going to grow, and most will, they are most probably lying to you (statistically and possibly overtly)… the numbers suggest it will not happen so why demand it?

How about viewing education differently, not the product line that churns out people with the same skills and thought processes who end up competing for the same jobs and coincidently end up creating companies with …you guessed it the same approaches. If you want differentiation, try mixing it up.  Clayton Christensen describes the impact of MBA’s on companies like Sony  in several of his books and articles.

The renaissance drove astounding change, huge culture and societal benefit…and was driven by the arts and most importantly, the diverse thinking the arts provides… yet our policy makers are forcing the education system to eliminate both…. SERIOUSLY is there any wonder that true innovation has slowed and everything is becoming the same.  (hear the sucking now???)

Acknowledge that people are people… they will protect their interests above all else. Why waste your time fighting that?

Put things in perspective. In the scheme of things does arguing about cloud definitions make a monkey’s difference?

Manage your own consumerism… I’m battling this daily. It isn’t easy, but I personally find distinguishing between needs and wants is valuable.

Accept responsibility for your own actions….. Greece borrowed a tonne of money, so has the US and many other nations, apparently feed by consumerism, not assets acquisition…. Why shouldn’t they face hard times fixing their poor decision making?  Smoking kills, its well known… in my country there is government funded insurance / healthcare provided to these people who decided to ignore the overwhelming evidence and still smoke… why?

Question seriously advertising. Not just the above the line message but the deep subtext… it doesn’t feel right that products make people feel insecure or captialise on it…Educate people about what advertising does and how they are impacted on it.

While we at it, how about turning the thing on its head and use advertising to raise self esteem, celebrate those, like teachers who, with the right resources can and do reall make a difference.


I’m sure there is more….




Is a matrix structure the enemy of innovation?


Clayton Christensen first highlighted the role of middle managers as innovation killers in the Innovators dilemma.  He did it gain with Michael Overdorf in their great paper called “Meeting the Challenge of Disruptive Change”.  The basic premise is that middle managers don’t back truly disruptive innovation ideas because they are either seen as a large career risk, or they have such uncertain (and usually) smaller returns compared to the incumbent model that the idea is deemed ‘ not worth it’.


This is a phenomenon I've seen in action, so its fair to say i’m a believer… But i’d like to add to it.


Middle managers, by default exist in large organisations. Small companies don’t need them…. And almost without exception, large organisations operate using a matrix structure. I think that Matrix structures are also one of the big inhibitors of innovation…. Why??


Well think about it, by definition in a matrix structure, you might end up with 5-10 managers around who are all peers! They are equal, and because of this everyone thinks they have a say…It is actually much worse in some instances. If these peers don’t like the decisions the majority make, they will re-litigate or actively torpedo initiatives.   Unless you make the conscious decision to allocate a leader, they matrix actively democratises decisions….


In my humble opinion, this democratising affect essentially takes the ‘middle management innovation killing phenomenon’ and multiplies the by number of peers around the table…

SaaS providers, know your business.

A cross posting with


I’ve always viewed SaaS as a disrupted technology, and I mean disruptive in the classical sense as outlined by Clayton Christensen.  Looking at the SaaS market though, I can’t help but wonder if the a good deal of SaaS companies don’t fully appreciate this.

By this I mean, they don’t seem to appreciate the macroeconomic forces they are playing with as well as the customer needs they are addressing.

Not wanting to do Clayton a disservice, but I’m going to quickly summarise my understanding of disruption and how it occurs.

  1. There is an incumbent business model
  2. These incumbents enter into a cycle (arms race even) of continually adding features to their products in an attempt to keep adding value to the clients, and hence maintain their pricing.
  3. The cycle continues until you get to a point where the products are over spec’d compared to client NEEDS or even requirements, and accordingly over priced
  4. Then someone finds or offers an alternate product or delivery method, which is much cheaper and actually more suited to the clients  real needs
  5. The incumbents, talk to their clients (who have sunk investments and a political agenda to support their buying decisions) who say they aren’t interested in this new product approach etc. The incumbents completely miss the new trend, because hey…the customer base aren’t asking for it.
  6. The disrupter gains a foothold in a niche part of the market, gets scale over time and eventually becomes acceptable to the mainstream. They then enter the arms race cycle (they are the new incumbents), while the old incumbents struggle belatedly to meet the market…

Phew… all this is shown in this picture (from Wikipedia)


So back to today’s SaaS market and my assertion that many of the players don’t fundamentally get this economic and market dynamic. Here is what I see

  1. Many SaaS providers seem to be targeting the mainstream market, not the niche. You can tell this because they are going after current incumbent providers customers….
  2. They are over specifying their products. That is to say instead of understanding the niche’s absolute needs, they’ve attempted to offer  like for like functionality when compared to the incumbents product. My guess is because they aren’t targeting niches
  3. Their pricing isn’t disruptive… in some cases its not that cheap. Instead they are banking on other levers like speed to benefit, opex not capx and the other regularly articulated benefits of SaaS


Based on my assumption that SaaS is still early in its market cycle ( 2 minutes into the first quarter of the game ), by acting this way the SaaS companies are missing the greater opportunity and literally giving the incumbents a breather.

I know some SaaS providers aren’t playing like this, to those that are I would say this. Know your business,  

Step back, think a little, be the disruptor. Ask yourself

  1. Are we better suited competition head on with a SAP, Oracle or MS with their huge resources, channel and marketing engine, or going after those customers who have a more basic need, haven’t bought a product or literally hate the incumbent price model. I would contend that there are a bunch (the vast majority in some markets) of clients who’d love some basic HR, ERP or accounting products (for instance) who can neither afford the entry price or the ongoing maintenance and are ‘making do’ or deferring another year
  2. What features does this niche really really need?  I bet its not 30 massively configured modules requiring 50 servers,  and a team to implement and manage
  3. At what price can you offer this much simpler product?  Make sure its more than it costs you to make and ensure it’s a lot cheaper than the traditional providers. You need scale to win, price for the long term.
  4. Who can you pre integrate with to offer a broader offering (instead of building it all)