The dangers of corporate success.

Author:Smolowitz, Ira

Edgar A. Shoaff notes that, "The two leading recipes for successes are building a better mousetrap and finding a bigger loophole" (Qtd. in Peter, 1979, p. 481).

The above popular idea has, in my opinion, been rendered obsolete by the insightful observations of Dr. Clayton M. Christensen, professor of business administration at the Harvard Business School and author of The Innovator's Dilemma: When New Technologies Cause Great Firms to Fall.

What is a "disruptive technology"? Christensen coined the term in his best seller, The Innovator's Dilemma, published in 1997, and it has since become the hottest buzzword in business today as the Merrill Lynches react to the E-Trades. It's nothing new. Japanese automakers used disruptive technology in the 1970's to seize market share. A disruptive technology is often an inferior product or service, but one good enough to win wide swaths of market share" (Qtd. In Jones, 2000, p. 23).

Examples of disruptive technologies are as follows: The PC "TOY": The Minicomputer Makers' Global Killer

A March to Industry Dominance-Disrupted

"During the mid-80's, minicomputer companies were high-growth, high-margin companies regarded by investors, the business press, and academia as among the world's best-manages organizations. Indeed, Digital was one of the most prominently featured companies in the McKinsey study that led to the book In Search of Excellence"(The PC "Toy," 2002).

"As medium and large businesses demanded ever-increasing amounts of computing power, this dynamic industry supplied it at rapidly decreasing prices. DEC and others did so by aggressively investing large amounts of capital in small to large, radical, and risky technology projects. Not even IBM could impede their successful march to industry dominance" (The PC "Toy").

The Stealth Attack

"At the same time, a few startups had introduced very simple, low-power computers. 'Just a toy,' declared DEC's founder. And he seemed to be right: PCs were purchased by individuals, mainly for games. Should DEC invest money, time, and energy in low-margin products that their customers don't want? Or should the company stick to higher-performance initiatives that promised up-scale margins and growing volumes, such as DEC's super-fast Alpha microprocessor?" (The PC "Toy").

The Aftermath

"DEC had achieved its peak profits and some of its highest margins ever ... one year before the missile-like attach of the PC industry hit from below, severely wounding every...

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