The Innovators Prescription for IT – Part 2
February 17, 2009
Part 2 of my post on the new book by Clayton Christensen called: The Innovators Prescription . Part 1 can be found here: (The Innovators Prescription for IT).
A key theme of the book is that the general hospital is not a viable business model because it is focused on trying to do everything for everybody. As a result, general hospitals really are trying to simultaneously support three different business models: solution shops (which diagnose problems and recommend solutions), value-adding process businesses (which fix or repair definitively daignosed problems e.g. a knee replacement), and facilitated networks (membership based networks that deal effectively with chronic disease maintenance). And the resulting overhead structures, high costs, and inefficiencies are the source of the health care problems in this country. The answer is that focused specialists need to disrupt the general hospitals, and this trend is already beginning in health care.
If you are in the IT services or software industries, does this ring a bell? The lack of focus in IT has been a pet peeve of mine for a long time and I have seen it bring down several fine organizations. In effect many IT and software companies act like a general hospital in the health care industry: they try to do everything for everybody.
A couple of recent blog post talks about this growing and pervasive problem (Rocket Watcher), and the recent product management survey conducted by Pragmatic Marketing really drives home the lack of focus and the problems it causes.
In essence many IT and software companies are acting like general hospitals: they try to do anything for everybody. And as such they are trying to manage multiple business models just like the general hospitals: solution shops (which diagnose problems and recommend solutions), value-adding process businesses (which implement the systems and technology that address business needs), and facilitated networks (ongoing management and support). The result is the same high overhead and increased costs that the market is no longer willing to pay for.
In health care we are starting to see disruptive business models displace the general hospitals. Specialist hospitals are starting to pop up everywhere. Neighborhood clincs are dealing with the simple illnesses that we used to go the physicians office for. And online networks are helping people manage their chronic diseases far better than their primary care physician can (due primarily to the fee-for-service profit formula in use today). To survive, general hospitals are going to have to be dissected into the three businss models.
In IT we are starting to see the same thing. Fueled by simple new tools and technologies (WordPress, Facebook, Twitter, Google Docs, etc.), disruptive innovators are starting to steal market share from the industry leaders. Specialists and focused competitors are the wave of the future, just like in health care. If you are still caught in the general hospital business modl, you had better act fast. Once disruption hits it stride, creative destruction will quickly push aside those organizations that are unable to adapt.
If you are in the IT or software industries, pick up Christensen’s book and kill two birds with one stone. Become an informed citizen as the health care debate picks up in this country, and develop some keen insights on how to move your IT or software business forward in the new era of disruption.
The Innovators Prescription for IT
February 16, 2009
Over the weekend I finished reading The Innovators Prescription written by Clayton Christensen, a professor at Harvard Business School, along with Jason Hwang M.D. and the late Jerome Grossman M.D. Christensen intoduced the concept of disruptive innovation back in 1997 in The Innovators Dilemma.
As I read this book, which is about applying the principles of disruptive innovation to health care, it struck me that the IT industry is dealing with many of the same types of issues.
Here is a succinct summary of disruptive innovation and the book: Disruption is about the need to transform expensive, complicated products and services into ones that are higher in quality, lower in cost, and more conveniently accessible to larger numbers of people. And disruptive technologies and business models have been the mechanisms that brought affordability, consistent quality, and convenient accessibility to most facets of our society and to most industries (including technology).
Every disruption is comprised of three components: a technology that transforms the fundamental technical problem in an industry from a complicated one into a simple one; a business model that can take that simplified solution to the market at low cost; and a supporting cast of suppliers and distributors whose business models are consistent with one another, which is called a value network.
So the premise of the book is that disruption is the best way to make health care more affordable and accessible to everyone. The authors urge America’s political leaders to foster disruption as the vehicle to solve our health care problems and to avoid further government control (Amen!). And the central discussion is about disrupting the business models that currently drive the health care industry and that are the source of its inefficiencies and high costs.
If you are at all concerned about the state of the health care system in the US, and are feareful of what might happen as the politicians in Washington DC begin to address this problem later this year, read this book and pass it along to everyone you know. It is that important.
Due to the growing length of this post, I will get to the to the connection to the IT industry in my next post.
Some Thoughts from my Visit to the 2009 ASAE Technology Conference
January 30, 2009
I attended the ASAE Technology Conference (http://twurl.cc/ei5) this week (January 26-28) to try and discern any patterns around new and interesting problems facing the Association community. I love innovation, and innovation begins with identifying pervasive and urgent problems that need to be solved.
I found that not much has changed. Since about 2004 I have done a fair amount of work with associations. Mostly in the areas of Internet and Web Strategy, Product Strategy, and Web redesign/CMS implementations. So I was a bit surprised that the AMS/CMS/Website Redesign triumvirate is still dominating the agenda.
There was some chatter around new issues like the bad economy and implementing the PCI standard, and of course the whole Social Media/Networking thing was a hot topic. But in general, it seemed that most Associations are still dealing mostly with fixing problems with existing technology infrastructure, managing major system changes/implementations (AMS/CMS/Website), or just struggling to deal with complex technologies given limited budgets, skills, and time.
I expected to detect a sense of urgency around the need to change the status quo, given all the ongoing change in how people connect, associate, and interact today. But I sure didn’t get that feeling. I wonder why?
But after listening to Chris Sacca (http://twurl.cc/ei9) General Session talk on innovation and Goggle, it occurred to me that the way forward for Associations is to begin to shift their focus from technology to innovation. Sacca talked about Google’s laser focus on user problems and user experience, and he demonstrated how disruptive innovation can be incredibly powerful. I think Associations can transform themselves by embracing these concepts.
Because this post is already getting long, I will continue this conversation over the next several days to expand on this idea. Stay tuned for more on disruptive innovation for Associations, moving from surveying member needs to understanding member “jobs to be done”, and the power of a discovery driven approach to technology implementation for Associations.
At the end of the day, it’s simple.
March 24, 2008
Phil Myers’ blog entry today caught my eye. Especially the last paragraph that starts: “At the end of the day, it’s simple. Create a product or service that your buyers want to buy and the rest takes care of itself.”
I have been involved in several conversations of late around growing sales. On more than one occasion I have heard the statement: “in order to grow sales you need to increase sales activities.” In other words, sales grow when sales people and others responsible for sales in an organization make more phone calls, send more emails, schedule more meetings, attend more networking events, etc. etc. I couldn’t agree more. But it also made me wonder why it is so hard to actually get people to increase their sales related activities.
In some cases it seems it is a result of having the wrong people in the wrong seats on the bus. Some people are just not good or just don’t like being involved in sales activities. And if somebody is no good at something, they typically avoid doing it. But I think there is something deeper going on here, which brings me back to Phil Myers’ blog entry.
At the end of the day, it is all about having products and services that our buyers want to buy. This is the essence of innovation: creating products and services that meet the unmet needs of our buyers. Or as Clayton Christenson has taught me to think about it: creating products and services that our buyers want to hire to help them get important jobs done. As I think about all of the great salespeople I have known over the years, one common trait stands-out above all others: these great salespeople were all selling products and services that were in high demand. Sure these people were true professionals, and great with people. They had a strong worth ethic and high integrity. They maximized their sales activities every day, and they knew how to close deals. But they also knew how to pick hot products. And they weren’t shy about moving on to the next company or the next hot product when their current products cooled off.
So if you are thinking about how to get your salespeople to increase their sales activities don’t stop at the traditional techniques like more incentives, more training, and more carrots and sticks. Ask yourself: do my buyers want to buy my products and services? In many cases this question might lead to a bunch of additional questions to consider:
- Who are my buyers?
- What job(s) are they trying to get done?
- What alternatives can they use to get the job done besides my product/service?
- What criteria will they use to determine which alternative they will hire to help get their job done?
Who knows, these questions may lead you to the real answer to the question: how do I grow my sales? That is, I need to understand my buyers better and make sure I have created products and services that they want to buy.