In the introduction to Christensen’s Seeing Whats Next, Christensen explores the idea and application of theories of disruptive innovation to predict industry change. Christensen’s main point in the introduction is that instead of focusing on the forecasting techniques used by analysts and financial firm, companies can predict the future by using an “‘outside-in’ analysis of how innovation will change an industry” that will help will help in making decisions or recommendations to a company based on the industry’s future.
The introduction focuses on explaining the core concepts behind disruptive innovation theory. In short, disruptive innovation theory holds that “existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But established companies almost always lose to attackers armed with disruptive innovations” (3). Unlike sustaining innovations, disruptive innovations introduce a new value proposition that create new markets or reshape existing markets. There are two types of disruptive innovations – low end disruptive innovation and new market disruptive innovation. Low end disruptive innovation occurs when existing products are overpriced relative to the value existing customers can use. New Market occurs when charactersitics of existing products limit the number of potential consumers or force consumption to take place in a standard setting. Christensen’s introduction then explores the resources, process and values theory that reinforces why existing companies have a hard time combatting disruptive innovations and the value chain evolution theory to explain how companies intergrate to improve what is good enough.
What I really want to focus on is the overall theory of disruptive innovation. Christensen analyzed all of these theories through the scope of the telecommunications industry. However, I believe that there is a disruptive innovation taking place right now in cable television and video streaming that is relevant to Christensen’s analysis in Seeing What’s Next. Last night, at our typical Sunday family dinner, my sister and I were comparing our cable bills. Like every time that we have the discussion, my sister returned to encouraging me to discard my Comcast digital cable and instead embrace the power of video streaming through my Sony Google TV. My sister’s argued that it was time to get rid of cable television since 1. It cost way too much 2. the fixed package offered way too many channels 3. There never seemed to be anything good on the 200 channels provided. Instead, she suggested that by paying a $10 membership to video streaming content websites such as HULU and Netflix, I gained superior value since for a low price I could gain access to an unlimited amount of television shows and movies that were customized to my preferences and available to me 24/7. When I suggested that I would then miss out on my news channels like BBC, CNN, FOX, and MSNBC, she provided a strong rebuttal that most of those networks already provided live content on their websites that I could access through my IPAD. Therefore, I would be able to access the television shows and movies that I liked without having to pay a hefty, ridiculous fixed cable bill.
My discussion with my sister reminded me of the theory of disruptive innovation. Video streaming websites such as Hulu and Netflix appear to be reshaping the market of wireless and mobile users by offering a new value proposition that offers an innovation that offers a low-end solution to the overpriced and fixed cable television offerings that force consumption to take place in an inconvenient, impractical and centralized cable packages. Therefore, these companies offer new access to television or movies that for the past decade required a hefty cable bill and access to OnDemand. Additionally, in comparison, cable companies such as Comcast and Verizon have an extensive amount of fixed infrastructure and hardware that prevent it from offering the more customized and lower priced innovations that Hulu and Netflix provide. Additionally, Netflix and Hulu are now even offering original content on their streaming memberships to compete against cable companies. The rise of Netflix and Hulu along with the proliferation of mobile and wireless tablets, phones and even televisions raises the question: what will happen to cable television?