Monday, May 22, 2006

Chasing your pot of gold at the end of the rainbow? Go, look for your fortune at the bottom of the pyramid instead.

That, in a line, summed up a day-long summit on ?Disruptive Innovation? titled ?Seeing What?s Next? by Harvard don and innovation guru Clayton M Christensen, organised by in the city today.

Professor Christensen, who teaches at the Harvard Business School, agreed there was really little difference between his ?Disruptive Innovation? theory and the ?Bottom of the Pyramid? theory of Michigan don C K Prahalad. Having said that, he unleashed loads of mind-bending strategies on how to really get to the Bottom.

Disruptive Innovation is innovating to turn conventional wisdom on its head. It?s a way forward for Big Corporations to Think Small and for Small Companies to Think Big to keep

To establish his contention, Prof Christensen drew upon the big versus small analogy in the US steel industry. The mini steel mills in the US had grown at the cost of the integrated giants manufacturing quality products for niche segments, and, in the process, controlling over half the American market.

In saying so, he also sounded a note of caution for the world?s biggest steel maker, Mittal Steel: Prof Christensen said while Mittal Steel had created huge capacities of scale by acquiring bankrupt steel mills in the United States and Europe, it had actually stayed afloat on growing steel demand from China and India. Mittal Steel is still vulnerable to disruptive strategy by competition, he said.

The professor also drew upon the big versus small analogy in the computer hardware industry where mainframes were replaced by fleet-footed manufacturers of mini computers in the ?80s and ?90s. So, how does a Big Corporation Think Small?

Prof Christensen said there were three ways of doing this: One, by making a complicated product affordable; two, by creating low-end disruption through low-cost products; and three, by executing new disruption by penetrating frontier markets where no corporation had ventured before.

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Source: The Economic Times (link opens in a new window)