The Innovator’s Dilemma trips up telecos

pelephone companyby Seattle Municipal Archives

The Carriers Are Stuck In The Innovator’s Dilemma. Just Don’t Tell Them That.
[Via PandoDaily]

Harvard professor Clayton Christensen, who wrote the book “The Innovator’s Dilemma” that defined such corporate conundrums, described them as arising when a disruptive technology—like a small disk drive or steel mill—becomes so big that it displaces an existing market, sending big, successful businesses to their doom.

Of course, this happens in part because disruptive technologies are often difficult to recognize. This is especially true in the case of telecom, when the disruptive innovation isn’t any particular technology per se, but the rise of smart devices at the edge of carrier networks.

Carriers have embraced this trend, believing that iPhones, iPads, Droids and other smart devices will eventually reduce customer churn and increase the amount of time they spend on the network.

It’s a reasonable approach—but it is contributing to a dramatic shift in the balance of telecom power in the United States. This is particularly obvious in the wake of the holiday season.  App makers and device manufacturers like Apple are enjoying blockbuster sales, while carriers are struggling with declining margins and rising capital costs.

In order to profit from the boom, the carriers need to open up their networks to innovation. The challenge is that doing so goes counter to a century of business success—the innovator’s dilemma in action.


The classic approach for large companies is not to actually innovate to deal with disruptive technology but to actually legislate. The hstory of ATT and the phone companies demonstrate this.

The iPhone disrupts their entire system, providing ways to innovate that have not been imagined yet. I imagine that they would love to strangle the iPhone at its inception but Jobs and Apple simply moved past them.

It is like watching Lin play basketball – making correct decisions so much more rapidly than the competition. It is playing on a whole new level.

NBA basketball players will respond to the disruptive play of Lin by adapting and reacting to him. And in the end make basketball even more enjoyable.

Not so big Telco, who continues to react to disruption by changing the rules  – such as throttling unlimited data plans. Or like the MPAA, try to legislate stasis.

If they are unable to adapt – and all signs point to that – then others will create the innovations we will see.

Like if Apple created its own nationwide wireless network. That would be a nice use of a couple of billion dollars it has.

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