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Your Dilemma

January 19th, 2010

Every couple of years I try to make a point to read “The Innovator’s Dilemma” by Clayton M. Christensen.  Having just received a Kindle for Christmas, I thought what better way to break in an eBook device than with a book highlighting the problems with mismanagement of disruptive technology.  As someone who works in publishing, I can tell you eBooks are disruptive technologies.

I love my Kindle.  As a Boston commuter, it really is a remarkable device — but that is another post for another time.  One of the reasons I frequent Christensen’s “The Innovators Dilemma” is to be reminded that:

“Good management is often the cause of failure when managing disruptive technologies” Clayton Christensen, The Innovators Dilemma

The central thesis of the book outlines the idea that the decisions and behaviors of management for sustaining technologies — technologies that are simply advancements within the same value network — are often the reasons for failure in emerging markets.

Take the eBook for example, but specifically the textbook market.  Presently, the ease of use, convenience, and cost of these technologies do not meet customer standards.  Additionally, the profit margins for producing these eBooks do not meet management standards.  So, “Good Management” would say,

  1. EBooks don’t make enough money to be profitable
  2. Our customers don’t think eBooks are better than traditional books

These two conditions would lead traditional management to ignore eBook technologies. However, Christensen’s book suggests management should look outside of the traditional market for textbooks (educational institutions, learning centers, etc) and explore the need in emerging markets.  Historically, this is best achieved when a smaller company is branched off or acquired to handle the emerging market.  This prevents competition from resources with traditional product models with larger profits.  It also keeps managers and developers of these new products excited with small gains.  A $20 million market can hardly compete with a larger business’ $40 billion market.

The problem with emerging markets is that they are hard to find — they are emerging.  A company should not invest all of its resources into what they “think” the next emerging market is for a disruptive technology.  The initial goals surrounding the entrance into emerging markets should be to learn, not to succeed.  If you enter a market with the preconceived idea that you know what it should be, you will likely fail.  Emerging markets evolve as disruptive technologies mature.

So what are the emerging markets for eBooks?  I’m not entirely sure, but I can tell you that eBook technologies for textbooks are a hot ticket in new startups focusing on open access technology and “free” learning.  These startups are still developing, and their quality of education still falls behind that of traditional institutions.  However, as technology progresses, these open access environments could either become absorbed by traditional institutions (to help facilitate distance education) or become a direct competitor of these traditional institutions.  In either case, unless publishers continue to explore these technologies, they could eventually be replaced as the “primary” source for text and education.

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