Archive for the ‘Disruptive Innovation’ Category

Does anybody remember blockbuster?

August 15, 2017

Are movie theaters heading for the same junk heap?

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According to the WSJ

Movie theaters are reeling from a very disappointing summer season.

The summer 2017 season has been defined by big-budget movies that failed to live up to their massive marketing campaigns.

A steady stream of lackluster major releases …  has depressed moviegoing in the U.S. and Canada, where admissions are down about 5% so far this year. Revenues are down 2.9%, with slightly higher ticket prices making up for some of the attendance drop.

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Theater chain execs attribute the decline to the lackluster movie releases.

But, investors are starting to wonder if the industry is being fundamentally disrupted …

(more…)

What do universities have in common with record labels?

February 19, 2016

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry” and arguing that “it’s doing the same thing to higher education today.”

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me is that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.”

“The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

What do universities have in common with record labels?

April 27, 2015

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry’ and arguing that”and it’s doing the same thing to higher education today.

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me us that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.

The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

Disruption: Automating knowledge work …

December 19, 2014

In the old days, folks fretted (or dreamed) about the effect of computerized automation in factories and ATMs replacing bank tellers.

According to a recent McKinsey report:

Physical labor and transactional tasks have been widely automated …

image

Now, advances in data analytics, low-cost computer power, machine learning, and interfaces that “understand” humans are moving the automation frontier rapidly towards “knowledge work”..

Developments in how machines process language and understand context are allowing computers to search for information and find patterns of meaning at superhuman speed.

Here are a couple of examples …

(more…)

What do universities have in common with record labels?

July 15, 2014

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry’ and arguing that”and it’s doing the same thing to higher education today.

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me us that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.

The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

Disruption: Automating knowledge work …

December 17, 2013

In the old days, folks fretted (or dreamed) about the effect of computerized automation in factories and ATMs replacing bank tellers.

According to a recent McKinsey report:

Physical labor and transactional tasks have been widely automated …

image

Now, advances in data analytics, low-cost computer power, machine learning, and interfaces that “understand” humans are moving the automation frontier rapidly towards “knowledge work”..

Developments in how machines process language and understand context are allowing computers to search for information and find patterns of meaning at superhuman speed.

Here are a couple of examples …

(more…)

Disruption: Automating knowledge work …

May 24, 2013

In the old days, folks fretted (or dreamed) about the effect of computerized automation in factories and ATMs replacing bank tellers.

According to a recent McKinsey report:

Physical labor and transactional tasks have been widely automated …

image

Now, advances in data analytics, low-cost computer power, machine learning, and interfaces that “understand” humans are moving the automation frontier rapidly towards “knowledge work”..

Developments in how machines process language and understand context are allowing computers to search for information and find patterns of meaning at superhuman speed.

Here are a couple of examples …

(more…)

Watch out HBS, Perdue University is pecking at your heels.

March 20, 2013

Nope, not a typo.

It’s Perdue as in chickens, not Purdue as Boilermakers.

image

Who says so?

None other than HBS Prof. Clay Christensen — the father of the idea of disruptive innovation.

(more…)

AT&T sets the standard for disruptive education innovation

July 2, 2012

Punch line: If corporations really want to make a difference in the American education system they need to rethink their philanthropic giving. By reallocating monies to initiatives such as gamification they can facilitate the foundational transformation that the education system truly needs.

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Excerpted from Fast Company Co.Exist: Big Corporations Can Disrupt Our Antiquated Education Model

AT&T recently announced that it had made one of its single largest grants ever to the small nonprofit GameDesk, a pioneer in game-based digital learning for at-risk kids.

The signal to educators, consumers, and legislators alike is that the company has a transformative role in the education arena.

Without question, this is a departure from the “tried and true,” philanthropic grant which … is not the disruptive or innovative approach that the education system needs. Unfortunately, most private investors–and educators–tend to be risk averse when it comes to investing significant dollars or time in disruptive approaches to teaching.

The kind of partner strategy we see from the AT&T/GameDesk partnership is exactly how senior leaders from Fortune 500 companies and their foundations need to be thinking …

Why? Because when it comes to the future of our children and country, taking a risk and investing in “game changing” technologies … sends a clear message to parents, consumers, students, and educators that the status quo must change.

Edited by JDC

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How many “Minute Clinics” are there in the U.S.?

June 28, 2012

Trick question.

CVS operates about 550 in store clinics under the the Minute Clinic brand umbrella.

More broadly, there are about 1,200 total in-store clinics … run by CVS, Walgreen, Wal-Mart, Kroger and Target.

Ken’s Take: These are great providers of routine health care … I’d like to see them spread like wild fire … and, I’d be all for government run “free clinics” in under-served urban and rural area.

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Disruptive innovation: Apple threatened by skinnied-down challenger.

May 11, 2012

TakeAway: A disruptive innovator in the French Telecom industry is growing market share and inadvertently challenging Apple’s IPhone business model.

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Excerpt from Forbes: “Apple’s Business Model Vulnerability, Exposed by a French Upstart”

Free Mobile is up-ending Apple’s prospects in France. Analysts are blaming the firm for driving down iPhone sales by 10% in the past quarter alone.

Free is offering unlimited domestic calls and texts, free calls to many international countries, 3 GB of data, and no contract commitment — all for $25 a month. In exchange, subscribers give up benefits associated with traditional mobile carriers. Free barely advertises, does not invest in proprietary applications; and doesn’t subsidize handsets at all.

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Free has won nearly 3 million subscribers in its first three months, and the incumbents are facing intense price pressure.

This is a major problem for Apple. People who have to pay the full price for a handset flock to the less expensive, and technically quite solid, Android and Windows offerings.

The iPhone has always been expensive, reliant upon big subsidies from carriers trying to stand out from their competitors.

Edited by ARK

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US Healthcare: Ripe for Disruption

December 9, 2011

Punch line: Clayton Christensen – the guru of disruptive innovation – says that the US healthcare system needs some seriously disruption … to improve quality and cut costs.

Here’s a summary of his prescription.

Excerpted from MIT Sloan Review: Good Days for Disruptors – An Interview with Clayton Christensen Spring 2009

Every disruption has three components to it: a technological enabler, a business model innovation and a new commercial ecosystem.

In health care, the enabling technology is the ability to diagnose diseases precisely.

Now, through molecular diagnostics, enabled by our understanding of the genome, and through imaging technology that allows people to look inside the body with remarkable clarity, we are acquiring the ability to precisely diagnose more diseases by their cause, not by their symptoms.

That ability then enables us to develop rules-based treatment and a predictably effective therapy.

Our hospitals are, like mainframe computer companies, hopelessly complicated and very expensive.

To ever expect today’s hospitals to become cheap is a pipe dream.

Instead, we need to bring technology, in the form of precise diagnostics and predictably effective therapy, to outpatient clinics so you can do more and more and more of the things there that in the past required a hospital.

And then we need to bring better diagnostic technology to doctors’ offices, so you can do more and more things there that previously required a clinic.

And to nurse practitioners, so they can take on more and more of the things that in the past required a doctor.

Yes, I’m a big fan of MinuteClinics — walk-in clinics that inexpensively treat common disorders such as strep throat and bladder infections.

The hospital is really not a viable business model because, in general, its costs are driven by overhead, which is driven by complexity.

In a large general hospital, much of the cost is overhead cost that’s not expended in the direct care of a patient.

While cost is driven by complexity, quality is driven by integration. It’s when we don’t integrate things correctly that problems fall through the cracks.

Specialized health care institutions, whether they are focused hospitals or focused diagnostics clinics, can integrate correctly, and because of their focus, they have much lower overhead costs.

You get better quality and lower cost.

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Are these things stripped down computers or phones on steroids?

February 5, 2009

An example of a disruptive innovation …

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Excerpted from Knowledge@Wharton, “The Net Impact of Netbooks?”, November 26, 2008

PC makers Hewlett-Packard, Dell, Lenovo, Acer and Asus are increasingly thinking big about small netbooks — portable computing devices that can cost anywhere from $200 to $500 and depend on the Internet for many computing tasks.

Research firm IDC estimates that 10.8 million netbooks will ship in 2008, just about a year after Asus launched what is considered the first device in the category. Asus has a 46% share of the netbook market..

Netbooks are mobile computers with screens ranging from 5 inches to 10 inches. Originally intended principally for the education market, they typically run Linux or Windows XP and need to connect to the Internet for heavy computing tasks.

Analysts  agree that netbooks will be disruptive to the PC industry, but it’s not clear in what way.

  • Will netbooks poach sales of laptops?
  • Are netbooks replacements for smartphones?
  • Will netbooks increase the popularity of cloud computing in which users store files on the Internet and manage them with web-based applications?

It’s too early to know where netbooks fit or how well they will ultimately sell among consumers, who are projected to buy about 70% of these devices.

Gartner notes in a recent research report that it is also possible netbooks will be viewed as deficient by consumers, who expect the capabilities of a fully featured PC.

Meanwhile, these small devices are proliferating. Qualcomm, a wireless semiconductor company, announced plans in November to launch its own designs for a “PC alternative” that would compete with netbooks. Qualcomm’s device, code-named Kayak, is being tested in Southeast Asia in early 2009.

The success of netbooks may ultimately rely on always-on Internet connections. Since these small PCs lack significant storage, they largely depend on the Internet to access content and documents. “Once Internet connectivity gets to the point where it’s everywhere, these devices become more viable. Dark spots and dead zones in wireless coverage are a hindrance to the netbook market.”

“If you think of what people do with their computers, it includes a) storing data and b) installing and using applications. Cloud computing will reach the masses on both these dimensions, and netbooks go hand in hand [with this]. More consumer data will move online [or into the cloud]. Users are now more comfortable with their data living in the cloud. Having your data online lets you do things like sharing it easily with your friends and accessing it anywhere.”

While netbooks are showing early popularity, experts at Wharton stopped short of declaring these devices to be runaway hits. They point out many uncertainties.

The first worry is the economy. To be sure, netbooks are inexpensive, but they are also a largely discretionary purchase at a time when the global economy is struggling. In developed markets, like the U.S. and Japan, netbook purchases could be delayed.

Another question is whether netbooks are really suited for emerging markets, as early proponents contend. In the U.S., netbooks can find Internet connectivity through multiple means, but the emerging markets are different. Ubiquitous Internet access may be a fundamental concern.

“The real use of netbooks may be for the amusement of bored teenagers whose needs for connectivity and diversion cannot be satisfied with an iPhone, [which is] not exactly a market that I expect to see emerging in the developing world.”

One thing is certain: The netbook category is worth watching because it is growing and evolving on the fly…

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2107#

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Disruptive innovation: dentists in food stores … hmmm.

January 8, 2009

Excerpted from  Business Week, ” Root Canal? Try Aisle Five”, Oct. 13, 2008

Britain  suffers from a shortage of dentists.

So, in mid-September, British supermarket giant Sainsbury’s opened a dental clinic in one of its Manchester outlets. The in-store office will operate during store hours, including evenings and weekends. Most fees ($29 for a checkup, for instance) won’t exceed those charged by Britain’s national health service.

Earlier this year, at another Manchester store, the chain installed a medical clinic that it plans to replicate at other outlets.

If the dental office’s three-month trial is successful, the company says, it will set up 50 others

Full article:
http://images.businessweek.com/ss/08/10/1002_btw/5.htm

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Disruptive innovation: "netbooks" take on PCs … and win.

January 7, 2009

Excerpted from Business Week, “Netbook Sales May Be Cutting Demand For Laptop PCs”, November 26, 2008

Manufacturers and their suppliers are worried that soaring interest in netbooks is cannibalizing PC and laptop sales

Some consumers are opting for a pint-size $300 device known as a netbook instead of a traditional laptop, which normally costs at least twice as much.

This year millions are expected to buy netbooks, a relatively new family of cheap, light PCs that can handle Web surfing, e-mail, and other basic tasks.  Netbooks are one of the few bright spots in the tech industry. But their success may come at a cost: In some cases, pinched buyers are choosing netbooks instead of more expensive laptops—a potential problem for manufacturers because netbooks are typically less profitable than their bigger cousins.

PC makers originally thought a netbook would serve as a person’s third computer, complementing PCs in the home and office. But  10% to 20% of netbook buyers would have bought more expensive laptops or desktops if netbooks weren’t available.

Sales of netbooks exploded this year to an estimated 11 million, up from 182,000 last year. Analysts expect their popularity to rise as more computer makers introduce products and drop prices. 

“[Netbooks are] the classic disruption: A cheaper, less capable competitor comes into the market and takes over.”

Netbooks typically cost $300 to $500, but prices may slide … to as little as $100.

Netbooks are already putting pressure on PC prices. IDC estimates the average selling price for a portable computer will drop 8% this year, to $1,018, and an additional 12% next year, partly because of netbooks.

Full article:
http://www.businessweek.com/magazine/content/08_49/b4111064905299.htm?chan=magazine+channel_what%27s+next

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