Surviving Disruptive Technologies and Thriving with Practical Systems Thinking:
Summary of the dynamic: As technology advances, product and service performance improves and can provide more performance than required by the most-demanding customers. This allows modular, instead of integrated, designs to meet the needs of the most-demanding customers.
Eventually, the module-based designs also meet the needs of less-demanding customers, which creates even more demand for module-based designs.
Often, to reduce costs, companies outsource the module design because they see integration, not module design, as their core competency. This can be a big mistake because the source of increasing performance shifts to module design; and the companies that assemble the modules become commodity suppliers.
Therefore, industry profits shift to those with the ability to produce the best modules and shift away from those who assemble the modules into final products.
Systems thinking helps us understand why disruptive technologies have caused many of history's best companies to plunge into crisis and fail ... and what to do to prevent it. This is an example of "shifting loop dominance" (see below).
Here are key pages that show the system structure from a presentation (1552K) to the Rocky Mountain Product Development & Management Assoc [PDMA], April 16, 2003. The whole presentation (4832K).
This disruptive technologies dynamic is a major cause of what's happening when
"... after years of steady growth, organizations falter and sometimes fail?"
"... senior managers in these organizations, who are acknowledged as heroes in the press for their wisdom and success, seem to suddenly manage a series of failures that seriously damage their reputations?"
"The dominant loop is the one causal loop in a complex system that most influences the system's behavior over some interval of time. After one loop has governed a system's behavior for an extended period of time, it can occur very quickly, and sometimes imperceptibly, that the dominance shifts to another loop. When that happens, the habits, the senior personnel, the policies, the data and control systems, the criteria for success, even the mythology of the firm may become irrelevant or counterproductive."
Dennis Meadows presentation on "Shifting Dominance,
Power of Systems Thinking Conference, May 1997
In this case, the shift in "loop dominance" is from integration to modularization due to gains in technological capability.
A Quote on Disruptive Technologies
Christensen: "Disruptive technologies have caused many of history's best companies to plunge into crisis and fail."
"Skate to Where the Money Will Be,"
Clayton M. Christensen, Michael Raynor and Matt Verlinden,
Harvard Business Review, Nov. 2001, pp. 73-81
4/16/03 PDMA meeting feedback
What did you find most interesting?
- Concepts and artwork
- The entire dynamic is new to me. Trying to create a model for thinking in an almost mathematical fashion is unusual.
- The visuals/diagrams were helpful.
- Cartoons :) and method of thinking.
- Feedback loops
- The way you integrated models with real life examples ... this is the first time I understood what you do!
- Intro to flow diagrams
- The concept
- Great use of jokes, cartoons, current topics that are newsworthy, etc.
- Excellent integration.
What would you change?
- I was drinking from a fire hose ... too much, too fast.
- Add how to get authentic data.
- Slower through complicated material
- Rosetta stone to define things like "S" and "O"
- More real life examples - effect?
- Maybe add more application examples, i.e., urban sprawl, world peace, one country's world dominance (Rome, Europe, America)?
- I appreciated your explanations after your slide presentation.
e.g., MIT model programmer ................... You .....................Senge
- How would I, as a "C" level, apply?
- Very good presentation - thought provoking.
---------------- Note on the comments ------------------
There's a dilemma relative to how to address the "too much, too fast" issue (which it is) and also address application examples like "urban sprawl and world peace". :-).
I can do one on sprawl ... but not in the same hour!!! ... also I've yet to tackle "world peace."