Rick Klau (and others) on De-Captivating Markets

I enjoyed Rick Klau’s post today on IT innovation in the next decade is worth a careful read and tracing back to the linked sources. Rick covers a lot of important territory, as does Doc Searls, whose De-Captivating Markets inspired Rick’s post.
At the root of both posts is Clayton Christensen’s Innovator’s Dilemma, as laid out in his books, The Innovator’s Dilemma and The Innovator’s Solution. Christensen focuses on the power of “disruptive technologies.” To quote from one of the editorial reviews on Amazon, “At the heart of The Innovator’s Dilemma is how a successful company with established products keeps from being pushed aside by newer, cheaper products that will, over time, get better and become a serious threat.” Searls does a nice job of sketching out the theory in his post.
As compelling as the “disruptive technologies” argument is, the difficulty has always been that the well-chosen examples suggest that disruptive technologies are something that we can determine only in retrospect and that predicting them is very difficult indeed. In fact, we can analyze many technologies as “disruptive technologies” and never be certain that we are right until events shake out. Searls looks at Open Source, as have others, as a disruptive technology, but I suggest that we do not know whether it is or not at this point.
It is more reasonable to point to digital cameras today as a disruptive technology and point to Kodak and Polaroid as victims. It’s unclear to me, however, where the “tipping point” came. There are still many different standards (how many kinds of storage memory), battery life and other usability issues, and I believe that it is still cheaper to develop film than print out digital images, in terms of consumables. I think that you can look at digital cameras and fit them into the innovator’s dilemma framework now, but I don’t know how you could have done that (other than on faith) in advance.
For what it’s worth, although I’m as intrigued as anyone by the potential of Open Source, I’m not sure it will become a disruptive technology, especially if the measure is whether it puts Microsoft in the kind of position Kodak now finds itself in.
My vote for the disruptive technology of the day, by the way, is the availability of cheap fast hard drives with massive amounts of storage capacity. However, I’m not sure what the implications are.
I also have a vote for the disruptive technology for the legal industry – distributed document assembly applications embedded with routine legal knowledge. If this happens, I can see that the implications are enormous.
For a great article exploring the implications of the Innovator’s Dilemma for law firms, I highly recommend Darryl Mountain’s Could New Technologies Cause Great Law Firms to Fail? I saw Darryl Give the original presentation on which this article was based and it struck me that he was a few years ahead of the curve. It still does in terms of what law firms are doing, but not in terms of what technologies are available.
Doc describes two states in an industry: “One is a cluster of vendor-limited silos, with high level of dependencies, from the bottom to the top, on goods and services only the vendor can provide. The other is an open and free marketplace ? a commons ? where both vendors and customers are free to make and buy what they like.” How does your industry fit into that model?
The Internet has generally moved us from high level dependencies to increased independence, while also emphasizing a different set of dependencies. If the term “silo” applies to what you are doing, you should be setting aside some time to think strategically. My recent experience at the Legal Technology Summit led me to the conclusion that the term “silo” is one that many clients can reasonably apply to their law firms. Should that worry traditional law firms? You’re damn right it should.
To return to Rick’s original post, let’s look at the role of social networking and social technologies. I agree with Rick’s thinking. As I like to ask, what happens when the best lawyer for you to recommend to your client, or for you to work with, is no longer your partner down the hall? Or, what happens when your client puts together a project team of lawyers that excludes your law firm partners and you realize that the project team works extremely well?
Trust me, take a look at Rick’s post and Doc’s post and do a little reading about the innovator’s dilemma. You’ll thank me later.