In the 1997 book, the author uses several real world examples of businesses, dominant in their core business, that failed to adapt to an emerging “disruptive innovation” and failed. Did you know an inventor at Kodak had a digital camera in 1975
? Kodak suppressed it in favor of its core business – film. In 2012, Kodak filed for bankruptcy.
The Innovator’s Dilemma is that businesses must build certain practices, policies, and procedures to sustain the core business, and then resist variation of those things that enable the business to produce that key product. At the same time, these practices, policies, and procedures that sustain the core business, also prevent it from adapting to a changing world.
The converse is true as well. Those practices that support innovation and bringing new ideas to reality, have a tendency to break the cogs of the machine that supports the core business. One common phrase that sums it up for me is, “Here comes the good idea fairy.” Changing course every six months will not build an aircraft carrier. There needs to be resistance to change and a process that needs to be followed to get to the end result.
The problem occurs when bureaucratic processes are applied to innovation, or when bureaucratic processes sustain a system for too long. Because bureaucracy is constructive and conservative, the core business will tend towards growth in systems to support itself, and will eventually support a set of baseline assumptions that are no longer relevant. This is regardless of how much good the core business has done, or how good the baseline was to begin with.
Innovation is largely disruptive and destructive to baselines. Properly constructed, innovation will cause change, and will remove barriers to the implementation of the new idea. If allowed, innovation has the ability to sweep away bureaucratic policies that have built up over the years, and eliminate process dead ends. The truth is, much like an old spool of fishing line, at some point it becomes too tangled to efficiently untangle. It is better to cut the line and retie the lure.
In Defense, there can be no disruption to the core business. The United States has a duty to defend the people of the United States 24 hours a day, 7 days a week. It may be cliché, but true – we are always on the watch. This may lead to a defense of sustaining the core business over allowing innovation to run rampant. Unfortunately, in the case of sustaining the core business baseline, it is the baseline that effectively becomes the weak link.
Much like the example of Kodak, as we sustain the old business baseline, no matter how much we Lean Six Sigma it, if our baseline is the military equivalent of film, and the adversary has moved on to digital cameras and smartphones, we will be unable to defend the people of the United States.
If our process has become so onerous, bloated, and out of date that it also becomes a liability to adapting, that process that sustains the core business must be cut out and replaced with new processes. Like the fishing line, the effort is too great, and even if you do get it untangled, the line will never be as strong as if you had just cut it out and used new line.
How might we balance these competing priorities? One way suggested in the Innovator’s Dilemma is to conduct innovation in spin-off companies separate from the limitations of the core business. I like to think of these as sandboxes. Within the sandbox, there are the resources, people, authority, and freedom from the restrictions of the core business to bring about new ideas and create change. There is also a barrier that prevents the “half-baked” ideas and high risk behavior from directly affecting the core business. I recommend the book “F.I.R.E. How Fast, Inexpensive, Restrained, and Elegant Methods Ignite Innovation”
by Defense Entrepreneur’s Forum member and USAF veteran, Dan Ward.
The way that innovation makes its way into the core business is the core business makes a series of acquisitions. They reacquire the new innovation from the sandbox and are forced to accept the new baseline to build sustainment for the new acquisition.
Some may say, this is how we do it now with the Office of Naval Research, the Naval Research Labs, and other partner and joint organizations. This is not true. The requirements and approvals for these new technologies still come from the core business and are limited by the core business itself.
We must allow our centers of innovation to develop independent of the core business in order to systematically attack the baseline of our core business. We must be the most disruptive competitor to our own core business, and we must be brutal at removing those practices, policies, and procedures that do not support the new baseline.
We are at a crossroads in the Cryptologic Community. We are on the threshold of the next generation of Cryptologic Systems, Processes, and Policies. We must be unafraid to attack and discard the old baseline, no matter how well it has served us before. We should build our new systems and business practices in sandboxes, uninhibited by the current baseline and sustaining, core business practices. When they are ready, we should have a path to bring them into the core business and support them, while building the new, sustaining, core business practices based on the new baseline.
We are at a point where we must change our baseline to remain competitive. We are Kodak with the tools we need to be successful sitting on the shelf, and the only thing standing in the way of us releasing those tools are the limitations we place in front of ourselves.
The only way out of the Innovator’s Dilemma is to be able to play both sides of the Dilemma against each other and to be unafraid to change. We will have to let go of those things in the core business we thought sustained us. The risk is mitigated by proving the concepts out in the sandboxes, where the risk calculus is different.
We can do it. The only thing holding us back is our fear of failure, our resistance to change, and our nostalgia about our past.
We must remember the past, overcome the challenges we have in the present, but always be driving towards the future. We can defeat the Innovator’s Dilemma, but only if we make our core business building new baselines to adapt to a changing world as opposed to just sustaining the existing core business.