Meeting the challenge of disruptive change
Christensen & Overdorf
- Managers lack a habit of thinking about their organization’s capabilities as carefully
as they think about individual people’s capabilities.
- In trying to transform an enterprise, managers can destroy the very capabilities that
Where capabilities reside
- Three factors affect what an organization can and cannot do:
o Resources: tangible and intangible ones. Access to abundant, high-quality
resources increases the chances of coping with change.
o Processes: the patterns of interaction, coordination, communication, and
decision making employees use to transform resources into produces and
services of greater worth. Formal and informal ones.
Formal: explicitly defined and documented, more visible.
Informal: routines of ways of working that evolve over time, less
Processes are meant not to change, because a process is likely to
perform efficiently when it is used to do the task it was designed for.
When the same process is used for a different task, it may perform
A process that creates the capability to execute one task concurrently
defines disabilities in executing other tasks.
The invisible, background processes provide most serious disabilities
in coping with change.
o Values: the standards by which employees set priorities that enable them to
judge orders, customers, ideas, etc.
The larger and more complex a company becomes, the more
important it is for senior managers to train employees throughout the
organization to make independent decisions about priorities that are
consistent with the strategic direction and business model.
A key metric of good management is whether such clear, consistent
values have permeated the organization.
But broadly understood values also define what a firm cannot do.
- This article focuses on two sets of values that tend to evolve in predictable ways:
o The way the company judges acceptable gross margins.
As companies add features and functions to their products and
services, trying to capture more attractive customers in premium tiers
of the market, they often add overhead cost. As a result, gross
margins that were once attractive become unattractive.
o How big a business opportunity has to be before it can be interesting.
An opportunity that excites a small company isn’t big enough to be
interesting to a large company. As companies become large, they lose
the ability to enter small, emerging markets.