Disruption guru Christensen: Why Apple, Tesla, VCs, academica may die

The market has often wondered how long Apple can stay on top. The company’s never ending string of products seems to have defied gravity. Can Apple be disrupted?

Clay Christensen shares his ideas about the possibility of disruptive innovation meets Apple and other big, dominant ideas. Clay Christensen, the author of the Innovator’s Dilemma, shared his thoughts at Startup Grind this past Wednesday. Check out the full post at Silicon Valley Business Journal here.

Christensen’s main premise, popularized in his book, is that innovative companies can be disrupted by less sophisticated competitors if they overshoot customer needs or cede the mass market and exclusively move up-market in response to competition.

Apple is based on proprietary technology which allows it to protect its market position. But if the company moves “up to the ceiling and the volume goes to the open players”, it could be disrupted. He argues that if the architecture becomes open, similar to Google’s OS, it may be almost good enough. Christensen argues that the real value of the iPhone is the the sophisticated manufacturing tthat is becoming commoditized.

Similarly, he argues that Tesla is susceptible to electric vehicles that cater to customers who don’t want to travel very far or fast such as parents of teenagers. Additionally, he argues that while Tesla threatens existing car manufacturers, a low end electric car would escape incumbent’s notice.

Christensen recounts his experience with Bain Capital when they were starting out. At the time they had invested $1 million in Staples, but a few years later, they had set their minimum investment at $10 million. He believes that there is an opportunity to for other funding options (he doesn’t mention it, but it’s possible that this alternative may be crowdfunding).

His final example of disruption is higher education institutions like Harvard Business School. Online options brings more higher education to a broader audience and even now, Harvard is investing millions in online education but to support their existing business model. Christensen notes that there are new different business models that are disrupting education more broadly and predicts that over half the universities will declare bankruptcy in fifteen years.



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