Providing news, views and unrivaled content for the global sourcing community

 

 

Christensen: Transforming Innovation and Capitalism

Posted: 02/03/2018 - 00:47

In anticipation of next week's return of Kate Vitasek’s column “The Academics of Sourcing,” Outsource is pleased to showcase some of her best articles from the archives.

“The Academics of Sourcing” is a series that regularly shares some of the best academic insights and translates the learnings from academia into sound advice for practitioners.

Read on to get reacquainted with Kate Vitasek’s insight and experience into the world of sourcing and the academics behind it. 

I can’t believe it has been 16 years since  Clayton Christensen rocked the business world with his groundbreaking book,The Innovator’s Dilemma

The subtitle of the book is revealing:  When New Technologies Cause Great Firms to FailHis book was a bestseller in 1997 and received the Global Business Book Award for the best business book of the year.  I’ve been a fan of Christensen for some time and his creative ideas about innovation are an important element of  Vested. What is prompting me to write about him now is a  recent interview with Christensen in  Wired  by Jeff Howe.

Christensen explains in the interview that big companies often fail not because they do something wrong, but because they do everything right. Maybe a bit too right, and a bit too cautious. Yes, it is counterintuitive, but the article explains that companies are trained to focus on what he calls "sustaining innovations—innovations at the profitable, high end of the market, making things incrementally bigger, more powerful and more efficient. The problem is that this leaves companies vulnerable to the  disruptive innovations  that emerge in the murky, low-margin bottom of the market. And this is where the true revolutions occur, creating new markets and wreaking havoc within industries."

The Innovator’s Dilemma  points to a fatal flaw in business logic. Companies focus on things that have made them successful because that is where the money resides. They are often blind or resistant to new ideas and innovations because it disrupts the status quo.

I think it is important for companies and service providers to realize that it’s only a matter of time before disruptive innovation takes hold in the world of outsourcing. The outsource business model is ripe for a major transformation in innovation, and in the way we think about longterm thinking and innovative investment.

I’ve been preaching—and teaching!—for some time now that the outsourcing business model is broken; when gainsharing is the first thing that companies think about when the subject of innovation comes up, that’s a huge problem. And when companies can’t dig themselves out of the old transaction-based mindset and model—which stifles both efficiency and innovation—that’s another huge problem!

The Vested model embraces the Christensen’s idea of disruptive innovation because of collaboration and results based on sharing value and achieving outcomes; it relegates bean-counted transactions to the dustbin. Simply put Vested is, well, a disruption that is long-overdue in the outsourcing industry.

And that’s why I’m excited to see what Christensen has say to in his upcoming book, The Capitalist’s Dilemma, which will look at what he calls the “current economic paradox, namely, economic metrics that look fine, especially company balance sheets, while the economy remains mired in the doldrums for small companies and the average worker.

 

 

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

About The Author

Kate Vitasek is an international authority for her award-winning research and Vested® business model for highly collaborative relationships.   Vitasek, a Faculty member at the University of Tennessee, has been lauded by World Trade Magazine as one of the “Fabulous 50+1” most influential people impacting global commerce.    Her work has led to 6 books, including: Vested Outsourcing: Five Rules That Will Transform Outsourcing, Vested: How P&G, McDonald’s and Microsoft Are Redefining Winning in Business Relationships and Getting to We: Negotiating Agreements for Highly Collaborative Relationships.

Vitasek is known for her practical and research-based advice for driving transformation and innovation through highly-collaborative and strategic partnerships.   She has been appeared on CNN International, Bloomberg, NPR, and on Fox Business News.  Her work has been featured in over 300 articles in publications like Forbes, Chief Executive Magazine, CIO Magazine, The Wall Street Journal, Journal of Commerce, World Trade Magazine and Outsource Magazine.