In The Innovator’s Solution, Clayton Christiansen summarizes “Three Approaches to Creating New-Growth Businesses” in Table 2-1. He discusses three dimensions; the one which caught my eye was “Impact on the required business model (processes and cost structure)”. Here are the descriptions.
- Sustaining Innovations: Improves or maintains profit margins by exploiting the existing processes and cost structure and making better use of current competitive advantages.
- Low-End Disruptions: Utilizes a new operating or financial approach or both—a different combination of lower gross profit margins and higher asset utilization that can earn attractive returns at the discount prices required to win business at the low end of the market.
- New-Market Disruptions: Business model must make money at lower price per unit sold, and at unit production volumes that initially will be small. Gross margin dollars per unit sold will be significantly lower.
In the other two dimensions, performance and target market, the iPhone clearly matches the description of a new-market disruption. But not in its business model—its high price and margin disqualify it.
In a podcast about Hollywood accounting, and how it suggests that the movie business is ripe for disruption, Horace Dediu asked a few weeks ago for information about Hollywood from listeners who know. I don’t know if it’s still timely, but I hereby offer him my piece of the puzzle.
I worked for about six months as a “data manager” for a post-production firm in New York City. We did mostly Hollywood productions shot in New York. It was a half year of frustration, for me and for the people I served.
My background is in Unix system administration. The general goals are system availability and cost efficiency; there is a “platform” mentality of providing resources, rather than directly doing tasks for end-users. This firm saw IT, by contrast, not as a service provider but as an integral part of (post-)production processes. When a customer drops off a hard drive full of footage, one gives it to the data manager to have it transferred to central storage.
I expect to design workflows, not execute them; but in the world of Hollywood as I experienced it, there was no role for a designer and maintainer of workflows, a platform provider. I suspect this is connected to the project-based accounting Horace mentioned in his podcast. Although we were not reconstituted as a team for each show as a production crew would be, our management thought in terms of shows, and that limited our ability to improve costs and predictability by systematizing IT practices.
I understood this only vaguely at the time. I wonder what would have happened if I’d been able to formulate my point of view and take a case to management.
It would surprise me if Pixar didn’t have the deep understanding of information technology that my former employer lacked. Can they possibly affect the wider culture of Hollywood post-production? I’d have to venture back into that world to find out, and I’m in no hurry.
40 days ago, I observed that Apple’s desktop and mobile IM clients had something of an impedance mismatch: desktop was natively AIM-only, and mobile was natively iMessages-only.
Today, Apple released a beta desktop client which integrates iMessages. It’s clearly a revision of iChat, but they’ve changed the name to Messages, for consistency with the mobile client.