Exam 15: Global Marketing and the Digital Revolution

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To help managers recognize the innovator's dilemma and develop appropriate responses to environmental change,Christensen has developed the following five principles of disruptive innovations:
1.Companies depend on customers and investors for resources.The best innovations are user-driven.Paradoxically,however,if management listens to established customers,opportunities for disruptive innovation may be missed.
2.Small markets do not solve the growth needs of large companies.Small organizations cannot easily respond to the opportunities for growth in a small market.This fact may require large organizations to create independent units to pursue new technologies.
3.Markets that do not exist cannot be analyzed.Christensen recommends that companies embrace agnostic marketing.This is the explicit assumption that no one company personnel,nor the company's customers,can know whether,how,or in what quantities a disruptive product can or will be used before they have experienced using it.
4.An organization's capabilities define its disabilities.
5.Technology supply may not equal market demand.Some products offer a greater degree of sophistication than the market requires.For example,developers of accounting software for small businesses overshot the functionality required by the market,thus,creating an opportunity for a disruptive software technology that provided adequate,not superior,functionality and was simple and more convenient to use.

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It is true that the worldwide success of Apple's iTunes Store has generated a backlash of sorts.In Japan,the music industry was unsuccessful in 2005 to persuade the government to charge a royalty fee on each iPod sold.The money generated would have been distributed to record companies,songwriters,and recording artists as partial compensation for financial losses due to illegal music file downloading.In France,the National Assembly approved a bill that would require Apple to share the iTunes software codes with other companies so that music downloads would play on all digital music players,not just iPods.In January 2007,Norway's consumer ombudsman ruled that iPod's lack of interoperability was illegal.Cloud computing is the next-generation computing that will be performed "in the cloud." Rather than installing software such as iTunes or Microsoft Office on a computer hard drive,such applications will be delivered through a Web Browser.Cloud computing means that archives-including music and movies files,photos,and documents are all stored on massive remote servers and data centers rather than on individual users' computers.Computer files can be accessed remotely,via the Internet,from any location and from any computer.Cloud computing can therefore be applied on numerous computer-based applications.By contrast,cloud-based music services offer users a music locker,the locker is "in the cloud," and music files that have been purchased or uploaded can be accessed from a variety of mobile devices.Currently,Amazon.com,Apple,and Google all have cloud-based music services.