This paper aims to analyze the Hewlett Packard- Kittyhawk by taking into account “Disruptive Technologies” and “Value Network” by Christensen. In 1992, Hewlett Packard (HP) decided to produce a 1. 3-inch disk drive-the Kittyhawk Microdrive, in hope to establish itself as a leader in a disk drive market. This smallest drive in the world will represent a disruptive innovation and a breakthrough in technology. A special team was dedicated to developing Kittyhawk and high hopes were laid for its revenue.
However, the commercialization of Kittyhawk was a failure as a result of poor market forecast.
Recommendations from Christensen HP followed Christensen’s recommendation to organize an independent organization for disruptive business and isolated it from mainstream business to reduce conflicts between two parties. After an internal disagreement signaled to Spenner that Kittyhawk is a disruptive technology, he effectively organized an autonomous group dedicated financially and physically only to developing Kittyhawk.
This is a strength as the development team consisting of highly skilled engineers was focused, have freedom and flexibility, and top-level support.
Project manager, Woito, further ensured the team members were not under the influence of HP’s cultural bias but viewed themselves as a start-up business that upheld the creed of creating something cheap, dumb and unique. The weakness of the team lies in Spenner’s immodest and unrealistic financial goals and revenue projection. He was going to attack a new hill even though this new market has yet to be identified.
The team was positively biased; they laid heavy bets and wishfully think the disruptive technology will be the company’s future.
They have forgotten that such a technology is more prompted to failure and the short-term goal should be to create positive cash flow instead of huge revenue generation. Searching for Initial Market The team also followed Christensen’s recommendation to discover and locate the initial market after determining Kittyhawk is strategically critical. Seymour and White displayed keen enthusiasm by attending trade shows to narrow down on potential customers.
They did the right thing by engaging with customers over a broad range of industries, creating information about customers’ expectations and finally concluded with a list of possible target markets. However, the first wrong turn was to demand high financial returns from Kittyhawk. This unreasonable expectation led them to ignore their immediate customers-Nintendo, but attend to the unproven market of PDAs and assume PDAs will launch successfully. The selection of market became inconsistent with their initial scope as their goal became to satisfy the company’s financial standards.
The cost floor increased to $130 and handicapped their business judgments. Secondly, the market research was flawed. The research team employed the normal methodologies of speaking to existing customers and industry experts about Kittyhawk’s potential -but they were the wrong people to engage with since this is a breakthrough technology. For disruptive technologies, they should be making economical bets and agilely change their products and market strategies as a response to market feedbacks.
White however placed heavy bets on PDAs and customized technical requirements to specifications. As a result, the success of Kittyhawk will rely on the prompt launching of PDAs. White made the further mistake to team up and push upmarket with HP’s Corvallis Division, again, they had lose their initial purpose of Kittyhawk. The two markets White eventually bet on were unreliable and nonexistent, giving Kittyhawk more reason to fail. Deeper causes in the “value network”
According to Christensen, the purpose of disruptive technology is to create a value network that eventually displaces an earlier technology. Kittyhawk team initial creed was to introduce a low-end disruption where a ‘good enough product’ would first help them gain a foothold in the new market. However, their own guidelines changed substantially on the path towards product commercialization due to company’s cultural bias and immodest financial expectations. As a result of shifting priorities, White’s responses from sourcing to marketing is no longer geared towards a disruptive technology.
The underlying concerns became financial and White has forgotten that new markets need time to develop, and he should move up the trajectory slowly and steadily. Christensen demonstrated that the slope of technology trajectory is steeper than that of customer due to customers’ slower ability to absorb new trends. Kittyhawk’s final design not only overshoot what immediate customer needed, the manufacturing process also consumed a vast amount of resources and made agile changes impossible. Finally, the team was left with no major customers.
My Recommendations First, firms introducing disruptive innovations must be modest in setting their revenue projections and growth goals. Over the course of Kittyhawk development, the managers’ series of decisions were handicapped by company’s cultural factors, greed, and positive biasness. My recommendation is that the team should not have investment heavily in PDA because a non-existing and unproven market cannot be analyzed. In contrast, Nintendo would have made a good customer especially for Kittyhawk to gain an initial foothold.
Second, White should see the possibility of failure is higher than success for a breakthrough technology and hence stick to low -cost or in house- manufacturing to develop products that are inexpensive and changeable. In that case if they were to fail, it will be of a smaller scale too. To counter the HP value network, Kittyhawk team leaders should keep in mind that a company cannot count on disruptive technology for its future. They would have to experiment one step at a time and be responsive to market customer feedbacks. A positive cash flow should be the short-term goal because a market takes time to develop and emerge.
Flexibility is critical to survival, HP should have focus on low cost applications and aim at satisfying the minimum to obtain product acknowledgement first before considering higher margin products. The main reason for their failure is picking the wrong market, confusing the job to be done and further, losing sight of their initial vision. The outcome of this is a final product that adds no value to the team’s core competencies. When introducing the new product, HP could have also considered a joint venture to share the financial risks and burden.
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