MIS5102:Process Improvement and InnovationSystems Thinking

What do these have in common?

Disruptive Innovation Theory

• Low-end– Quality increasing

faster than need– Opportunity for low-

cost entrant

• New-market– Fits an emerging

segment with an unmet needhttp://en.wikipedia.org/wiki/Disruptive_technology

Low-end disruption

So how do companies innovate?

New products for high-margin customers

Cheap alternatives to existing products

New products for “nonconsumers”

Your existing position

What’s going on in the

environmentWhat to do

“Signals of Change”Undershot Customers• When companies are filling

up-market need• i.e., new data analytics

software to handle “big data,” gaming PCs

Overshot Customers• When companies are filling

down-market need• i.e., Netbooks, Kindle Fire

Nonconsumers• When new markets are being

created• i.e., Facebook, iPad

Nonmarket Contexts• Barriers to innovation are

changing• i.e., Government regulation

Source: Anthony, S., and Christensen, C. (2005). How You Can Benefit from Predicting Change. Financial Executive, 21(2), pp. 36-41

Systems Thinking

• Considering the system as a collection of integrated processes

• Synthesize and optimize

Process Thinking

• Considering the system as a collection of independent processes

• Decompose and optimize

Thinking about the system as a whole

• Consider the “boundaries” of each component– What other components affect this component?– What other components is this affected by?

http://blog.metasd.com/category/tools/visualization/page/2/

R = reinforcingB = balancing+ = increases- = decreases

A stock-flow diagram

http://blog.metasd.com/category/tools/visualization/page/2/

Both diagrams show essentially the same thing…

…cause-and-effect

relationships

Connecting Systems Thinking to Disruptive Innovation

What processes did the Kindle affect?

What processes affect the Kindle?

What were the secondary effects on society?

The Kindle as a disruptive innovation…

Connecting Systems Thinking to Business Processes

Grocery Store

Checkout

What processes are inputs?

What processes are outputs?

How would adoption of self-serve checkout change the

system dynamics?