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    Mastering Disruption and Innovation in Product Management: Connecting the Dots
    Mastering Disruption and Innovation in Product Management: Connecting the Dots
    Mastering Disruption and Innovation in Product Management: Connecting the Dots
    Ebook613 pages5 hours

    Mastering Disruption and Innovation in Product Management: Connecting the Dots

    By Christoph Fuchs and Franziska Golenhofen

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    About this ebook

    This book is an essential guide or foundational toolkit for anyone who is involved in the process of developing, offering or selling any type of product or service. Based on how to surf on the waves of innovation and the principle of “form follows function” (System Architecture), it introduces and connects concepts like Market Understanding, Design Thinking, Design to Value, Modularization and Agility. It introduces readers to the essence of these main frameworks and provides a toolkit that explains both theoretically and practically when and how to utilize which one. The methods and processes described in this book have all been successfully tested in many industries. They apply in today’s market context of high uncertainty, complexity and turbulence, where innovation and disruption are essential. Readers will find answers to two fundamental questions: How can we implement an innovation process and environment that are conducive to successful product design? And, if our products fail to appeal to customers, how can we achieve a major turn-around with regard to product development?

     

    A wealth of examples and case studies help readers to benefit from the authors’ broad professional experience. Further, lessons learned and conceptual summaries provide valuable shortcuts to the methods and tools discussed.

     

    For today’s CEOs, enabling innovation is one of THE most complex leadership tasks.

    But innovation is not about theory and nice buzzwords. It’s about succeeding in the real world. This ‘hands-on’ book connects the dots and introduces the reader to some of the most relevant ideas and pragmatic concepts fitting today’s business reality.

    Dr. Robert Neuhauser, Executive VP and Global Head People and

    Leadership Development, Siemens

     

    At the most fundamental level this book brings order to chaos. It sets different and highly relevant design approaches into a complementary picture, rather than presenting them as competing ways of solving the same problem. Product designers, managers, consultants, scholars and students will surely have this valuable book within reach on a daily basis.

    Olivier L. de Weck, Ph.D – MIT Professor of Aeronautics and Astronautics and

    Engineering Systems, Editor-in-Chief Systems Engineering  

    LanguageEnglish
    PublisherSpringer
    Release dateSep 7, 2018
    ISBN9783319935126
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      Mastering Disruption and Innovation in Product Management - Christoph Fuchs

      © Springer International Publishing AG, part of Springer Nature 2019

      Christoph Fuchs and Franziska GolenhofenMastering Disruption and Innovation in Product ManagementManagement for Professionalshttps://doi.org/10.1007/978-3-319-93512-6_1

      1. Introduction

      Christoph Fuchs¹  and Franziska J. Golenhofen¹

      (1)

      Corporate Development Consulting, Siemens AG, Munich, Germany

      The first idea for writing this book was born around 4 years ago, as it repeatedly turned out that storytelling helped many people to better understand the big picture of the why, what and how in projects. Working in the field of innovation for more than 20 years in a high tech company has been a long road and a great journey. Rather than writing a book from an expert to experts, we envisioned sharing the accumulated experience with all those people who want to understand how to connect the dots. With a kind of travel guide through the journey of innovation and disruption, we aimed to combine fostering deep understanding about the dots with the ability for practical application.

      So we jointly started off this undertaking in order to lay out a vivid and illustrative travel story that speaks to a wide audience: Learnings can be applied to all kinds of businesses, ranging from startups to big corporations. Whilst reading, we hope that you will see our travel motto of:

      Simplify complexity to let form follow function.

      What Is This Book About?

      This book aims to answer two overarching questions: How can we enable an innovation process and environment that is conducive to successful product design? And if our products fundamentally fail to delight customers, how can we create a major, necessary turn-around with regard to product development? In order to live long and flourish, individuals and companies alike strive to make progress. Progress means growth through continuous learning and development. Optimal processes and environments are key, as growth comes through evolving. True magic comes with acquiring the skill, experience, mindset, understanding and above all intuition to connect the right dots in the right place at the right time according to the unique circumstances of a business challenge. At its fundament, the most essential and basic groundwork is thus to gain a thorough, systematic understanding of what is needed and helps when and why.

      This book is set up to successfully navigate through each unique product development journey, from initial idea to product launch. We refer to mostly physical products because they are easy to visualize. Of course a product can also be more intangible such as a service, complex system, business concept or even designing your own life. Our objective is thus to equip and empower readers with the necessary understanding to get to a set destination in whatever way is the most suitable and applicable to their situation at hand, whilst providing enough guidance to actually get there.

      Luckily we all have a similar goal in mind, for the fundament of business success derives from the ability to understand what customers truly need and how a product or service is strategically designed to continuously delight customers in both the long- and short-term. This means we are all sailing in the same direction. However, every business situation is unique. As needs and circumstances vary, there is not a single silver bullet to a competitive end-product. How to know when it is smarter to take a path less traveled by, as it might surprisingly be the fastest route after all? Wouldn’t it be great to have a navigation tool that would tell you in advance, turn around now and rethink your decision, this is not a good idea down the road? The good news is, this person exists: You! Taking a pro-active stance to form the future rather than reacting when forced to and necessary carries many advantages.

      As equipment for dealing with an uncertain future, we dive into the topics that matter significantly for product development; namely the phenomena of disruptive change, form follows function (Systems Engineering), and the main frameworks of Market Understanding, Design Thinking, Design to Value, Modularization and Agile Development. In combination these provide many tools, methods, skills and mindsets that help to solve special questions during the conceptual phase of product development.

      To explain the structure of this book, we start off with exploring two fundamental, imperative theories and concepts. The first is that change happens. Exploring disruptive change hinges on the groundbreaking ideas developed by Clayton Christensen, which we aim to explore and refine. We add some complementary and new ideas to his concept, namely through the distinction between disruption by same and different DNA, as well as the superposition of long- and short-term waves of disruption.

      The second is that form follows function. This principle is at the heart of this book and pretty much everything that works incredibly efficient and effective. We find it everywhere in nature for example, where harmonious solutions emerge to create ease and flow whilst managing incredibly complex systems with incredibly complex interdependencies. It naturally follows that this principle is a core philosophy for the field of innovation because also here we care about constantly evolving and creating the new. Systems Engineering/product architecting thereby is like the vehicle that helps us move to and enable the transformation of innovative ideas and first concepts to tangible, real products.

      Building on these two fundamental theories and concepts, we then dive into exploring the main core frameworks. Similar to individual travel, it also varies what frameworks help us to best get a specific job done during each phase of the product development journey. The handover and interaction between these frameworks builds up a solid base for successfully mastering all relevant steps in the early phase of product development.

      The journey of product development starts off with an idea and moves from an initial concept to its tangible manifestation. In simplistic terms, the ladder in Fig. 1.1 illustrates the basic, well-known foundational steps for the conception phase in a product development process. The conceptual phase—starting from first ideas, to defining the product profile and finally designing the product architecture—sets the fundament for whether the product or service will succeed or fail in a turbulent market. Below the ladder the main core frameworks and their interaction are illustrated. The line thickness on the different phases of the frameworks indicates their respective focus and main area of application.

      ../images/457600_1_En_1_Chapter/457600_1_En_1_Fig1_HTML.png

      Fig. 1.1

      Overview of frameworks discussed in this book

      Zooming in on the main frameworks, Design Thinking and an initial market segmentation are about understanding what the customer needs, or more specific their jobs to be done even are. These early steps require adapting the innovative mind of an explorer and creative individual, who constantly seeks out ideas and solutions to faced challenges. Later during the journey we then need the contributions of those that are strong in connecting the dots between the ideation phase and the requirements and realities that reign in the technical world. Here we need to translate concepts in a way that is understandable and realizable by the engineer. The frameworks of Design to Value and Modularization are predominantly about this translation and implementation phase. Overall, the first stages are about understanding what the right it would be, the latter about how to build the right it right.

      Spanning over all frameworks, the processes shown in Figure 1 are not linear and sequential at all; we consider this today as outdated and instead emphasize a more dynamic, iterative and rapid approach which is depicted by the circular cycles marked on each of the different steps. While agile approaches are well-known for software, there is little written on applying agile for hardware and mechatronics. With our chapter on Agile Development for mechatronics and hardware, we aim to close this gap.

      What Makes This Book Special?

      While there are extensive descriptions for each of the mentioned frameworks, there is no description on how they are actually interlinked parts of a much grander, holistic whole that shape the entire product development process. It also matters what consequences seemingly small decisions have in the long-run: Thus, the most important skill one can master if one is interested in creating impactful products or services is to learn how to connect the right dots in the right moment at the right time. It’s not rocket science. The systematic behind it is what this book tries to share with you. Of course experience matters, but it is only useful if the foundational groundwork sets your sails in the right direction. Thus this book serves like both a map and compass in helping readers navigate through the product development process. It answers the where am I? and how do we best move forward from here?, helping you see both the forest and the trees.

      In the end, inquiry and understanding need to translate and manifest into tangible, concrete action. Another unique aspect of this book is also its structure: first focus on growing understanding, then skills on how to apply new levels of understanding, and lastly provide a practical toolkit for experienced readers. The second half of the book focuses on the how to aspect of the material explored previously, with a practical toolkit containing the most essential and useful tools, built on (also painful) learnings from the business setting.

      How to Read This Book?

      On this journey you can rely on us, but we do need you to be a driver that pays attention to the road. Efficiency and effectiveness will naturally emerge from informed choices when you know how to travel best. Some might be faster and more flexible than others—when traveling by plane all you simply need is to book a ticket to the final destination. Those that choose to travel by car or walk mindfully require a more detailed road map. If you are fixed to always use one travel type, your level of flexibility and ability to adapt to sudden changes is drastically limited. Sometimes you also need to smartly combine multiple travel types to reach a destination or deal with work-arounds. When moving from A to B, sometimes it is not even clear what B is or B keeps on changing as the rules of the game change. Only you as the informed driver or captain at the steering wheel can know what is the best thing to do, but we can equip you with all the know-how, know-what, know-when and know-why that could make an informed decision much easier. You can only act to changes appropriately and accordingly if you pay direct attention to what is being said by the one reading the map, yet still have an awareness for the outer, external environment: You have to be able to see both the big and small picture. It is also critical to understand the interactions and interfaces that you need to be aware of, as they could fundamentally change everything.

      This book invites you to embrace interdisciplinarity and resolve complexity by learning how multiple approaches can be helpful for solving a problem. The more you know, the more you can switch between different ways of thinking and different lenses or approaches. By having multiple problem-solving approaches at hand, you can not only choose the best one for a unique circumstance, but are also more likely to understand the larger system and bigger picture in which we are operating. Growing your knowledge means that you have increasingly more connection points to understand a system: Wherever you dive into a lifecycle, you can become more aware of the unique challenges and important points to consider.

      Who Is This Book for? Who Do We Hope Will Travel With Us?

      This book is an essential guide or foundational toolkit for anyone who is involved in the process of developing, offering or selling any type of product or service. For consultants, entrepreneurs and experts for example, the linkages between topics can be extended by using the tools explained in each chapter, or can be used to emphasize the benefits of for example Modularization in combination with Design Thinking to a client. For managers of all types of organizations and students, it provides a critical overview of the product development process and anecdotes on how a conglomerate tackles innovation and product management. It aims to empower and enable anyone willing to put in the effort to skillfully turn roadblocks into opportunities to discover new, even more exciting paths.

      Overall, at the heart of all approaches are a few common principles, which serve as a guideline throughout the book and which we aim to highlight:

      The customer and his jobs to be done are at the center of attention—not the objectives and goals of departments or company metrics that need to be fullfilled.

      Interdisciplinarity is key: Creating a common ground for understanding between different departments, people and methods, is fundamental in having a holistic oversight to a problem. Without being able to pull inspiration and understanding from multiple sources, one inevitably (a) will always think and approach a problem in the same manner, (b) lack the ability to mix and match tools according to the unique build of a specific problem, and (c) not be utmost efficient in finding an answer as one is not aware of all the things that are out there.

      A holistic approach that accounts for interdependencies and feedback loops within systems allows us to manage complexity more effectively. It also invites us to stay humble, protecting us from arrogance or a narrow point of view. In the worst case, a wrong problem definition can lead individuals to easily fall prey to the danger of solving the wrong problem, resulting in an unnecessary loss of resources, time and effort.

      There is no silver bullet for success. Rather, it is the unique combination and mastery of many tools, skillsets and mindsets, and knowing when to apply them best, that will help spur disruptive innovation successfully.

      Secretly we hope to inspire readers to become System Architects: Specialists that thrive on simplifying complexity, resolving ambiguity and focusing creativity in order to develop products, services, experiences, etc. that their users love. We encourage readers to share their experiences with us and to provide suggestions for improving the material. We are looking forward to hearing from you via our email at mastering.disruption@gmail.com.

      Part I

      Imperative and Fundamental Concepts

      Change Happens

      Change happens. It is just a part of life, if we want it or not. Given that change is natural, we can become better at understanding how to learn from and adapt to disruptive change. Sometimes a story manages to convey central messages so well, that it is not only a pleasure but actually the most effective to just re-tell it. To this end, Who Moved My Cheese? is a New York Times business best-seller that has helped millions of people understand and reflect on how to deal with change, both at work and in their private lives. Its central theme is how to overcome fear of the unknown (which often accompanies radical change). The central message that it promotes and illustrates is that constantly learning, adapting and courageously moving on to look for new opportunities can help us to actively shape the future in ways that make us happy. By stepping outside of one’s comfort zone when the time is right. This business fable is both a call for optimism and for refusing to give in to the natural tendency of settling in a false sense of comfort and security. It encourages us to find stability in learning how to evolve with, rather than fight against, necessary and potentially growth inducing change.

      Storyline

      Two mice (Sniff and Scrurry) and two little people (Hem and Haw) live in a maze and search for cheese. The cheese is a metaphor for whatever makes them happy or they want in life, such as health, a certain job, organizational success, a loving relationship, material things etc. The maze is the place where they look for that cheese. To paint a vivid picture, we accompany these four creatures on how they deal with a drastic, life-changing situation. With their cheese suddenly gone, how will they go about adapting to new circumstances?

      In order to find cheese, the mice have developed slightly different tactics than the little people. The mice only have little brains but very good instincts for finding cheese. Sniff has become adept in sniffing out cheese very quickly, whilst scurry is better at always being ready to race about if it leads him to new cheese. On the other hand, the little people have very complex brains. Rather than trusting their gut instinct, they like to find their way through the maze by using their brain power and make use of guide books or maps. When the cheese is suddenly gone, the little people react with anger, frustration, helplessness and despair: Who moved my cheese?! they say. For them, adapting to change with speed and flexibility is not as easy. However, the moment Haw is willing to let go of the illusion of getting his old cheese back, overcomes his initial fear and starts looking for new cheese, he starts to believe in the possibility of a better future and feels free. No longer locked down by his fear, he begins to look for new cheese in the outside of his current world, the maze.

      After a turbulent search for new cheese, the story ends with Sniff, Scurry and Haw joyfully finding even more new cheese than they ever had before. Whilst Haw is able to learn and adapt like the mice already did much earlier, Hem is not.

      This short business fable contains a plethora of profound, wise insights. It fully acknowledges that leaving one’s comfort zone naturally requires a lot of courage, as in facing one’s own fears and sometimes quite harsh realities. Sometimes we need that nudge from our surroundings to again and again question our own beliefs, remember what we have forgotten, or just find courage to move and take things step by step. Thus this story encourages us to reflect and ask, what would you do if you weren’t afraid?, and then to actively create the change you want to see. The way to do this is by taking responsibility for one’s own fate and having the courage to shape it (as in find new delicious cheese), by overcoming own fears and limiting beliefs. As Haw realizes in the story, when you change what you believe, you can change what you do. When you believe in what you do and do what you believe in, you are less scared. When you are less scared to look for new cheese and get going, you are more likely to actually find new cheese and be happy. With good intentions and a warm heart for his friend Hem, in the story Haw also writes down some quintessential insights on the wall, hoping that they will help his friend find his way through the maze. These are as follows:

      Change happens. They keep moving the cheese. This means that change is a constant in life. A nurturing and energizing ecosystem keeps on changing. Strong leaders see change as an inevitable human experience and get ready for it.

      Anticipate Change – Get ready for the cheese to move. Realizing and noticing small changes early helps to adapt to large changes that are to come.

      Monitor change—smell the cheese often so you know when its getting old. Radical change can happen over night, but often there are warning signs which we can spot if we monitor our environments and the systems of which we are part of closely. Of course, we do need to know what to monitor in the first place.

      Adapt to change quickly—the quicker you let go of old cheese, the sooner you can enjoy new cheese. Let go of the past to adapt to the present and fight for the future. When we live in the past, emotions and limiting beliefs can stop us from moving forward. When we live too far in the future, fear might freeze and inhibit our actions. Thus when we live in the present and choose to see reality as it is, we are open to realizing that new cheese is just waiting for us to be found, but also that finding it requires actively taking the next steps towards enabling luck and finding new cheese.

      Enjoy change—savor the adventure and enjoy the taste of new cheese. Change can be an enjoyable adventure of sensing and finding exciting new growth opportunities. By focusing on our values and what gives us meaning rather than our fears, we can use them as our fuel to rise above immediate circumstances and dream of mesmerizing new types of cheese.

      Be ready to quickly change and enjoy it again—they keep moving the cheese. Living and moving with change is easier than denying it and staying stagnant in the process.

      Change and win! Move with the cheese. The quintessence is that in order to find new cheese, you need to adapt with the change. If you stick with what you know, fear of failure and settling might hinder from finding that nurturing courage to start into the new and unknown. There is a lot of new cheese, but we can only win if we open our hearts and minds to it! As a consequence, trusting in the process of finding new cheese and actively moving with the change is smarter than passively waiting in a false sense of safety, stability or reality. The longer you wait to adapt, the higher your inertia and the lower your agility and willingness will be to reinvent your current approaches.

      Reference

      Johnson, S. (1988). Who moved my cheese. New York: G. P. Putnam’s Sons.

      © Springer International Publishing AG, part of Springer Nature 2019

      Christoph Fuchs and Franziska GolenhofenMastering Disruption and Innovation in Product ManagementManagement for Professionalshttps://doi.org/10.1007/978-3-319-93512-6_2

      2. Disruptive Innovation

      Christoph Fuchs¹  and Franziska J. Golenhofen¹

      (1)

      Corporate Development Consulting, Siemens AG, Munich, Germany

      The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.

      Clayton M. Christensen

      2.1 Introduction

      Why Do Great Companies Fail?

      Imagine the following: your customers love the products, services and performance you deliver, and your competitors are years behind you in terms of performance. You seem invincible, which sales numbers only seem to confirm because your company is breaking one growth record after the other. It truly seems that you are riding on a wave of continuous luck and success, with your teams over-performing and customers valuing your offering. There just truly are no signs anywhere that something could go wrong! Or at least you think so.

      This assured mindset of thinking you are the best can have fatal consequences. The problem is that things can change unexpectedly—disruptively, almost over night. Imagine you are now replaced in your core market and there is nothing you can do but watch the ship sink. Hit by gigantic disruptive waves, it is too late to change course or do anything that could restore your business to original heights of glory. Before truly being prepared, you are replaced or killed by someone who has never been taken seriously as potential competition, but now they are a true threat because they simply changed the rules of the game within the industry! Although so much weaker and less experienced than your established business, the newcomer managed to make you obsolete by bringing in a game-changing technology or a radically different, more effective way of meeting customer needs. Frustrated, all you can do seems to be to try and catch up with the new competition, re-learn and adapt to the new circumstances. You begin to ponder and ask yourself, how could all of this happen?

      Behaviors and mindsets linked to knowing better or pure hubris manifest in actions and organizational forms that precisely allow for the phenomena of David conquering Goliath to occur. In modern usage, this ancient story is used to describe how an underdog (i.e. weaker, smaller opponent) can succeed in the face adversity; against all odds, the newcomer conquers over an invincible, old and quite arrogant giant. Unusual and surprising with ingenuity, the new approach taken by the entrant leads the new way forward by taking a route no one even expected to be a smart tactic. In the natural fight for survival, the competition never sleeps nor stops to adapt and evolve. The consequences of the competition coming up with radically different ways to better meet basic customer requirements can be so drastic that they lead to the downfall of your carefully created business empire. Thus executives whose companies are currently highly profitable should not think about whether the power of their companies earning attractive profits will shift, but when (Christensen, Raynor, & Verlinden, 2001).

      Example: Siemens Misses a Dramatic Paradigm Shift

      A story even used by CEO of Siemens J. Kaeser exemplifies how important it is to constantly adapt to technological innovations (2016). Deriving also from personal experience, the quintessence of David and Goliath is shown in this famous incident, which forever changed the face of global telecommunication.

      The setting is the mid 1990s to early 2000s and the storyline goes as follows:

      Siemens was founded in 1847, and the telecommunication business was one of the most innovative and successful units of Siemens for the last 150 years. In the field of voice telephony, circuit-switched networks had been an established, well-functioning technology. As a quick reminder on how it works, circuit switched networks reserve a dedicated line or channel for the entire communication of a connection between two users. The approach is similar to a string telephone where sound vibrations travel along a fixed pathway in an uncompressed manner, from one end to the other. The incumbents in this highly attractive market were the telecom giants Siemens, Nortel, Lucent, Alcatel, and Ericsson. At that time, Siemens had several ten-thousands employees working in the entire telecom business: the telecommunication business was among the most profitable business segment of the conglomerate. The Siemens switch, called EWSD (Ger: Elektronisches Wählsystem Digital, Eng: Electronic Digital Switching System) became the best-selling switching system in the world. By the late 1990s, the company was delivering EWSD systems for more than 250 million connected units to customers in more than 100 countries. At that time, Siemens communication technology was riding the wave of success and everything seemed to be under control.

      What a fatal illusion!

      In no connection to voice transmission came the phenomenal growth of the Internet in the mid-to-late 1990s. The technology behind the internet was originally driven by data transmission and not intended to transmit voice. However, the rapid speed of internet technology development quickly changed also the landscape of telecommunication. Cisco was the company driving this innovation, founded as a start-up in 1984. Imagine that by late 1990, Cisco had a de facto monopoly in this fast growing market segment by connecting the dots between internet and telecommunications in the right way. With this, Siemens and the other large giants could do almost nothing but watch as they were disrupted by Cisco.

      How was a radical take-over of market share possible? What Cisco did fundamentally different is that they combined voice with the internet-based technology of data transmission. They helped customers get the same job done yet took a very different approach, by making use of the internet. Thus, Cisco used a fundamentally different technology as its basis for radical innovation. How? The internet is based on packet switching. Packet switching networks transport data in small chunks, meaning packets. First the original message from a sender is decomposed into small packets. Each packet has a destination address that transports the packet to the final receiver. Each packet seeks out the most efficient route through the network, which means that each packet can go a different route. When received, the packets are reassembled in the proper sequence to build up the original message.

      For voice transmission, the decomposition of the original voice signal into small packets has a slight disadvantage (no real-time transmission is possible compared to circuit switching), as transporting voice chunks through different paths via the internet and finally reassembling those packets at the receiver causes a certain latency/time delay. It also means that the quality of Voice over Internet Protocol (VoIP) is less than in circuit switched networks where voice is transmitted via an established channel. Siemens thought that customers valued voice quality so much that they would never choose VoIP because the connection could never be as good as circuit switched technology. How wrong they turned out to be.

      The most tragic reality about this true story is that by the mid 1980s, three young men from California actually came to Siemens in Munich with the cool idea of voice calling via the internet. Would you be interested to join in? they asked, but they were met with disbelief, arrogance and rejection. How should that work? If VoIP was possible, we would have already invented it on our own Siemens representatives answered (Kaeser, 2016). Siemens could just not believe that this invention was possible and missed an opportunity that would later lead to its own downfall in the telecommunication business. So the three young men pursued and accomplished their vision without Siemens and changed our world. These three young men from California were the future co-founders of Cisco.

      So what was the problem for the market leading companies such as Siemens? Believing that this new approach would not work, Siemens held on to its ingrained beliefs, just not believing in the crazy, radically new. It continued to follow its set philosophy that for voice calls, there is nothing more important than quality for voice transmission. Very skilled and experienced engineers even thought that VoIP will never really work due to quality and security reasons. So they continued and incrementally made innovations for circuit switched technology. In the meantime, new technologies like ISDN and later ATM (Asynchronous Transfer Mode) had emerged that allowed voice and data transmission at the same time but still were based on circuit switched network (ISDN), or virtual circuit switched networks (ATM). ISDN was very successful for Siemens for some time and there was a coexistence of VoIP and ISDN in the early-to-mid 2000s. ATM was driven by the philosophy to maintain the Quality of Service (QoS) such as voice quality, and it was considered to be the future for the internet by many telecommunication experts.

      But the situation changed rapidly as soon as VoIP had a voice quality that was considered to be good enough for most users. VoIP meant higher efficiency, dynamic bandwidth, less complexity, significant cost reduction and tremendous increase in data rate. Most importantly, with the rise of the internet data traffic exploded exponentially and the new performance feature that users were requesting and valued was data rate, not voice quality. The final verdict for Goliath’s such as Siemens and the other incumbents in the era of circuit switched voice telephony was finalized. VoIP finally became a fundamental stepping stone in enabling digitalization, displacing circuit switched technology and enabling today’s massive internet surfing that seems so normal to us today.

      It should be noted that this story is quite exceptional, because Siemens was one of the few companies that was able to recover and reinvent themselves after such a massive disruption. Today this bitter own failure is still deeply ingrained in the corporate memory of the company, and the entire management takes it as a imminent reminder and warning to not let a similar catastrophe happen again. Potentially this is one reason for its current success. Today, one could say that Siemens is one of the leading companies in realizing digitalization in the B2B sphere.

      2.2 Defining Relevant Terminology

      Disruptive innovation, as introduced by Professor Clayton M. Christensen, has become a powerful way of thinking

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