Rebranding Strategies: When they can help, when they cannot help – Best Buy

Rebranding Strategies: When they can help, when they cannot help – Best Buy

I worked eight years at Kingston Technology, a manufacturer of solid-state memory products, both volatile (DRAM) and non-volatile (Flash). In business 27 years, Kingston is in a commodity space and competes primarily on cost; it has no technology of its own and buys semiconductor chips from the manufacturers.

Kingston does very little marketing, promotion and advertising. Instead, it invests heavily in fulfillment and the customer website is part of their competitive edge when it comes to getting to the product you want, looking at pricing information and delivery; the order entry process is efficient, smooth and intuitive.

Interestingly, Kingston has what I consider an outstanding tagline: “Committed to Memory.” Like all taglines, they must be linked with the logo, products, culture and corporate values (Freeman, 2005) and over time, the cachet and value only builds to form an integrated brand:

Kingston Logo

Considered the ten best taglines of all time, most of us can readily identify these chestnuts (Klein, 2005):

Top 10 Taglines:

1. “Got milk?” (1993, California Milk Processor Board)

2. “Don’t leave home without it” (1975, American Express, AXP)

3. “Just do it” (1988, Nike, NKE)

4. “Where’s the beef?” (1984, Wendy’s)

5. “You’re in good hands with Allstate” (1956, Allstate Insurance, ALL) 6. “Think different” (1998, Apple Computer, AAPL)

7. “We try harder” (1962, Avis)

8. “Tastes great, less filling” (1974, Miller Light)

9. “Melts in your mouth, not in your hands” (1954, M&M Candies)

10. “Takes a licking and keeps on ticking” (1956, Timex)

Two years ago Best Buy was in transformation, losing executives and market share at the same time. In 2011 a huge push to rebirth the company was undertaken (Zmuda, 2012). Their old taglines of “You Happier” and “Buyer Be Happy” were replaced with “Making Technology Work for You.” Certainly seemed like a step in the right direction. The old taglines weren’t much better than the auto manufacturer whose tagline was “We Put People in Front of Cars,” or Mobil’s “We Want you to Live.”

Taglines should be more than a proverb, more than a motto (Klein, 2005). Taglines should convey the culture of the corporation, it core values and its vision. The tagline should embody what you are promising to the customer and how will you convey that promise?

Educational institutions generally are a good read for taglines to avoid altogether. Like a resume full of generic and predictable action verbs, institutions of higher learning tend to use taglines that include “future,” “excellence,” “challenge,” and “change.” (Millbern, 2012). This is not an effective way to impart the character of your organization.

Back to Best Buy. We now have a couple years that have passed since their huge investment in rebuilding their brand. This included an expensive 2011 Super Bowl advertisement featuring Justin Bieber and Ozzy Osbourne. They retooled and enhanced their offerings in service and support, adding classes and training (Zmuda, 2012). Yet for all this transformation the past four quarters ending May 3, 2014, operating income has averaged only 2.7% of revenue, and since the beginning of 2014 their stock price has dropped by 25% as the rest of the market has been booming.

The lesson is here is that rebranding is no substitute for rethinking an entire business model. The brick and mortar retail stores have been retrenching, shrinking, or failing altogether at an accelerating rate as consumers have moved to online purchasing in droves. Here is a sample of the carnage in just the past several years:

  1. Abercrombie & Fitch
  2. Barnes & Noble
  3. Aeropostale
  4. C. Penney
  5. Office Depot
  6. RadioShack
  7. Sears Holdings
  8. Staples
  9. Toys “R” Us

Retail stores are facing tremendous headwinds as people are shifting to online purchases. Managing costs, shrinking stores, and trying to eke out whatever profitability might remain in the brick and mortars is a far superior strategy than the idea of “putting lipstick on a pig” and trying on a major, costly and radical transformation. Because after all the investment is spent, the brick and mortars still have no compelling value proposition relative to the online alternatives.  ~r



Freeman, K. (2005). Creating strategic taglines. Strategic direction, 21(10), 3-4.

Klein, K. E. (2005). Slogans that are the real thing. Business Week Online.

Millbern, R. (2012). Taglines Are Dead: Who killed them, and how we can bring them back to life.

Zmuda, N. (2012) Best Buy Gets Back in the Game With New Tagline, Focus. Advertising Age, volume 83, issue 26, pages 4–6.


Rodd Mann | mba | cpa | apics cpim | six sigma hands-on-champion

Disrupt or Die!

Disrupt or Die

Theories of Disruptive Innovation and Value Innovation

Rodd Mann

Capella University

Doctor of Business Administration – Leadership (candidate)

Disruptive InnovationTheories of Disruptive Innovation began with the publication of Clayton M. Christensen’s much-heralded book, “Innovator’s Dilemma,” (Christensen, 1997). The Webster Thesaurus describes innovation as “change, alteration, revolution, upheaval, transformation, or metamorphosis. Technological innovation refers to a new method, idea, or product designed to save energy. In the book Mr. Christensen makes a distinction between what he refers to as “sustaining” and “disruptive” technologies.

The first deals with the more incremental improvements in technologies that a firm undertakes within their existing markets and among their existing customers. On the other hand, “disruptive” technologies primarily refer to the innovations that are more revolutionary, going well beyond the metronome of continuous improvements in the form of sustaining innovations. The disruptive category includes new technology that although it may have very little initial market acceptance and impact, it goes on to displace the technologies that were established, and eventually becomes the new normal.

USBAn example of a disruptive technology is Flash (NAND) memory. Productized in 1988, flash memory provides data storage in the form of secure digital (SD) cards for cameras, universal serial bus drives (USB) for connection to computers, and solid-state (SSD) internal and external storage drives in lieu of traditional hard disk drives. The new technology was too expensive initially and in fact cost ten times as much to store a bit of information in flash memory as it did on a platter in a hard disk drive. Interestingly the hard drive (HDD) technology beginning in the 1970’s disrupted tape drives. Even though the same ratio of 1/10th the cost to store a bit of information on a tape drive as a hard drive, the disruptor, in this case hard drives (HDD), effectively and substantially reduced the market for tape drives and relegated them to library and archival applications in high-end enterprises. A number of tape drive manufacturers went out of business beginning in the 1990’s, and today only Quantum (Colorado) remains in the United States.Zip

As the cost of Flash Memory has decreased markedly over the past twenty years, the total storage market is beginning to be impacted by this disruptive technology. When asked during an interview, “How are you going to compete with this new flash technology?” then Chief Operating Officer Bill Watkins of Seagate Technology responded, “We own most of the IP (intellectual property, patents) from the motherboard all the way to any storage peripheral, so if flash begins to eat into our market share we will sue.” Since that time hard drive manufacturers Seagate and Western Digital have acquired solid-state drive companies and invested heavily in research and development. Today these hard drive manufacturers have a full product portfolio of flash based storage devices along with their traditional hard drive product line-up.Seagate

WDCToshibaChristensen argues that these disruptive innovations are the cause of failure for the firms that are impacted by the new technology interloper. (Christensen, 1997). A follow-on to disruptive technology research, “value innovation” derives from the notion of disruptive innovation, but focuses upon what is happening in the current competitive environments so that new ways to compete in new markets and opportunities might be developed. The focus is on innovation in both cases, without which a given firm will likely miss out on these opportunities or be too late to participate.

When Darwin’s Theory of Evolution was first proposed, it quickly led to applications far and beyond the original development of species (Hull, 1973). Today we talk of not only biological evolution but also social evolution and numerous other evolutionary metaphors – “survival of the fittest” can fit any situation we choose today.

Similarly, Mr. Christensen’s thesis has evolved a virtual cottage industry of conferences, seminars, testimonials and consultants willing to advise companies how to adapt “disruptive technology” focus in their firm, school, church, government or any organization. Today you can find scholarly writings on “Disruption Innovation from Emerging Economies” (Markides, 2012), “Innovation for the Bottom of the Pyramid,” (Prahalad, 2012), “Cost Innovation,” (Williamson, 2012), and “Reverse Innovation,” (Govindarajan and Trimble, 2012).

But problems with the theory and challenges to the underlying theoretical assumptions are beginning to show cracks inherent in the model. First of all, Mr. Christensen did not utilize scientific methods in the design of his study. Rather, he handpicked several examples he hoped would demonstrate the validity of his thesis. His conclusion was that he now understood why a given company ultimately fails. He goes on in his book to claim that by following his definitions of “disruptive technology,” a firm’s demise can be predicted.

The theory doesn’t attempt to address disruptive impacts in far-flung countries, only the impact on ‘established markets.’ What constitutes sustaining versus disruptive technology? How innovative does it have to be? Should it be revolutionary, as in the case of the smart phone? Or can it be evolutionary, as in the case of steadily improving technologies in handheld digital devices over the past ten years? Many innovations are excessive, some appeal only to the very wealthy, should they demonstrably improve our standard of life or significantly lower the cost of living?

“Disruptive Innovation” appears to be simply yet another business model characterization, a business book that seeks to explain and predict but in fact does neither. Only recently several new business strategies have been proposed, ostensibly to explain and even predict business activity and potential success or failure:

  1. In “Competitive Strategy,” (Tom Porter, 1980) discussed three primary determinants of success: Cost Leadership, Differentiation and Focus.
  2. Yet one more popular model dealt with the theory of making ‘rational choices’ (Nau, 1999). Certain tests determine whether a manager is considered to be making rational choices. The underlying assumption with ‘rational choice theory’ is that the decision-maker has the knowledge of the important exogenous variables impacting their environment. They are considered ‘individually rational’ if their choices satisfy criteria described as independent, and they are considered ‘collectively rational’ if they can go beyond ‘individual rationality’ to also include a common denominator of knowledge and prior-held beliefs.
  3. Another business model that was popularized was called “game theory.” Game theory also proposed to address a given firm’s strategy through mathematical models of the dynamics a decision-maker utilizes in all areas including both cooperative and conflicting strategies under consideration. (Wikipedia)

In fact Christensen was so convinced that he was onto something that could and would be validated as a predictive tool with the passage of time, he launched the “Disruptive Growth Fund” in 2000 (Lepore 2014). After losing more than half of its value in less than one year the fund was closed. In a Business Week interview (MacGregor, 2007) Christensen, relying upon his own theory, said that Apple could not succeed with the iPhone, “…history speaks pretty loudly on that.” Apple went on to sell $1.5 billion worth of their new smartphones in just the first five years. So apparently “disruptive technologies” are clearly identifiable all right, but only in the rear-view mirror. There is no demonstrable predictive quality to the theory. But whether we call past successes disruptive technologies, breakthrough, game-changers or anything else, the tag is simply a characterization, not a science. History also tells us something about successful entrepreneurs. They are often bright risk-takers who largely ignore the past and push on through with their vision anyway. Consider for a moment Elon Musk and Tesla. What would disruptive theory have predicted in his case?

The doctoral thesis that began with work Mr. Christensen had done with Mr. Bower (1995) focused upon the disk drive industry, specifically a company named “Seagate Technology.” Christensen notes that Seagate delayed moving from 5 ¼ inch drives to 3 ½ inch drives primarily because their largest customer, IBM, saw no need for the smaller form factor in their own products. At this time there were almost 100 companies participating in the disk drive market (see Appendix A). Although Christensen also examined several other product characteristics of disk drives, he did not attribute issues to any of the other significant variables that can account for the acceptance or rejection of a disk drive by the consumer:

  1. Weight
  2. Capacity
  3. Seek time / RPM
  4. Failure data / Quality / Life of the drive
  5. Cost
  6. Applications (consumer, mobile, desktop, enterprise)
  7. Power usage
  8. Number of electro-magnetic sub-assemblies in the bill of material
  9. Speeds and feeds
  10. Compatibility

So what did happen to Seagate since Mr. Christensen’s blockbuster book chose Seagate Technology as his “magnum opus” “or crowning achievement” in terms of his hand-picked cases? Today Seagate has a market capitalization of $20 billion (Yahoo Finance). For the past couple years Seagate has averaged $14 billion in revenue and $2 ½ billion in operating income. The firm generates over $3 billion per year in cash flow from operations. And only two other companies remain in the business today: Western Digital Corporation and Toshiba. As an oligopoly, in spite of the commodity nature of disk drives, all three disk drive companies generate significant revenues and profit.

What accounts for Seagate’s success? It turns out that the answer is far more mundane than the clarion call of “Disrupt of Die!” Seagate focused on technology, largely through its acquisition strategy (See Appendix B), getting into the enterprise market with its acquisition of Control Data. Being first to market with a disruptive format had nothing to do with the success of the three remaining disk drive makers. Western Digital used to describe itself as a “fast follower,” a characterization their then Chief Executive Officer, Matt Massengill, proudly and often repeated on the quarterly financial analysts’ calls. Indeed the survivors were the ones that just kept on doing better and better – incremental evolutionary improvements in technology, efficiency, cost, market share, and flexibility. Not disruptive technologies, nor sustaining technologies, nor value innovation, nor focus, nor any other erstwhile popular business competitive strategy that has been proposed, heralded, then later discarded over time when a new idea takes hold. The companies that could have been characterized for their blockbuster novel and disruptive technologies, Iomega’s Zip Drive for example, are today all out of business. The failures of all of these disk drive companies had little to do with failing to embrace new “disruptive technologies,” and a lot to do with plain old bad management. In the case of Micropolis, they were fraudulently shipping bricks in the disk drive boxes and recording these shipments as revenue. Poor management indeed.

Companies worry about disruptive technologies, because if they don’t, they will lose their competitive edge and perhaps even go out of business. But just as the Boston Consulting Group divides company businesses into four categories within a product portfolio: “Question marks,” “dogs,” “stars” and “cash cows,” each business requires a completely different management and operating strategy. Certainly the “stars” must be guarded or their flank will be attacked by disruptive technologies. But the “question marks” are these newer technologies, and every company should be doing research and development to identify the “next best thing.” Some will bet correctly, most will not. Why? Pride in the current technology, or hubris, can blind the management team to a technology that will make theirs’ obsolete. General Motors, Ford and Chrysler could have developed a blockbuster, high-end electric car. But they didn’t. It takes upstarts, bright, entrepreneurial risk takers that feel in their gut that this is the next big thing. IBM lost the PC business to Compaq primarily on portability. Compaq lost the PC business to Dell primarily on the low-cost, online configure-to-order model Dell offered. And Dell is losing the PC business to other digital device manufacturers with newer, sleek products that you can touch and feel in retail stores. The beat goes on.

A great management team can take a bad business and make it successful, just as a bad management team can take a good business and cause it to fail. That is the root cause of success or failure of businesses, not “disruptive technology.” And the second lesson is that management teams inevitably get blinded by their own hubris, unable to see that the current technology, of which they are so understandably proud, is about to get trampled and taken out. Bad Mgmt




Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: catching the wave. Harvard Business Review Video.

Christensen, C. (2012). The Innovator’s Dilemma. 1997. Harvard Business School Press, Boston, MA.

Govindarajan, V. and Ramamurti, R. (2011) Reverse Innovation, Emerging Markets and Global Strategy. Global Strategy Journal, 1, 191–205.

Hull, D. L. (1973). Darwin and his critics: The reception of Darwin’s theory of evolution by the scientific community.

Lepore, J. (2014). The Disruption Machine: What the gospel of innovation gets wrong. The New Yorker.

Markides, C. C. (2012). How Disruptive Will Innovations from Emerging Markets Be? MIT Sloan Management Review, 54(1), 23.

McGregor, J. (2007). Clayton Christensen’s Innovation Brain. INNOVATION.

Nau, R. F. (1999). Arbitrage, incomplete models, and interactive rationality. Durham, NC: Duke University.

Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. FreePress, New York.

Prahalad, C. K. (2012). Bottom of the Pyramid as a Source of Breakthrough Innovations. Journal of Product Innovation Management, 29(1), 6-12.

Williamson, P.J. (2010) Cost Innovation: Preparing for a ‘Value-for-Money’ Revolution. Long Range Planning, 43, 343–353.


Appendix A

List of disk drive manufacturers since the 1980’s no longer in business today:

  1. Alps Electric
  2. Amcodyne
  3. Ampex[
  4. Apple
  5. Atasi Corp.
  6. Areal Technology
  7. Aura Associates
  8. Avatar Systems
  9. BASF
  10. Bryant Computer Products
  11. Burroughs Corporation
  12. CalComp
  13. Calluna Technologies
  14. Century Data
  15. Cogito Systems
  16. Comport
  17. Computer Memories Inc.
  18. Conner Peripherals
  19. Conner Technologies
  20. Control Data Corporation / Imprimis
  21. Cornice LLC
  22. Data General
  23. Data Products
  24. Data Recording Instruments
  25. Data Storage International
  26. Diablo Systems
  27. Digital Equipment Corporation
  28. DZU
  29. Epson
  30. Evotek
  31. ExcelStor Technology
  32. Fuji Electric
  33. Fujitsu
  34. General Electric
  35. Gigastorage
  36. Halo Data
  37. Hewlett-Packard
  38. Hitachi
  39. Hitachi Global Storage Technologies
  40. Hokushin Electric Works
  41. Honeywell Bull
  42. IBM
  43. Information Storage Systems
  44. Integral Peripherals
  45. International Memories
  46. Iomega
  48. JT Storage
  49. JVC
  50. Kalok
  51. Kyocera
  52. LaCie
  53. LaPine Technologies
  54. Marshall Laboratories
  55. Matsushita
  56. Maxtor
  57. Memorex
  58. Microcomputer Memories
  59. Micropolis Corporation
  60. Microscience International
  61. MiniScribe
  62. Ministor Peripherals
  63. Mitsubishi
  64. NEC
  65. Newbury Data Recording
  66. Nippon Peripherals
  67. Nomaï
  68. Olivetti
  69. Philips
  70. Plus Development
  71. Potter Instrument
  72. PrairieTek
  73. Priam Systems
  74. Quantum Corporation
  75. Raymond Engineering
  76. Rodime
  77. Sagem
  78. Samsung
  79. Seiko Epson
  80. Sequel
  81. Siemens
  82. Sony
  83. Storage Technology Corporation
  84. Syquest
  85. Tandon Corporation
  86. TEAC
  87. Texas Instruments
  88. Tulin Corporation
  89. Venturi International
  90. Vertex Peripherals
  91. Wang Laboratories




Technology & Innovation: Sandisk versus Kingston Technology

Sandisk is an S&P 500 public company traded on the NASDAQ (SNDK). The company manufactures and sells solid state NON-VOLATILE memory and was founded in 1988 by Dr. Eli Harari. From inception to the present day, growth came as a result of two primary factors: 1) Flash technology for which Sandisk now has a virtual treasure trove of patents, (almost 5,000), and 2) More than a half dozen large and significant acquisitions.Sandisk

Kingston Technology is a private company. The company manufactures and sells solid state VOLATILE DRAM (originally) and NON-VOLATILE memory.  Founded in 1987, Kingston is jointly owned by two Taiwanese-American businessmen, Mr. David Sun, and Mr. John Tu. From inception to the present day, growth came as a result of two primary factors: 1) Understanding along with deep semiconductor supplier relationships, and 2) Organic growth.Kingston

Both companies began around the same time more than 25 years ago, and both companies generate about $6 billion per year in annual revenue. But other than a similar product portfolio they couldn’t be more different beyond the same solid state electronics manufacturing industry:

  1. Sandisk spends $750 million per year on Research and Development (R&D). Kingston spends zero.
  2. Sandisk generates $720 million per year on royalty and license fees associated with its patents, this revenue is at 100% gross margin, and makes up over 1/3rd of their after-tax profit. Kingston has no revenue from royalty and license fees, no patents, and no R&D. (Gagnon, 2013)
  3. Sandisk is vertically integrated, sharing semiconductor fab capacity with Toshiba. Kingston is horizontally integrated and purchases components from semiconductor suppliers like Toshiba.
  4. Sandisk is always at the leading edge of flash technology with the newest products in the industry. Kingston waits until technology is mature, even in the autumn of the product life cycle, before manufacturing and selling.
  5. Sandisk lost almost $2 billion in 2008. Kingston Technology has never lost money.

So lest you look at boring Kingston Technology, with no technology of their own, basically buying semiconductor chips and adding another 10% of value-add in the form of DRAM Modules, Solid State Drives, Secure Memory cards and USB drive enclosures, and call them RED OCEAN, think again. This company has a net worth of more than $2 billion with absolutely no debt at all. According to Forbes each owner was not the least bit wealthy when they started the business yet today are worth $4 billion each.

Kim and Mauborgne argue in “Value Innovation” (2004) that a given company is either a “Pioneer, a Migrator, or a Settler.” Clearly the hands-down Pioneer winner in the world according to Flash Memory is Sandisk Corporation. Sandisk started the flash business, they developed the technology platform, and 37% of their after-tax profits come from their intellectual property billings. And just as clear is the fact that Kingston Technology is a “Settler.” They employ no technologists, and for the most part their manufacturing and sales teams have only superficial knowledge of how the products function. None of them could quote “Ohm’s law” to you.

Both have grown their revenue to comparable size, $6 billion per year. But Sandisk lost $2 billion in 2008 while Kingston has never lost money and has minted billionaires in both owners.

There is nothing “BLUE OCEAN” about Kingston, only Sandisk (Barwise, 2012). “Existing markets” would be a strong indication that Kingston is a RED OCEAN player, yet an unbiased financial analysis might conclude Kingston is the superior business model having achieved the same revenue growth without ever losing money and therefore imposing far less risk and volatility on the potential investor.

The example Barwise and Meehan provide with Samsung (2012) misses the mark. Samsung, one of a half dozen big chaebols in Korea, took the post-WWII manufacturing playbook of Japan and went on to trounce Japan economically. But they did not do so “making the competition irrelevant,” nor by “developing radical new products that create uncontested market space.” No. They took on Apple, a company no other competitor would dare have the audacity to touch. It was Apple who appears to fit the “BLUE OCEAN” characterization, not Samsung.

So what did Samsung do then to ultimately exceed Apple’s market share in the smartphone? They did so through a brilliant strategy and by following a tried and true business planning model that goes something like this:


Business Planning

As ubiquitous and wonderful as Apple’s new iPhone was, Samsung sought to document all of the customer complaints:

  1. Too expensive
  2. Limitation on phone service carrier (initially)
  3. Small screen
  4. Apple way or the highway (no flexibility)
  5. Few colors, few models to choose from

So the vision was followed by their newly minted strategy: Build and sell smartphones that address every Apple shortcoming (Fast follower? Settler?).

All of the innovation-related articles that have been propagated since Clayton Christensen’s 1997 seminal work entitled “Innovators Dilemma,” have the same major flaw: They presume to have uncovered some business breakthrough that deals with the success stories of breakthrough or “disruptive” technologies. But any company can do well and be accretive with good business planning techniques (see above). And we all should not strive to be breakout disruptors generating obscene profits based upon new technologies protected by patents and launched on proprietary platforms. All such strategies have a limited run of it since eventually competing open technology systems will, as a matter of course, be adopted.

Remember the Boston Consulting Group Quadrant:


Boston Consulting Group

Each company, division and product is in some stage of their life cycle.  And each life cycle calls for different management strategies.  Innovators are focused only on the northeast corner of the quadrant.  But stars, cash cows and even dogs have important roles to play and smart managers know just how to play them.  ~r


Barwise, P., & Meehan, S. (2012). Innovation beyond blue oceans. Market Leader, (Q4),. 24–27. 2. Buisson, B., & Silberzahn, P. (2010). Pages 24-27.

Kim, W. Chan and Renée Mauborgne (2004), “Value Innovation,” Harvard Business Review, Vol. 82, No. 7/8, pp. 172–180.

Gagnon, P. (2013). The business model of patent assertion entities in IT: unilateral restraints of competition or business as usual?. Journal of Antitrust Enforcement, 1(2), 375-417.


Innovation and the History of Data Storage

Difficult to predict...

Difficult to predict…

The history of technological breakthroughs enabling the storage of data has had a run approaching one hundred years. Throughout this time, ever new technology was considered entirely new and unique, disruptive, and breakthrough. One could argue that people working in the data storage industry, from scientists to manufacturing operators to sales and marketing have become accustomed to only one constant: Whatever is the latest and greatest storage technology will not last longer than a few more years. The art within the science of data storage technology breakthroughs is which “horse” to bet on, since a plethora of new ideas in research and development are continuing.

Here are just a few of the developments in data storage since the 1920’s according to (2014):

  • Invention of the magnetic tape drive in 1928
  • Magnetic drum in 1932
  • Electrostatic cathode ray tubes and delay line memory in the 1940’s
  • Hard disk drive (HDD) in 1956
  • DRAM in 1966
  • Floppy drives in the 1970’s
  • CD, CD ROM, DAT and DDS in the 1980’s
  • Flash memory in the 1990’s
  • HD-DVD, Blue ray, Flash cards and holographic in the 2000’s
  • Cloud (today)

One thing data storage has always had were almost insurmountable challenges in terms of barriers to entry: Huge scientific leaps were required, huge amounts of capital were also needed – a semiconductor fab today will run upwards of US$5 billion, with plenty of issues getting from the drawing board to mass production. Certainly not for the faint of heart, but exciting nevertheless.

Where do we go from here? What comes next after the cloud? Most people don’t understand how to describe the “cloud” or even what it is. Basically the cloud’s tangible properties are server farms, data centers in far-flung places that very few people even knew existed. When you save your tax return or your Capella University assignments to the cloud, you are entrusting the storage and protection of your information to a massive array of networked server hard drives, tape back up, flash and software. The good news is that most of this information is in turn backed up, or mirrored, in another similar facility but at an entirely different geography, perhaps on the other side of the planet. The bad news is that if hackers do manage to get into your tax returns, well your problems have just begun.

According to Chen (2013) “The increasing adoption of cloud services is demanding the deployment of more data centers. Data centers typically house a huge amount of storage and computing resources, in turn dictating better networking technologies to connect the large number of computing and storage nodes. Data center networking (DCN) is an emerging field to study networking challenges in data centers.”

So what to expect over the next several years? While speeds and feeds and capacities continue to grow in flash memory and hard drive products, a lot of investment is going into data warehousing, data processing, data mining, network efficiency, fast internet connections and global capability to send and receive information from any place on the planet.

So is that it then? Not at all! In background are holographic storage and who knows? This 3D storage technique could be the next big thing. And in the world of flash? According to Villa (2010) ““Phase-change memory (PCM) technology is the only one of the proposed alternative technologies that is demonstrating the capability to enter in the broad NVM market and to become main-stream in the next decade.” Phase-change memory, Memristors and similar technologies are expected to replace flash entirely. And DRAM, flash and the controller technology necessary to run them together is now packaged into a single multi-chip which in turn is soldered to the motherboard.

What can keep up? One thing is certain though. Technology companies tend to trade at high stock price-earnings ratios. This is because some of them will break out and rocket to the moon. Most of the others will simply whither away, unable to keep up. And it is this phenomena that accounts for the very high volatility in stock price earnings ratios of the tech stocks traded on the NASDAQ exchange. No one is 100% which horse to bet on.


Bez, R., Camerlenghi, E., Modelli, A., & Visconti, A. (2003). Introduction to flash memory. Proceedings of the IEEE, 91(4), 489-502.

Villa, C., Mills, D., Barkley, G., Giduturi, H., Schippers, S., & Vimercati, D. (2010). ISSCC 2010/SESSION 14/NON-VOLATILE MEMORY/14.8.

Zetta, Inc. (2014). Retrieved from






Chen, M., Jin, H., Wen, Y., & Leung, V. C. (2013). Enabling technologies for future data center networking: a primer. Network, IEEE, 27(4).

The Innovator’s Dilemma Debunked


In early 1988, four years before Clayton Christensen began working on his doctorate, focused specifically on the disc drive business, I was hired by Western Digital to be the financial shepherd of their newly acquired disc drive business purchased from Tandon Computers. At this time about 200 companies manufactured disk drives with at least 30 of these maintaining a significant manufacturing presence.

Mr. Christensen focused on one in particular: Seagate. Form factors for disk drives were 51/4 inches and some of the competitors were starting to develop a smaller 3½ inch version. Seagate’s customer IBM said they didn’t need these new smaller drives so consequently Seagate was late to this market and stumbled badly. It was through this study that Mr. Christensen began to develop his idea that unless you innovate, your firm will certainly fail.

Well. I spent four years in finance and in the mid 1990’s went on to become vice-president of manufacturing at Seagate. During this time many competitors left the market, consolidation was happening. But Seagate was growing from less than $3 billion in revenue in 1992, to $8.5 billion in 1996, to $15 billion this year. Seagate is both profitable and paying dividends today, with a market capitalization of $20 billion.

And the competition? Only Western Digital Corporation in the United States remains and Toshiba in Japan. Three companies remain to provide 600 million disk drives per year. I later returned to Western Digital Corporation as their vice-president of finance, only to enjoy the stable growth and consistent profitability you generally find in an oligopoly. So the company that should have predictively failed, according to Mr. Christensen, went on to grow and generate significant earnings and cash as over 90% of their competitors went out of business.

Joseph Schumpeter (1939) defined innovation as “bringing new products to market.” I think he had it right and the definition remains today. Whether we seek to alarm with terms like “Disruptive Innovation, Big Bang Disruption, of Devastating Disruption,” it is simply “a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, with shaky evidence.” (Lepore, 2014).

A huge industry has been built on innovation theory: Consulting, seminars, more and more books, with companies valiantly striving to get this right. Yet what I tried to find right in the notion of disruptive change (Christensen and Overdorf, 2000)) I found misguided instead. To stress resources, processes and values are to miss the primary driver that underpins both the behavior and the manner in which a given company conducts itself: Culture. Plaques proclaiming company values have always been a mystery to me, particularly when I find scant evidence that some or most tenets are even remotely adhered to. If you really want to understand a company then look into their culture. This investigation will take you to the leader, the president, the CEO. His culture, his values, his norms, his priorities, his belief in process and the extent of automation, these are the things that will define the operations of any given firm.

The story of Toyota’s Corolla car was equally off the mark (Christensen and Overdorf, 2000). This product is a success today. Yaris and RAV4 are also success stories. The new entrant, Echo, is off to a good start. It is not about going upstream into higher margin territory, it is about stratifying a fragmented market and correctly dialing in to know how each segment can be accretive. Whenever a company pushes its own technology in order to command higher gross margins, it finds that a commodity, open standard, less-expensive and perhaps even less offered to consumers qualitatively, is just waiting to be developed to kill the proprietary, relatively expensive product. Consider Sony for example. Everything from Beta Max to Blue Ray, they pushed their proprietary technology and generated high gross margins – for a while. Now they suffer while companies in South Korea such as Samsung, have offered reasonable generic alternatives at much lower prices. When Apple invented the iPhone, every aspect of its functionality was Apple-proprietary. What did Samsung do in response? They studied every single consumer complaint about the Apple iPhone and developed phones that solve for these complaints: 1) Not a lot of choices, 2) Inflexible, 3) Not many colors, sizes 4) Too expensive, 5) No choice of phone service providers (originally), 6) Small screen size, and today Samsung’s smartphone market exceeds that of Apple.

The aspects of business focus have really not changed. It is not about innovation, it is about offering the customer something they desire that they’re not currently getting with the incumbents. Kingston Technology, where I worked for eight years, bought solid-state memory chips, placed them in USB enclosures, memory modules, SD cards or Solid Sate drives, tested the final products and shipped to 125 different nations. They had no intellectual property of their own, no patents, and no research and development investment. Yet they have been profitable every year since they began in 1987 and today generate over $6 billion in annual revenue. The company has no debt, with growth achieved organically, and the two owners are each worth $4 billion according to Forbes.

No innovation during this time? Oh contrare. Semiconductor die shrinks were common. DRAM memory was buttressed by Flash memory. Technology was changing rapidly. But the owners continued to find niches where the semiconductor firms were weak, distribution being just one of the niches. And they grew DRAM market share above 50% so that their ability to command low semiconductor materials costs was far greater than their competitors could achieve. Innovation and technological change should have killed them off, but that didn’t happen.

The buggy whip industry didn’t perish because it didn’t innovate. Capital flows into industries and companies that can most efficiently generate the highest returns on investment. Along the way new technologies simply become enablers. Enablers for faster delivery, better quality, new products and services, and completely fresh ways of pursuing and prosecuting market opportunities. Ten years from now half of the jobs haven’t even been defined yet. Will the innovation that is to come cause companies to perish? Not at all. Companies will perish for the same reasons they’ve always perished: Hubris blinds the eyes of the management so that they cannot see what is coming at them. The IBM PC market never saw Compaq coming, with its portability offer. And Compaq never saw Dell coming, with its online configuration and delivery model. And Dell never saw the variety of tablets, laptops and PC’s consumers want to touch and feel. There is no “innovator’s dilemma.” There are only good leaders who are uniquely tuned in and humble enough to take calculated risks and change their business models as their environment changes. ~r







Christensen, C. (2012). The Innovator’s Dilemma. 1997. Harvard Business School Press, Boston, MA.

Christensen, C. M., & Overdorf, M. (2000). Meeting the challenge of disruptive change. Harvard Business Review, 78(2), 66-77.

Schumpeter, J. A. (1939). Business cycles (Vol. 1, pp. 161-74). New York: McGraw-Hill.

Lepore, J. (2014). The Disruption Machine: What the gospel of innovation gets wrong. The New Yorker.

Raynor, M. E. (2011). Disruption theory as a predictor of innovation success/failure. Strategy & Leadership, 39(4), 27-30.

Wessel, M., & Christensen, C. M. (2012). Surviving disruption. Harvard Business Review, 90(12), 56-64.


Why I am Christian

Growing up in rural Wisconsin in an area that could have been part of the shooting for the film “Deliverance,” I often sat and wondered about why I was even born. We all do. My mom had 8 kids and we were dirt poor. My father came off a farm and started a construction business with equipment that was held together by hope and duct tape.deliverance-3

My mom was a Lutheran and dad was a Presbyterian, suffice to say their differences largely centered on the concept of pre-destination (Calvin & Luther). Looking around the church at the people only a step from the grave and listening to the pastor talk mostly about social and community issues, I stopped going to the Presbyterian Church as a young teenager. It all seemed to me to be the handiwork of men with wild imaginations and a desire for their name to live on as someone historically significant.

In college I studied world religions and also loved learning science, especially physics and mathematics. Of the world’s religions I tried to understand the basis for Judaism, Christianity, Islam, Buddhism and Hinduism, largely because they had all been around for centuries. Anything that some man created in the past several hundred years was easy for me to dismiss. Indeed after reading the incredible claims of some of these erstwhile religions, I wondered if as a people we had all gone completely mad.Education

Though not a scientist, Charles Darwin’s observations in the Galapagos quickly gained traction among the scientific community. From Lucy to the Hobbits of Flores Island, all the pieces of evolution began to fall into place to explain the puzzle of life.

LucyBut I think the part that first began to trouble me most regarding the Theory of Evolution were mathematical models of probabilistic combinations and permutations constructed to measure the changes over time through the various stages in evolution. Darwin didn’t know what we know today about the complexity of something as “simple” as the basic cell. So to deal with the remote probabilities to achieve such complexity the Theory of Evolution introduced two postulates (prerequisites for the model to work): First, the Principle of Uniformitarianism. Uniformitarianism underpinned evolution, asserting that over a long period of time, very long period indeed, things just kind of stayed on track without major interruption. This is needed because cataclysmic intervention, the kind that doomed species to extinction, would necessarily require a reset of the clock. Secondly, as the complexity of life forms began to emerge, the mathematics of the combinations and permutations required a proportionately longer period of time to explain how things became so amazing today.

Over my lifetime the science books continued to expand timeframes exponentially, from the life of the universe to all creation therein. So given enough time and mutations, we achieve what we see around us today. Unfortunately life forms are becoming more complex, not less, as we continue to learn more about them. So time needs to be extended accordingly. As the time frame heads toward infinity, in a mathematical-probabilistic equation, the possibility of having this complexity can be explained. But here is the rub: If you need to approach infinity in order to get possible mutations sequenced in the order required for advanced complexity, then it is also tautological to say that the probability of these complexities developing through evolution approaches zero as the time requirement to make them work approaches infinity. And Uniformitarianism? I think the fact is that we have experienced several major cataclysmic events, one meteor perhaps so large that it knocked our earth 23 degrees on its axis. Today the earth literally wobbles its way around the sun in an elliptical trajectory.

So I lost faith in evolution but was now faced with a real dilemma. I scoffed at man-made religions, thinking all of them incredulous, even ridiculous to the point of insulting our intelligence. And my friends who were atheists believed religion helped people deal with the unfairness of life – a two-year-old suffering and dying of leukemia for example. Good logic right? So for atheists religion served a purpose. But for me I didn’t need it. I wanted to see how far my own search would take me.  I wanted to get as close to truth as I possibly could, however painful this truth might be.

So I began to study the Bible as a textbook without any religion. As I came across historical events I also took a look at secular history (e.g. Josephus) to see if these things happened according the accounts in the Bible. I learned that even the Jews believed in a historical Jesus (not His claims about Himself however), and that Jews, Muslims and Christians alike believe the Torah (books of Moses) right up to the point of Abraham. After Abraham’s two offspring, the Jews and Muslims go in different directions, and after Jesus (essentially the New Testament) the Jews and Christians go in different directions. Interestingly other long-time religions such as Buddhism had many of the same admonitions and advice that I found in the Bible. Many parallels. “Don’t do to others what you don’t want them to do to you,” is just one of these parallel admonitions.

So Jesus was a real person after all, indeed our very calendar is split based upon His birth. Next step was to see what people said about Him. Probably the most striking historical account was that all of the apostles except for John died a horrific death for holding to the account of Jesus’ death and resurrection. These were eyewitnesses who instead of accepting torture and inevitable death could have denied the events and saved their lives. Apparently holding to the truth of their convictions, supported by their witness, was the better choice than denying what became of Jesus two thousand years ago. Our own system of jurisprudence would authenticate the veracity of these claims the apostles made.

I spent many years searching, questioning, checking, doubting, verifying. I finally came to my own conclusion. God is — and Jesus was — the only begotten Son of God, coming in the flesh for no other purpose than to die for our sins so we could be reconciled back to our Creator and spend eternity with Him. I would challenge anyone to read the Bible, cover to cover, all 66 books written by roughly 40 authors from Genesis through Revelation. If you will do so and then still reject Jesus as Savior, I defer to you and have nothing but respect for the views you hold.r_mann