Issue #44: Copycats Stomp on Ham Radio Innovation

There is no innovation in the Baeofeng, let alone a 'disruptive' one.

You seem to have a different definition for 'disruptive innovation'. I believe what you meant is that the pricing, not the innovation--there isn't any-- is disruptive.

Disruptive pricing is a standard that we see everyday and is not an innovation.


A disruptive innovation isnt the 'same stuff only lower performance at a lower price point'. Disruptive innovation is a NOVEL approach , in this case to the TECHNOLOGY OF THE RADIO , that has lesser specification attributes but matches the need, initially of a NICHE.

Note there is no novelty to the technology of that radio.

It may be cheaper. It may be the same price but fewer, unneeded features --but it meets the niche need. Baefeng HT's do not meet this source definition of 'disruptive innovation'.

To wit: if Baefeng offered these radio at a HIGHER price point, then your definition of 'disruptive innovation' would mean purely a differential in PRICING. Disruptive innovation has nothing to do with that. Pricing is not part of the definition, in toto, of disruptive innovation.

I suggest reviewing the original article by Christensen and Bower, or Clay's thesis.

73
Chip W1YW

 

I have read your series of responses here and find them to have very little value in our ongoing discussion. My article was an opinion piece, and it has input from a team leader who experienced these issues himself. You approach us from a pedestal that none of us can reach. I sincerely hope you will approach all future commentary from a less Godlike perspective. Regards, Dave W7DGJ

 

And yet the Baofang has been disruptive. Newbies went wild over it. It inspired its own copycats and there are now many models. It created the "HT under $50" category that is now taken for granted.

Disruptive is inherently about the market - that is what gets disrupted.

"Creating new markets or addressing underserved segments.

Offering simplicity, accessibility, and affordability."

 

It clearly is disruptive. Based on disruption of the pricing.

In contrast an 'innovation' is a novel IMPROVEMENT. Baofeng's PRICING is not a new or novel improvement. It is an old and true tactic. As you know along with myself and other old timers, Yaesu Kenwood, and later Icom used low pricing to kill off the American transceiver manu's in the 1970's.

The word disruptive is apt in many situations, but is not inherently married to 'disruptive innovation'. Of course, you know this Others may not.

73
Chip W1YW

 

Fair enough. If I'm not adding value then I'm perfectly happy to desist.

I don't believe I've had my perspective described as Godlike before...

 

Novelty in technology is not a requirement for a disruptive innovation. Lower performance, a lower cost point, and a different supply chain were sufficient elements of what was clearly a market disruption.

Icom and Yaesu would never have built such a product ( tx emissions issue aside) because it would cannibalize their existing sales.

 

New info is valuable. Always be there to present updates or clarifications please. Perhaps my comment was skewed because I was PO’d. Regards, Dave

 

I recommend the book Poorly Made in China by Paul Midler, which explains in detail how Chinese companies took advantage of Western forms looking for partners.

The good news is that most companies have figured this out and will not fall for it in the future.

Increasing labor rates in China have also made them less competitive, as have tariffs.

 

That’s a good read.

I worked for an avionics manufacturer in the 90’s and in order to sell product into China we were required to provide the designs and assist our Chinese partners in building the product in China. It was extortion but we did it anyway.

I remember specifically a Distance Measuring Equipment (DME) that they tried to copy and build in house. They never got it to work so we sent them the pwb’s (at a high cost) so they could package them. They still couldn’t get them to work. So we would ship them tested and finished units (at a higher price than we sold them domestically) so they could slap their sticker on them and call them made in China.

 

We are in semanticsland now, but here's the official definition of "disruptive technology":

"Disruptive innovation refers to a process where a product, service, or business model starts at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. It typically has the following key characteristics:

1. It presents a different value proposition than existing products, often being cheaper, simpler, smaller, and more convenient to use.
2. It starts in niche or underserved markets and then moves up to mainstream markets.
3. It is often initially overlooked by established players because it doesn't meet the needs of their mainstream customers or lacks immediate profitability or scale.
4. It transforms expensive or highly sophisticated products or services, previously accessible only to a high-end or more-skilled segment of consumers, into those that are more affordable and accessible to a broader population.
5. It requires enabling technology, an innovative business model, and a coherent value network to succeed.

The concept was first introduced by Harvard Business School Professor Clayton Christensen in 1995 and has since become a fundamental principle in understanding how industries evolve and how businesses can maintain competitiveness."

I buy this because it is how the fellow who introduced the term defined it. So it's basically a tautology.

I would not necessarily invest in such a business. We always looked for a "novel, defensible" technology that could serve as the basis for a large business that was possibly also disruptive (in the way described). It was not enough that it was disruptive. So, I think the idea that "disruptive technology" must involve novel technology is not technically correct. But something that is novel and is also disruptive is a reasonable candidate for venture money. I'm sure, without looking, that there are no VCs behind Baofang...

 

Unless you consider the Chinese military-industrial complex to be a VC, in technological competition with Sand Hill Rd and DARPA, et.al.

 

I do not. They put up money to create jobs. They do not care about profits. That means they are not capitalists, much less Venture Capitalists.

There is no doubt these companies have impact.

I bought an insolvent boat manufacturing business whose production facility was near Shenzhen. About 150 employees. I needed to shut it down and move a much-narrowed product line to the U.S. It was difficult to shut it down. The Chinese government required 5 years of continued operation before they would allow any staff reductions. In these discussions, they made it clear that they do not care about profitability - only jobs. Jobs keep the people going.

 

There is noo innovation in the Baefeng. No process that is an 'improvement' on prior ones.

The pricing disrupts, but underpricing as a PROCESS is not an innovation. It is a standard tool that has been around for a long time. It is not an omprovement. It is a standard process not improved on a prior one.

Again, you confused 'disruptive innovation' with 'disruptive pricing' in this circumstance.

73
Chip W1YW

 

An innovation is an improvement. There is no improvement in the Baefeng. Its the pricing that changed.

As I mentioned, I am one of the folks that Clay talked with about innovation. He was a section mate of my wife (at HBS) and lived three streets away.

Clay founded Innosight to guide larger companies, for the most part, on how they could bring disruptive innovation into their folds, or make it happen themselves. Most took the advice, bought out smaller companies-- and killed them.

As you note, large firms have a reality distortion zone that they can CONTROL the changes in markets. Kodak. What a model ;-) NOT!

The unfortunate thing that VC's jumped on on disruptive innovation is that it can 'jump the board' if enough money is thrown behind it. Hence the origin of the 'rollup' of overfunded dead premises...

73
Chip W1YW

73
Chip W1YW

 

Does not have to be an improvement. The microcomputer was not an improvement upon minicomputers. It was just cheaper. Yet it was the disruptive technology to end them all...