Clayton M. Christensen's book, The Innovator's Dilemma has served as a touchstone for many technology companies looking to create and expand their market share.
One such company that has taken The Innovator's Dilemma to heart is Juniper Networks (NYSE:JNPR). The dilemma outlined by Christensen is about how a successful company with products in market can continue to innovate. During Juniper's Financial Analyst Meeting this week, the company's CEO and CTO detailed the process by which they're building a technology pipeline to solve the innovators dilemma.
At the heart of Juniper's strategy and Christensen's book as well, is the idea of disruptive innovation. Kevin Johnson, CEO of Juniper Networks explained that a challenger in a market has two choices, they can disrupt the status quo of a market by commoditizing what they do, or a challenger can disrupt with innovation.
"We are focused on disruptive innovation and the reason why it's so significant in this marketplace is because the requirements and demands on networking are changing," Kevin Johnson, CEO of Juniper Networks said. "If the requirements were not changing, it might be more favorable to be a commoditizer."
Johnson noted that building a disruptive innovation often requires two key partners at the executive level of a company. Johnson, who had previously been at Microsoft, noted that the relationship between Bill Gates and Steve Ballmer is one such partnership as is the one between Apple's Steve Jobs and Tim Cook. Johnson sees the relationship he has with Juniper CTO and Founder Pradeep Sindhu as following a similar paradigm
"It takes someone that has the vision, the engineering and the ability to look three to five to seven years out on the horizon and identify disruptions, understand the math and science behind the disruption and what is possible," Johnson said.
The other person in the partnership is the one that can figure out how to operationalize and sequence the disruptive innovations as well as figuring out how they can be leveraged to grow and take market share.
Johnson explained that the innovation engine starts with the conceptualization of what is possible. At Juniper, that process occurs in the office of the CTO. Sindhu will meet with Johnson and have a whiteboard discussion about the potentially disruptive innovation.
"I will ask a thousand questions and out of that I'll ask Sindhu to write a white paper about the innovation to get a clear idea about the principles of what will cause the disruption," Johnson said.
Juniper has a portfolio of two to three page whitepapers that are kept between the CEO and the CTO. Johnson noted then at a certain point the idea is transitioned from a concept to an innovation. At that point the idea becomes a project at the Juniper Incubation Lab.
"When we make a decision to incubate, we have no more then five incubations going on at any one time and each one of those incubations has five people," Johnson said.
Some incubations never make it out of the lab while others get transitioned into the business groups for the main research and development effort. Juniper's QFabric data center architecture is one such example.
"Once it is clear an innovation actually is worthwhile to carry out it is phenomenally important to build a bridge with the business units," Juniper CTO Pradeep Sindhu said. "The moment it's clear that something might work we start the discussion of how to transition the technology into a business unit."
Sindhu noted that Juniper is focused on networking and specifically in large market that have potential to be disrupted. He added that he likes to start with a small team, since at the beginning it's important to allow for the lots of ideas to move around.
"It's important to start with a clean sheet as you don't want to start with constraints that were imposed ten years ago," Sindhu said. "Technology moves rapidly, so it's important to have a clean sheet approach even when the approach might end up disrupting some of our own existing products."
Sindhu added he always tries to build a model to demonstrate how the disruptions will work in the market. He noted that Juniper is relentless at testing the model as a way to encourage more discussion and improvement on the theory behind the innovation. The testing will occur with key customers that will further help to validate and refine the model.
The other key thing for Juniper is the synergy between the hardware, software and silicon layers that underpin an innovation.
"It's unfortunate that not that many companies these days focus on these three areas, since the maximum bang for the buck comes when you're able to do this," Sindhu said. "One other company that does this phenomenally well is Apple."
Sindhu also noted that it's important to fund the development of the innovation at levels that are commensurate with the opportunity. In the case of Juniper's QFabric, $100 million dollars was invested. The business opportunity of a disruptive innovation is then operationalized by a business unit. Johnson noted that each business group at Juniper has a three year product roadmap.
"Once it gets into the three year product roadmap we have our line of business executives and they take it," Johnson said. "As those things get productized we feed them into our go to market machine and it becomes a commercialized product."
Once an innovation is commercialized, Juniper then goes into the loop of enhancing and iterating the product. Johnson noted that at the same time, the company is laying the groundwork for the next innovation.
While Juniper has a strategy for dealing with the innovators dilemma, it's not a finite equation.
"All this being said, there is no formula for innovation," Sindhu said. "It's a lot of hard work and always going back to the fundamentals and testing them."
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