And in fact, the PKWare group, while granted wide latitude, didn't have completely free rein. Kander said establishing truly independent units inside a firm is difficult. A key step: Create an autonomous group within the company to focus on innovation. So when Newton came to PKWare and determined that the company needed to find new paths, it was natural to adopt Christensen's approach.
You have to have a long-term view." Focus on innovationīeyond the insider's perspective of disruption that Newton gained at Monster, he had gotten to know Christensen personally when both men were involved in the same Boston-area start-up in the early 2000s. "Which is.counter to how you need to align your incentives in order to be innovative. "Their immediate incentives are to generate cash," Diana Kander, a senior fellow at the Ewing Marion Kauffman Foundation, said of incumbent firms. "Now, how frequently it occurs is a different question."Ī problem established companies face in embracing radical innovation is that there often is less profit - initially, at least - in the new business methods. "If you look at business history, there's a lot of indication that some of what he says occurs," Edward Levitas, a business professor at the University of Wisconsin-Milwaukee, said of Christensen. Think of print publishing and the Internet in the last decade, department stores and discount retailers in the '60s and '70s, or traditional steel-making and the rise of "mini-mills" that produce steel by melting scrap in electric furnaces. But in taking the logical path of focusing on the needs of their customers, he says, they are vulnerable to more radical "disruptive innovation." There, Christensen argues that established, successful companies excel at incrementally improving their products - what he calls sustaining innovation.
A Harvard business professor, he is best known for his 1997 book, "The Innovator's Dilemma." That's where Christensen - or at least his ideas - figure in.
#SECURE ZIP PKWARE SOFTWARE#
"We knew that our product pipeline was bare here," Newton said, "and growth is how you create value in a software company - any company.We came into this investment understanding that we would need to start working on new products." Its current count of 75 employees is slightly below what it had four years ago when Newton assembled an investment group to buy the firm. Privately held PKWare doesn't disclose revenue, but in terms of employment, it hasn't been growing. Now Newton is surveying the competitive landscape not from the perspective of a surging upstart but as a potentially threatened incumbent. newspapers have lost 90% of their once-lucrative employment classifieds business. And since 2000, while Monster and its Internet cousins have thrived, U.S. Within just a few years, Monster had bitten off a significant chunk of newspapers' help-wanted classifieds. He ran in the late '90s as the online site for recruitment advertising was gaining traction. What Christensen terms "disruptive innovation" - the notion that successful businesses are vulnerable to radical change advanced by upstart companies with no stake in existing practices - is something Newton knows about first-hand. Miller Newton, PKWare's president and chief executive, "is shocking."Īnd it keeps him up at night.
Katz came up with a way to compress computer data that became a global standard.īut for all the success of PKZip and its encrypted iteration, SecureZip, the core product has remained remarkably stable for more than 20 years. PKWare was built on the work of the late Phil Katz, a personally troubled but brilliant software developer who founded the company at his kitchen table in Glendale. In the meantime, though, PKWare is a case study in the ideas of influential business thinker Clayton Christensen, whose theories on why successful companies find it difficult to embrace radical innovation have been hailed by such tech luminaries as Steve Jobs and former Intel Corp. The firm even ignored what its top tech talent, and its CEO, thought was best.Īnd instead of pursuing what had made perfectly good business sense for years, it threw itself into a new and unproven product with uncertain prospects. has amassed a gold-plated client list that includes huge banks, most of America's largest corporations and such government agencies as the Federal Aviation Administration and the Centers for Medicare and Medicaid Services.īut for the sake of its future, the company directed a key group of employees to forget about what those demanding customers wanted and needed. Over more than 20 years, Milwaukee software firm PKWare Inc.
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