As the digital performance management market leader, Dynatrace could be forgiven for resting on its laurels – but driving innovation is still top priority, even facing the risks of the Innovator’s Dilemma.

In the years since Clayton Christiansen’s book, the Innovator’s Dilemma is now a familiar challenge: incumbent companies with established customers are loathe to invest in innovations that might disrupt existing revenue streams – thus eventually ceding leadership to more nimble challengers.

To avoid this fate, Dynatrace has been investing time and resources into Ruxit, a cutting-edge performance monitoring tool. Yet while the Ruxit product itself is unquestionably innovative, so too is Dynatrace’s business strategy.

To free the Ruxit division to innovate in a disruptive market environment, Dynatrace executives spun off the effort, giving it the resources and leadership it needed, but without the traditional management constraints of traditional product development efforts.

The Ruxit team organized around its novel product plan, but also innovated its go-to-market and sales strategies. Now that it’s in the marketplace, Ruxit competes with hot new players on the block like New Relic and AppDynamics.

The challenge Dynatrace faces now, however, is that Ruxit’s slick user interface and seamlessly integrated architecture make Dynatrace’s mature products look rather stodgy and old-fashioned in comparison.

Here at PERFORM, its annual customer event, Dynatrace is showing off Ruxit to its established customer base – who may now be disappointed that their current Dynatrace’s products aren’t as slick as Ruxit.

In other words, Dynatrace is now facing the cat food problem: once you feed tuna fish to your cat, they’ll never want to eat regular cat food again. Will Dynatrace customers who aren’t ready or able to switch to Ruxit be upset with the vendor?

From Cat Food to Dog Food

If simply spinning off Ruxit as a separate product were the goal of Dynatrace’s strategy, then perhaps – but there’s more to this story.

Now that Ruxit has reached a level of maturity, Dynatrace will be gradually incorporating Ruxit’s innovations into its core product line, a process they call “unification, not migration,” according to Bernd Greifeneder, who serves as CTO of Dynatrace as well as CTO of Ruxit.

While the strategy has its risks, this plan to “Ruxitize” the core Dynatrace product line is perhaps the most effective way out of the Innovator’s Dilemma. If it’s successful, Dynatrace will have successfully navigated its own digital transformation, changing not only its products but its business model as well, as it moves increasingly to a cloud-based, next-generation product line.

There is an interesting irony at this point in the story, as Dynatrace’s stated objective is to help its customers deal with digital disruption – and Dynatrace is actually providing a real-world example to its customers how to successfully navigate such transformation via its own Ruxit strategy.

For followers of tech industry clichés, we can therefore say that Dynatrace is eating its own dog food. What could be a more perfect conclusion?

Copyright © Intellyx LLC. Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing, AppDynamics and Dynatrace are Intellyx customers. None of the other organizations mentioned are Intellyx customers. Intellyx retains final editorial control of this article. Image credit: Dynatrace.