The Innovator’s Dilemma
by Clayton Christensen
Why have many once market-leading companies failed to stay relevant? It would be easy to assume that they had stagnant engineers or complacent management, but Clayton Christensen concludes otherwise: “Because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership.”
How is that possible? The key is to understand the distinction between sustaining and disruptive innovation. Large companies are good are sustaining innovation—product improvements demanded by existing customers.
Disruptive technologies do not serve mainstream markets initially. In fact, the market may not be obvious at all. Because there is no existing market, there is no reliable market research. That’s the innovator’s dilemma.
Disruptive technologies are generally brought to market by start-ups. They find their niche through trial and error. Initially their functionality doesn’t satisfy the mainstream, but with successive generations this problem is overcome, displacing the old technology.
Christensen concentrated on the disk drive industry because new generations of technology are released frequently. However, the principles of disruptive technology are not limited to high technology. He also presents examples from the excavation equipment, steel, motorcycle, and retail industries.
This is an insightful, substantive book. The most notable weakness is the graphics. The purpose of graphs is to present data in a visual form that is easy to digest. Some of the graphs in this book add more confusion than clarity.
Christensen, Clayton M. The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business. New York: Harper Business, 2011. Buy from Amazon.com