book: The Innovator's Dilemma

The Innovator's Dilemma

In book The Innovator's Dilemma, Harvard Business School Professor
Clayton Christensen asks the question: Why do well-managed companies fail?
He concludes that they often fail because the very management practices
that have allowed them to become industry leaders
also make it extremely difficult for them to develop
the disruptive technologies that ultimately steal away their markets.

Well-managed companies are excellent at developing the sustaining technologies
that improve the performance of their products
in the ways that matter to their customers.
This is because their management practices are biased toward:

• Listening to customers,
• Investing aggressively in technologies that give those customers what they say they want
• Seeking higher margins, and
• Targeting larger markets rather than smaller ones. 

Disruptive technologies, however, are distinctly different from sustaining technologies.
Disruptive technologies change the value proposition in a market.
They are typically cheaper, smaller, simpler and frequently more convenient to use.
Therefore, they open new markets

Because of experience and sufficient investment and new customers,
the developers of disruptive technologies are able to improve their products faster, and they eventually take over the older markets.



Principles of Disruptive Technology:

1. Companies Depend on Customers and Investors for Resources
2. Small Markets Don't Solve the Growth Needs of Large Companies
3. Markets That Don't Exist Can't Be Analyzed
4. Technology Supply May Not Equal Market Demand

He advises managers faced with disruptive technologies to:

1. Give responsibility for disruptive technologies to organizations whose customers need them so that resources will flow to them.

2. Set up a separate organization small enough to get excited by small gains.

3. Plan for failure. Don't bet all your resources on being right the first time. Think of your initial efforts at commercializing a disruptive technology as learning opportunities. Make revisions as you gather data.

4. Don't count on breakthroughs. Move ahead early and find the market for the current attributes of the technology. You will find it outside the current mainstream market.

Attributes that make disruptive technologies unattractive to mainstream markets are the attributes on which the new markets will be built.

Disruptive technologies initially under-perform the current technology on the attributes that matter most to mainstream customers.
The companies that succeed in commercializing them must find different customers for whom the new technology's attributes are most valuable.

The Innovator's Dilemma - Wikipedia, the free encyclopedia