The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail

At the heart of The Innovator's Dilemma is how a successful company with established products keeps from being pushed aside by newer, cheaper products that will, over time, get better and become a serious threat. Christensen writes that even the best-managed companies, in spite of their attention to customers and continual investment in new technology, are susceptible to failure no matter what the industry, be it hard drives or consumer retailing. Succinct and clearly written, The Innovator's Dilemma is an important book that belongs on every manager's bookshelf. --Harry C Edwards

This book takes you through the difficulties of selling revolutionary inventions to a big company (even if you are employed by one) and explains how managers and accountants of these companies think and decide. It also gives some compelling evidence of how the data storage industry (floppy disks, CDs, DVDs) progressed not by evolutionary, but by revolutionary thinking (or disruptive technologies). Last, but not least, it gives some practical pointers of how to start the discussion with management, and how a large company can set up a successful strategy to let disruptive technologies emerge.

While reading this book, I was reminded of many do's and don'ts from companies around the globe; such as ASML setting up a new organisation, even in a new building, to come up with a revolutionary new product; of Philips, buying up small companies who have had less problems bringing disruptive technologies to adulthood.
The only thing I missed in Christensen's book is the view on the nature of researchers: a good researcher will wither in a company that dedicates itself solely to bigger and better, instead of different.

If you are a researcher and wondering why your great ideas are not embraced, this book is really a must-read. It is easy to read, based on facts, and gives you a vital insight in research politics.


Leaping Over the Barriers You Create Against Innovation   July 31, 2004
Donald Mitchell (Boston)
3 out of 4 found this review helpful

This book clearly deserves more than five stars. It has positively influenced more technology executives than any other book.

The book does a wonderful job of explaining how traditions, bureaucracy, disbelief about the potential of new technologies, and misconceptions about the market hurt companies. Professor Christensen is a Boston Consulting Group alum, as am I, and that firm has been very interested in the question of why dominant firms lose out to new entrants featuring innovative technologies. Professor Christensen has written the best work on this subject that it has been my pleasure to read. Unlike most academics, he is rigorous without being dull or irrelevant to those who must operate businesses. I particularly found his exploration of the differences between a sustaining and a disruptive technology to be very useful. His insights into how accounting and financial concerns can "stall" organizational progress were also valuable.

His cases (especially the hard disk ones) accurately capture many of the classic "stalls" that delay organizational progress. For example, tradition says that everyone focuses on serving the current customers. That's where the bread and butter are. Also, the overhead structure is established to serve those current needs.

Both perspectives no longer serve when a disruptive technology is involved, and he persuasively argues that being first with disruptive technologies is usually very important.

Bureaucracy comes into play because the authorization process requires a lot of confidence by those who will bet their careers that the market and financial projections will be achieved. The bureaucracy also increases the likelihood that an error will be made, or an unnecessary delay will occur.

Disbelief comes from the tendency to misdefine who the customers will be and to underestimate the long-term potential of the technology. Professor Christensen puts in some nice technology development/time charts in to show how to better anticipate a new technology expanding from a lower need-defined market into the mainstream market.

Misconception comes in because people misunderstand the danger of the disruptive technology, and how to manage it. THE INNOVATOR'S DILEMMA is very hepful here because it provides a model of best practices to cure the misconception stall here.

Three other stalls are often important: Procrastination (delaying when delay is costly); Ugly Ducklings (avoiding what is unattractive, physically or financially); and Communications (not getting the message or not understanding the message). I suspect all 3 play a big role in the cases here, but I could not tell from the way the cases were written. I hope in his future work, Professor Christensen will also tie his thinking into the idea of innovation itself.

I personally favor an 8 step process for improving innovation. One, measure everything you can in an area to understand how the measurements can help you improve. Two, apply the same approach to your most important activities. Be sure to consider how and why noncustomers do not find your offerings appealing. Three, seek out the best practices in other industries in these important activities, and estimate where these best practices will be in five years. Four, assemble a new combination of best practices from these cases that goes beyond what any one company will be doing in five years. Five, imagine the best that anyone will ever be able to do, ever, as the ideal best practice. In the case of disruptive technologies this would involve spotting them well in advance and being able to pursue them without pain to the rest of the organization, and pursuing very rapid adoption that leads to dominating the new marketplace. Six, find ways to approach the ideal best practice. Seventh, put the best people, resources, and incentives together to create great success in exceeding the future best practice and approaching the ideal best practice. Eight, repeat steps one through seven.

Do buy, read, and apply the lessons of THE INNOVATOR'S DILEMMA. This is pure gold. Also, send Professor Christensen a friendly note to encourage him to do more studies like this one on innovation. He deserves our support.

I also suggest that you set up some skunk works to advance potentially disruptive technologies, as a way to develop more experience in improving your innovative potential. You may also wish to study Cisco's attempt to be technology agnostics, to see what you can learn from their experience as well.

Let innovation reign supreme!