The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business

Trying hard isn't enough when it comes to innovation!

We are all familiar with the story of the innovative and nimble startup surpassing the corporate leader with a disruptive technology that the larger corporation was blind to. Why this happens is the subject of Clayton Christensen's thoughtful Innovator's Dilemma. Although originally published in 1997, it's a highly relevant and useful read today.
Christensen was interested in how the market leaders missed the disruptive innovations. At the time, most thought the corporate leaders were just too arrogant or too bureaucratic to see the disruption coming. Could there be more structural forces at play? Turns out, there are.

The first half of the book follows the development of the disk drive and the hydraulic excavator to understand and make clear these forces. First, the author distinguishes between sustaining technologies and disruptive technologies. Market leaders, it turns out, are capable of innovation but those innovations typically occur as incremental evolutionary changes to existing products - sustaining innovations.

Where they get tripped up is the development of disruptive technologies which fundamentally transform the existing product. In many cases the market leader also developed early forms of the disruptive technology or were at least aware of the development of the technology.
Christensen, a professor at the Harvard Business School, makes the case that in ignoring the disruptive technology, the market leader was acting quite rationally. They were following their customers' and corporation's best interests.

Christensen discovered that the disruptive technology yields a product that is inferior as measured by the traditional metrics for product quality. In the case of the disk drive it was price/unit storage. For the excavators, it was reach. For the disk drives, the disruption was the introduction of smaller and smaller drives. At each step of the way, these products were costlier than the existing larger drives in terms of price/unit storage. However, their advantages, in terms of other characteristics such as size, weight, and power consumption outweighed nominal improvement in the price/unit storage ratio provided by sustaining technologies. Eventually, price catches up and the disruptive products are better in both sets of characteristics.

For the excavator (a big digger), the existing machines used cables to extend and control the basket. The overriding measure of performance was reach and capacity - how far out could the basket reach and grab a bucket of dirt. When hydraulic excavators appeared, their reach was very limited because of the physics of the hydraulic cylinders needed to control the baskets. Even today, a cable excavator will give you a longer reach. However, the hydraulic excavators had advantages of safety (no cable breaks) and had significantly lower maintenance costs. Eventually, as manufacturing of hydraulic excavators grew in practice, reach extended and for many uses such as building foundation excavation and utility pipe laying, as soon as the reach was sufficient for the task, the improvement in safety and the reduced maintenance costs made the hydraulic excavators superior.

This book will change the way you think about innovation and the structures needed not only to spark the ideas, but get them built into new product lines.

My name is David Marquet, from Practicum, Inc and we help our customers get everyone be a leader and avoid casting employees into follower roles. To co

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An Engineer's take on THE INNOVATOR'S DILEMMA

What it does: Provides insight for business managers that need to deliver continually improved products to their markets. Provides good information about how business have grown and fallen in the face of technical advancement. It does provide case-study backed recommendations on how to manage innovative business ventures.

What it does not do: This is not about 'how to innovate,' how to make a better mouse trap, nor even how to find out what your customer wants. Christensen assumes that you have that much together already. The book's emphasis is on business management.


Comments:
Before reading "The Innovator's Delimma," I thought that I knew what a 'disruptive innovation' was. (After all, I am an experienced engineering manager working in new product development.) But Christensen succeeded in changing my paradigm here and gave me significant insight into the evolution and demise of corporations.

Christensen's book takes an academic study of business innovation, drawing extensively on the computer hard drive industry, to divide innovation into two classes: 'sustaining' and 'disruptive.' What many people would be inclined to call 'disruptive innovation' are, in Christensen's view, radical 'sustaining innovations.' The 'disruptive innovations' are initially generally not especially technically innovative, but they fill a market niche and grow to the point of challenging the established. He then digs into details, and pulls out similar supporting case studies of the excavator industry (steam shovels to back hoes), computers and electronics, and lesser detail in discussing changes in retailing.

He shares some good insights into why big companies have fallen to upstarts. This is rooted in the natural tendencies of companies to progress from lower-end, lower-margin products to higher-end, higher-margin products. He also shows how companies succeed by innovating and managing to provide what customers' want, and how that focus can cause a company to miss the disruptive technology. His case-study supported recommendations on how companies can address the dilemma seem convincing.

A few complaints about the book: 1) the texts and graphs do not agree or match in several cases - this was very annoying, 2) the case studies are largely from manufacturing, so applications to the services industry may not be as straightforward as one would hope, 3) the advice is geared more towards keeping a large corporation alive rather than in assisting small companies grow.

He ends with a discussion of how he would manage commercializing an electric car, based on his research findings. (I don't think that GM has been listening.) In my opinion, he didn't follow his own advice well enough in his plan - it relies too much on mainstream market.

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Highly Recommended, but not for the casual reader

For those interested in what makes company's succeed or fail when faced with technological change, this book should satisfy. Using the disk drive industry as his main focus, but delving into many other examples, Christensen shows how companies react to disruptive technological change, and why most often they fail to adapt. However, Christensen is not just descriptive, but includes advice on how a business can successfully adapt to disruptive technological change. Highly recommended, but technical at times.

A Must-Read!

Professor Clayton M. Christensen¿s excellent book is a classic of strategy literature. The innovator¿s dilemma is that doing the right things can lead to failure. Sometimes it is wrong to listen to customers, invest in the highest return opportunities and do all of the things that made a successful company succeed. Clearly written, amply documented, provocative and challenging, this book is indispensable for anyone in business. If it has a shortcoming, it is that it focuses more on the dilemma than on resolving it and it does not offer specific remedial prescriptions. However, Christensen has authored or co-authored two other books that attempt to remedy that deficiency. We heartily recommend this book, which remains the leader of the three. It has the potential to change the way managers think about business - any business.

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