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

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

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by Clayton M. Christensen
     
 

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ISBN-10: 0875845851

ISBN-13: 9780875845852

Pub. Date: 05/28/1997

Publisher: Harvard Business Review Press

How Great Firms Fail By Doing Everything Right

Harvard professor Clayton M. Christensen demonstrates in the most revolutionary business book in years why outstanding companies that did everything right-were in tune with the competition, listened to customers, and invested aggressively in new technologies still lost their market leadership when confronted with

Overview

How Great Firms Fail By Doing Everything Right

Harvard professor Clayton M. Christensen demonstrates in the most revolutionary business book in years why outstanding companies that did everything right-were in tune with the competition, listened to customers, and invested aggressively in new technologies still lost their market leadership when confronted with disruptive changes in technology and market structure ... and he tells how to avoid a similar fate as business races online into the twenty-first century. The Innovator's Dilemma eloquently demonstrates a shattering paradox: that the best of conventional good business practices can ultimately weaken a great firm. There is a certain type of technological innovation that Christensen labels disruptive technology, which mainstream customers initially reject. Following these customers causes well-managed firms to allow strategic innovations to languish. The solution? Create a subsidiary entirely focused on the emerging market, one that is free to be visionary while courting an unorthodox customer base and staying poised to catch the next great wave of industry growth. Sharp, cogent, and provocative, The Innovator's Dilemma is one of the most talked about business books of our time-and something that none of today's executives will dare to be without.

 

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Product Details

ISBN-13:
9780875845852
Publisher:
Harvard Business Review Press
Publication date:
05/28/1997
Series:
Management of Innovation and Change
Pages:
288
Product dimensions:
6.40(w) x 9.56(h) x 1.05(d)

Table of Contents

Introduction
Chapter 1: How Can Great Firms Fail? Insights from the Hard Disk Drive Industry
Chapter 2: Value Networks and the Impetus to Innovate
Chapter 3: Disruptive Technological Change in the Mechanical Excavator Industry
Chapter 4: What Goes Up, Can't Go Down
Chapter 5: Give Responsibility for Disruptive Technologies to Organizations Whose Customers Need Them
Chapter 6: Match the Size of the Organization to the Size of the Market
Chapter 7: Discovering New and Emerging Markets
Chapter 8: Performance Provided, Market Demand, and the Product Life Cycle
Chapter 9: Managing Disruptive Technological Change: A Case Study
Chapter 10: The Dilemmas of Innovation: A Summary
Index

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Innovator's Dilemma 4.3 out of 5 based on 0 ratings. 32 reviews.
Just_Another_Engineer More than 1 year ago
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.
Anonymous 12 months ago
Clayton M. Christensen’s work in his book The Innovators Dilemma is both equal parts frightening and entertaining. To the professional world of high-ranking executives and aspiring business owners this book is like a dangerous warning. The book outlines the problems successful companies have in adapting to new emerging markets that utilize disrupting technologies. He backs up his claims by using in depth analysis of real world examples to help frame his perspective and opinion. Christensen creates what he calls the ”failure framework”(Christensen 7), and using the frantic changing of the guard in the disk drive industry elaborates on three main reasons why leading firms tend to stumble repeatedly with stagnation and disruptive technology. Upon finding comparisons in industries unlike the ones previously mentioned, Christensen goes onto promote what he has dubbed the, “principles of disruptive innovation”(Christensen 14). The Innovators Dilemma culminates with an explanation of how to spot threats and opportunities of disruptive technology and their markets as well as where in today’s world disruptions are currently happening. I enjoyed reading The Innovators Dilemma because I believe what he writes about is seen constantly in society. Technology is continually advancing and changing. The same advances in technology have a massive impact on various industries across the world, from hotel enterprises to various outlets of social media. Examining recent technological advances such as Airbnb, Uber and other recent startups we see how disruptive advances in technology can truly be. As Christensen argues, traditional powerhouse companies in their respective markets were unable to capitalize on the evolving technology because they had a responsibility to their customers and their investors to provide great quality and create growth. He provides tremendous examples such as Sears and IBM as leading firms that fell victim to what is described as the “Failure of Success Bias”(Silk 52)in What Is Marketing by Alvin J. Silk. Failure of success bias is a term used to describe firms that lose touch with customers and markets because they fail to understand evolving culture, emerging technologies and repeat past strategies. The book uses Sears as a prime example, a company that once accounted for over 2% of all retail sales in the United States was considered to be in the upper echelon of successful firms in the late twentieth century. As Christensen points out in his failure framework, Sears like other successful firms don’t have the luxury of spending valuable resources on possible disruptive technologies because improving their sustained technologies is more profitable in the short run. Firms can’t spend cash on long-term investments because shareholders voice their opinions for what Christensen calls ‘‘Rational Investments’’(Christensen 71). By using companies like Sears and IBM, Chistensen is able to solidify his argument and delicate elaboration of the failure of success bias. Ultimately showcasing to aspiring business owners and the professional world the importance of recognizing disruptive technologies and the dangers of being successful. What struck me the most was how Christensen’s principles remain relevant in today’s market. It has been almost two decades since the book was first published and yet Christensen’s principles remain at the forefront of emerging technologies. He highlights five fundamental principals that harness the princ
Anonymous More than 1 year ago
Clayton’s Christensen’s book, “The Innovator’s Dilemma”, is a well-known read amongst business experts, offering a unique look at the constant and repeating reason that businesses fail. Originally published in 1997, Professor Christensen of Harvard Business School writes about what he finds is the key factor is business failure: disruptive technology. Typically technologies seek to improve existing products or markets, which Christensen calls “sustaining technologies”. Sustaining technologies are what businesses handle best, since they address the current needs and wants of customers. However, disruptive technologies quickly change the market, leaving businesses that did not see the change coming in the dust. Sometimes the changes are easy to see, while some are nearly impossibly to spot. Throughout the book, Christensen meticulously breaks down his findings and what led him to his theories, offering countless examples that although now dated, still prove his point as technology evolves exponentially today. By the end, he seeks to provide successful solutions and tips for businesses that face the “innovators dilemma”: making a decision to embrace a disruptive technology, regardless of whether or not it is counter-productive to current business operations.  For a large section of the read Christensen describes his theories, using the hard disk industry as a primary example. Seagate was a large manufacturer of 5.25 inch hard drives, and in 1985 developed the first 3.5 inch design. After testing with customers, the initial response was that 3.5 inch drives were not growing in popularity, and were more expensive, causing their development to be shelved. As a result, Seagate continued to develop the 5.25 inch drives, making them perform better and more efficiently, until new and competing companies developed the 3.5 inch drive. Quickly the 3.5 inch drives grew in performance and reliability, becoming more popular as the main components of personal computers and laptops. As a result, Seagate quickly lost its 5.25 inch drive market, not anticipating the rise of the 3.5 inch drives. This example explains Christensen’s theories rather well, demonstrating the need to embrace technologies still in their infancy. Although 5.25 inch drives were the sustaining technology, which drove Seagate’s success for quite some time, the disruptive technology was the smaller and higher performance 3.5 drives, which have made 5.25 drives obsolete.  Of course, identifying disruptive technologies is not an easy task, and it is especially more difficult to invest money and resources into a product that will not succeed for an indefinite period of time. In the second half of the book, Christensen offers many ideas for combating this, such as creating strategies to embrace disruptive technologies with research and development plans as opposed to immediately jumping to serving the current market. Another strategy he offers his for a company to take a stake in a disruptive company, typically a startup, to provide necessary resources and share the benefits of the emerging innovation. For example, Johnson & Johnson in the past has acquired small startup companies focused on disruptive technologies at the time, such as disposable contact lenses and blood glucose meters, and provided them research for further development, which today have evolved into billion dollar markets. This seems to be a highly valued solution offered by Christensen, since there are numerous instances in which he dismisses the idea of creating a division within a large company for research on a disruptive technology. Christensen says that typically these divisions are given minimal resources and support, due to the present day sustaining operations that hold back advancement on emerging technology.  Overall I felt that Professor Christensen’s theories are very valid in a world where technology continues to grow faster than businesses can keep up. He supports his claims with real examples from the industry, which demonstrate how well managed businesses constantly fail due to their myopic look at the market. The book itself, although slightly dry, provides indispensible information to semi-mature audiences, especially business owners looking towards the future in our techno-centric world. Despite examples that are now semi-dated, Christensen’s findings can still be applied to today’s biggest market changes, as companies such as how Uber, Skype, Amazon, and Google continue to replace traditional markets that were once wildly successful. I recommend this book to any rising entrepreneur, as it offers insight to how startup companies can use disruptive innovation to their advantage, and also to veteran business owners that seek to stay ahead of the technological revolution. 
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Even if it does get a bit clunky at times, the ideas are important considerations for managers today.
Anonymous More than 1 year ago
HIGHLY recomended do read this book it is amazing!!!!!!!!!
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D_Kemp More than 1 year ago
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.
David_Marquet-Practicum More than 1 year ago
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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