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339 of 354 people found the following review helpful
5.0 out of 5 stars Disruptive technologies create a threat to large companies
This is a book is about successful, well-led companies -often market leaders- that carefully pay attention to what customers need and that invest heavily in new technologies, but still loose their market leadership suddenly. This can happen when disruptive technologies enter the stage. Most technologies improve the performance of existing products in relation to the...
Published on November 13, 2001 by Coert Visser

32 of 33 people found the following review helpful
3.0 out of 5 stars Hindsight is 20/20
The Innovator's Dilemma presents the idea that even if you do everything right, you can still be wrong if you don't see what's coming. unfortunately, that all depends on what you can see. In this case Christensen's hindsight is 20/20 and he can say "Of course they didn't see it coming." The problem is applying this to modern business. That said, it does present...
Published on August 27, 2001 by J. J. Kwashnak

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339 of 354 people found the following review helpful
5.0 out of 5 stars Disruptive technologies create a threat to large companies, November 13, 2001
This is a book is about successful, well-led companies -often market leaders- that carefully pay attention to what customers need and that invest heavily in new technologies, but still loose their market leadership suddenly. This can happen when disruptive technologies enter the stage. Most technologies improve the performance of existing products in relation to the criteria which existing customers have always used. These technologies are called sustaining technologies. Disruptive technologies do something different. They create an entirely new value proposition. They improve the performance of the product in relation to new performance criteria. Products which are based on disruptive technologies are often smaller, cheaper, simpler, and easier to use. However, the moment they are introduced, they can not at once compete against the traditional products and so they cannot directly reach a big market. Christensen researched how disruptive technologies have developed in the computer disk industry, an extremely rapid evolving industry. He identified six steps in the emergence of disruptive technologies:
1. Disruptive technologies often are invented in traditional large companies. Example: at Seagate Technology, the biggest producer of 5,25 disks, engineers in 1985 designed the first 3,5 disk.
2. The marketing department examines first reactions from important customers to the new technology. Then they notice that existing customers are not very interested and they conclude that not a lot of money can be made with the new product. Example: this is what happened at Seagate. The 3,5 disk's were put upon the shelf.
3. The company keeps on investing in the traditional technology. Performance improvement of the traditional technology is highly appreciated by existing customers and a lot of money is being made. Example: Seagate invested in the 5,25 disk technology. This led to considerable improvement of the technology and to a considerable improvement of sales.
4. New companies are started up (by ex-employees of the traditional companies) and markets for the new technology emerge by trial and error. Example: ex-Seagate people started up Corner Peripherals. This company focused on the small emerging market for 3,5 inch disks. In the beginning this was only for the laptop market.
5. The new players move up in the market. The performance of the new technologies gets better after some time, enabling them to compete better and better with the traditional companies and products. Example: the performance of the 3,5 disks improved drastically. The 3,5 inch disk moved up in the market, to the personal computer market. Corner pushed Seagate out of the PC market for 3,5 inch disk drives.
6. Traditional companies try to defend their market position and to get along in the new market. Often they notice that they have fallen behind so far, that they cannot keep up. Example: Seagate did not succeed in capturing a significant part of the new market for 3,5 inch disk drives for PC's.
The events described above can be understood by the four principles of disruptive technologies which Christensen formulates:
1. In well-led companies it is customers, not managers, who actually determine resources allocation. This is a proposition of the resources dependence theory (Pfeffer & Salancik, 1978) which is supported strongly by the research of Christensen. In essence: middle managers will not tend to invest in technologies that are not directly appreciated by important (large) clients, because they will not be able to get quick financial gains by doing this.
2. Small markets can not fulfil the growth need of large companies. For several reasons, growth is important for companies. Unfortunately, the bigger the company, the harder it is to continue growth. A small company (40 million sales) with a growth target of 20%, must achieve 8 million extra sales. A large company (4 billion sales), has to achieve 800 million of extra sales! Emerging markets often simply are not large enough to fulfil such growth needs. They can, however, fulfil the growth needs of new small companies.
3. Markets that do not exist can not be analysed. The ultimate applications of disruptive technologies can not be foreseen on forehand. Failure is an intrinsic unavoidable step to success.
4. Technology supply does not always equal the market demand. The speed of technological progress is often bigger than the speed with which the customer demand develops. By improving the performance of the disruptive technologies (for instance the 3,5 inch disks, first only used in the laptop market), they became suitable for the larger PC-market.
These steps explain why traditional companies are often not capable of applying disruptive technologies. Christensen argues that you can not resist these four principles. What you can do however, is use them to your advantage. For instance: in a large company you can create an 'island' where the new technology is developed for the new market. Also it is possible get an ownership in emerging companies which develop the new technologies (several companies have done this successfully).
I think the innovator's Dilemma is an excellent book. The ideas are empirically foudend and together they form a coherent theoretical framework. The examples from the computer disk industry, the steel industry and others, are very well-documented and interesting. The book is logically structured and reads easily.
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145 of 156 people found the following review helpful
4.0 out of 5 stars Identifying the horns of the dilemma., January 29, 2000
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Prior to reading this book, I chalked up the misfortunes of the well run companies of our time to the vagaries of the market place and put them in the same shoulder shrugging category of "bad things happen to good people." But now I have a new way of looking at success and failure due to disruptive technology. I better understand my own frustrations of trying to do new things in a large corporation given the further insight from Christensen that assets are really managed by customers, not our own managers. That is what makes this book scary. There seems little hope of any large corporation staying on top of disruptive technology unless they follow the prescription of segregating those innovations from the usual corporate overhead structure. That means spinning off groups, taking equity positions in start-up firms, and/or completely funding start-ups to grow the new markets. The writing is clear, the data gathered is thorough and fully documented with ample notes, the logic is concise, and the conclusions are entirely logical. Christensen gives us formulas for success including agnostic marketing to help us recognize emerging markets. The case studies are at once interesting and compelling. This is a must read for managers in any industry. Dr. Andrew S. Grove, Chairman and CEO of Intel Corporation had this to say, "This book addresses a tough problem that most successful companies will face eventually. It's lucid, analytical-and scary."
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141 of 153 people found the following review helpful
4.0 out of 5 stars A new paradigm, August 11, 1998
Duwayne Anderson (Saint Helens, Oregon) - See all my reviews
We have all seen large, powerful, and successful corporations upstaged and driven out of business by startups using new ideas to grow exponentially and dominate the new business landscape. In his book "The Innovator's Dilemma," Clayton M. Christensen provides a unique and novel theory that explains why entrenched corporations often fail to capitalize on such new ideas, and fall prey to firms with fewer initial resources. With enough data and case histories to make even the skeptic sit up and take notice, Christensen sculpts an argument that demands our attention at once. Step by step he shows that such extinctions come about not necessarily because of arrogance and dogmatism (though these play their parts) but because of the architectural and organizational structures that make good companies good. Like Einstein's theory of relativity, with its concepts of relative time and space, some of Christensen's conclusions seem unintuitive. Others even seem contrary to phy! sical reality. Sometimes it really is wrong to listen to your customers. Sometimes it is better to build a product with low margin and a limited market rather than build a product with high margin and large, virtually guaranteed market.
Christensen builds his thesis upon the notion that technology comes in two broad flavors: sustaining and disruptive. Established product lines use sustaining technology to make incremental improvements. In the language of biology, sustaining technology facilitates gradual Darwinian evolution where incremental improvements coupled with survival of the fittest lead to gradual product improvement. For example, tire manufacturers use sustaining technology to enhance the tread, sidewall, and belt design of automotive tires. Sustaining technology is not trivial, and often involves tremendous expenditures of capital. It is, however, what established companies do best, and these companies have developed very effective organizational and manag! erial structures for dealing with it.
Disruptive technol! ogy, on the other hand, approaches product evolution outside the sustaining envelope. Disruptive technologies typically offer a cheaper solution to a small, often unidentified subgroup. Once established within this small market the disruptive technology evolves through sustaining technology until it eventually satisfies the performance criteria of more traditional markets. When this happens, the disruptive technology bursts onto the scene, attacking the soft underbelly of the established corporations, often with fatalistic consequences. In the parlance of evolutionary biology, disruptive technology is like punctuated evolution; fast with significant changes in the gene pool.
Christensen may be excused for lacking the breadth to discuss similarities between such diverse fields as biology and business management. Still, the book would have benefited immeasurably by a co-author in the field who might have offered greater insight into universal principles governing the evol! ution of complex systems. Repeatedly I found myself going to books by authors such as Richard Dawkins and Stephen Jay Gould to refine my mental image of the multidimensional landscape in which biological organisms and industrial businesses compete for the resources of survival.
The book is well written and persuasive in its arguments. It questions many established ideas and shows that often these ideas fail to apply to disruptive technologies. Often the best corporations are especially susceptible. Defense against disruptive technologies does not come from being smarter and working closer with customers. Paradoxically, working closely with customers and following established rules for corporate investment often make a company more susceptible to harm from disruptive technologies. Companies naturally evolve toward higher-end products with greater margins. Consequently, they find it difficult to enter markets with disruptive technologies that often begin with low margi! ns, are technologically simple, and do not have a clearly d! efined customer base. Such markets are ideal for start-up firms. The author suggests, with several case histories, that one of the best ways for established firms to deal with disruptive technologies is to spin off autonomous organizations that exist within the economic constraints of disruptive technologies.
The author does an excellent job of using examples, drawing most from the disk-drive industry. He also includes examples from the computer, motorcycle, steel, automotive, and earth-moving industries as well. In each case he explains how disruptive technologies emerged and often destroyed well-run companies that were following all the established rules. This drives home the fact that disruptive technologies pose such a great risk precisely because they can destroy industries not only in spite, but because they follow established business practices.
After describing disruptive technologies, with historical cases to illustrate points, the author ends with a case st! udy involving electric vehicles. I found this chapter to be among the weakest, and something of a distraction from the more substantial earlier material. Ironically, in the process of trying to frame electric vehicles as disruptive technology, the author seems to have missed one of the best examples of a disruptive technology, and one that nearly destroyed America's foremost industries: small cars.
Overall, Christensen's work is on a high academic level, though some of the technical material is inconsistent. For example, the ordinates in figures 1.4, 1.5, and 6.1 disagree with each other. The text on page 128 also disagrees with figure 6.1, while the text on page 150 disagrees with figure 7.1. These may be simple examples of typographical errors, but they lessen confidence in the book's technical accuracy. On the positive side, the book has excellent organization and lots of pertinent examples, as well as extensive notes and documentation. The index is also very co! mplete and thorough.
Though Christensen's ideas are new! and radical they are so lucid, logical, and clear that anyone involved in American business cannot afford to ignore them.
Duwayne Anderson
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42 of 43 people found the following review helpful
4.0 out of 5 stars What is the Innovator's Dilemma?, January 18, 2002
Elio Spinello (Valencia, CA United States) - See all my reviews
In The Innovator's dilemma, Clayton Christensen describes the dynamics by which some of the largest, most successful companies in America fail due to "good" management. In his analysis, firms that dedicate themselves to listening to and serving their customers the best, place themselves most at risk for future failures as they are overtaken by smaller upstart competitors with innovative technologies.
The Innovator's Dilemma makes a compelling argument based on the author's study of the computer disk drive industry. Disk drive manufacturing was chosen for its frequent turnover of technology and competitors in a relatively short timespan.
Cristensen places technological innovations in two categories: sustaining and disruptive. Sustaining innovations are those that help sustain an organization's existing customer base by improving the performance, capacity, reliability, or value of an existing product technology. Disruptive innovations produce products that are technologically inferior from the perspective of a firm's existing customer base. Disruptive products, however, may include improvements that, while unimportant to the existing market, hold potential for new and emerging markets. Christensen uses the example of the introduction of small 50cc Honda motorcycles in the late 1950's. From the perspective of the existing motorcycle market at the time, the Honda was inferior compared to larger, more powerful motorcycles such as Harley Davidson and BMW. Honda found a niche, however, as a dirt bike - an emerging market that had not been explored by other manufacturers but was ideally suited for a small, inexpensive motorcycle.
Once a market is established for a disruptive technology, it can then evolve into the mainstream and become technologically improved to the point of competing with and eventually overtaking existing mainstream technologies. In the case of Honda, once a market was established, small motorcycles were technologically improved to the point of appealing to a mass market rather than just dirt bike enthusiasts.
Organizations overlook disruptive technologies for a variety of reasons. Often, larger organizations listen to their existing customers and what is important to them, overlooking small, emerging markets. The innovator's dilemma is that at the time disruptive technologies are introduced, mainstream companies are often wildly successful marketing their sustaining technology to existing customers. Investing in disruptive technology necessitates a diversion of resources away from the organization's most profitable activities that its customers are asking for, toward an unproven technology with a small, uncertain market. Disruptive technologies are often not as cost effective to manufacture or sell when they are viewed from the perspective of existing markets. Small 3.5 inch disk drives, for example, initially cost more per megabyte of capacity compared to larger 5.25 inch drives while, and they had less overall capacity Although they were not attractive to desktop computer manufactures, they represented a cost effective solution to the needs of the emerging mobile computer market where size was more important than large capacity.
Citing examples from a number of industries, Christensen makes the point that traditional business planning works well for established markets and sustaining technologies. In the case of disruptive technologies, however, he argues that strategy should be based on discovery of new opportunities and that individuals working on the development and marketing of disruptive technologies should be organizationally separate.
Overall, the Innovator's Dilemma is a concise, well written book in which the author is able to effectively convey a technically complex study on a technically complex industry. Overall, the Innovator's Dilemma should be required reading for anyone in an business planning role.
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32 of 33 people found the following review helpful
3.0 out of 5 stars Hindsight is 20/20, August 27, 2001
The Innovator's Dilemma presents the idea that even if you do everything right, you can still be wrong if you don't see what's coming. unfortunately, that all depends on what you can see. In this case Christensen's hindsight is 20/20 and he can say "Of course they didn't see it coming." The problem is applying this to modern business. That said, it does present a very interesting way of looking at disruptive technology changes, and how sometimes you just aren't in a position to do anything unless you scrap everything and go from there. Much of his case relies on the hard drive industry, which he has some good quantitative data to work with. At the same time, it is some of his other examples, with backhoes, and steel mills that can illustrate his concept to a greater extent. Part of this is because while computer componants is a fast moving field, it is these more lumbering machine parts area that scream "steady as it goes." Thus his thesis is stronger. It is almost too bad that the newest version is only updated and with a new chapter. Much of his computer hard drive case is only through 1996 - a lifetime ago in terms of technology changes. I would have been fascinated to see him revisit his data and see what it shows. Granted, that would be a complete rewrite of his book, but something that is so groundbreaking as this requires more thorough updating. Overall it is a very good and though provoking book that makes you think. Will it help you catch the next wave and survive the disruption? I am not sure I can say I took that away with me.
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30 of 31 people found the following review helpful
4.0 out of 5 stars Disruptive vs. Sustaining Technologies, January 12, 2000
Jennifer Ryan (Pepperdine University) - See all my reviews
Christensen clearly presents the reality of how disruptive technologies affect organizations. He reviews the business perspectives of large firms vs. those of small firms, and their issues with disruptive and sustaining technologies, i.e., resources, profit margins, customers, etc. Christensen explains that what to us, from the point of 20/20 hindsight, may now seem like blatantly obvious organizational faux pas, at the time seemed like the correct path for the organization to follow. He also reviews companies that have been able to not only survive, but succeed with the emergence of disruptive technologies.
Disruptive Technologies vs. Sustaining Technologies
One of the main reasons why great firms fail is that they attempt to market and manage disruptive technologies utilizing the same methodologies that are found to be successful for the management and marketing of sustaining technologies. These firms are essentially held captive by their customers, since this methodology is based on pleasing the established customer base. Disruptive technologies often are intended for different customer bases that may not have yet been discovered. Due to this, disruptive technologies are often not seen as successful or profitable by large firms that need to keep large profit margins. They are instead seen as successful by smaller entrant organizations with smaller profit margins.
"Resource Dependence - Customers effectively control the patterns of resource allocation in well-run companies"
Management, especially middle management, is very aware of the customer base their company holds. Their customers are the ones who keep pouring money back into their organization through the purchase of products. These customers have set their expectation on the sustaining technology the organization currently offers, as it helps them run their business. They usually have little interest in a disruptive technology that more than likely will not currently meet their needs. This, in turn, causes any new projects involving disruptive technologies that are kept within the same organization and held to the same profit expectations, which initially they will no be able to meet, to not be held at the top of the organizational priority list. The disruptive technology will be "shelved" until it comes into the mainstream, and by that time it may be too late.
"Small markets don't solve the growth needs of large companies"
When a disruptive technology begins to make its presence known, the disruptive technology needs to be viewed with serious consideration. From this, proper planning for its many possibilities should take place. These plans need to remain flexible, and development of the disruptive technology should take place within a department, organization, or subsidiary that has little financial bearing on the company as a whole. This is the necessary environment for the successful development of a disruptive technology. The larger organization can not expect this disruptive technology to command the profit margins of the organization's sustaining technologies until it has discovered its customer base.
"The ultimate uses or applications for disruptive technologies are unknowable in advance. Failure is an intrinsic step toward success."
A great example from the book is the introduction of Honda motorcycles in the U.S. in 1959. Initially Honda wanted to conquer the American market with their 50cc Supercub bike, but their bikes weren't built for running at high speeds for extended periods like Harley-Davidson and BMW. Honda discovered, after failing to market the bikes as road bikes, from actually watching how people used the bikes, that their bikes were best suited for off road dirt biking, a sport that had not yet come to fruition. Harley-Davidson attempted to take part of the new market, but tried to do so by marketing this disruptive technology as a sustaining technology. Their plan failed to prove profitable.
"Technology supply may not equal market demand. The attributes that make disruptive technologies unattractive in established markets often are the very ones that constitute their greatest value in emerging markets."
Honda was able to do this by creating a new market segment, off road bikers! These same bikes were not attractive to those customers interested in long haul road bikes such as Harley-Davidson and BMW, but Honda's bikes now hold a majority of the market.
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23 of 23 people found the following review helpful
4.0 out of 5 stars Original and Important Thinking on Tech Business Strategy, February 20, 2002
Bradley A. Swope (State College, PA USA) - See all my reviews
REVIEW: The author's key theme (my oversimplification) is that new technologies can be separated into "sustaining technologies" (for improving established products)and "disruptive technologies" (fundamentially new products or markets) and that while established firms do an excellent job at exploiting sustaining technologies, disruptive technologies often cause them to stumble and lose leadership. The book explores the reasons why this has ocurred despite the established firms having good management and following good management practices. For those who are Peter Drucker fans, I believe Christensen has independently found and expanded upon two Drucker concepts in a fresh and original way. The Drucker concepts embedded here include: (1) key changes always start with a company's non-customers and (2) the "new" (e.g. a company's new products) should be developed separately from the old, should be sheltered, and should not bear the same burdens as the company's established products. The book is based on solid research and is well written. Highly recommended for those interested in high-tech manufacturing business strategy.
STRENGTHS: The book is organized very well giving the reader the option of a quick read or a detailed read. For example, there is an excellent introduction that summarizes the main points of the book. Also, each chapter has detailed footnotes allowing the reader to go deeper into the material if desired. The book has plenty of case studies and graphics to illustrate key concepts.
WEAKNESSES: The book has a bit of an academic feel and is not written in a casual way as found in many popular business books. This didn't bother me as I found the content first rate and very interesting.
WHO SHOULD READ THIS BOOK: Exectives responsible for strategy in technology product companies.
ALSO CONSIDER: Andrew Grove - Only the Paranoid Survive; Peter Drucker - Management Challenges for the 21st Century; Michael Porter - On Competition
[feedback welcome]
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25 of 27 people found the following review helpful
4.0 out of 5 stars A Major Achievement, December 21, 2000
Newt Gingrich (Washington, DC United States) - See all my reviews
This is an extraordinary and important book that helps explain and put into perspective many of the changes our economy is going through. It outlines clearly why successful firms find it easy to develop "sustaining" technologies and why they find it so extraordinarily difficult to develop the "disruptive" technologies that our economy and country need to continue moving forward and being successful. The lessons Christensen develops apply to government as well as business and help explain why government-run systems in the areas of health, defense and education have lagged so far behind the private sector in developing breakthrough technologies.
The heart of Christensen's message is that "sustaining technologies" - improving upon something that you are already doing - are normally developed by firms that are already successful because they fit the existing markets' definition of value. Thus an IBM, Intel, or U.S. Steel will naturally develop better ways of delivering the product they are already focused on. However the successful companies will almost never develop a "disruptive" technology - a radically new way of doing things, or a way of doing new things - precisely because they focus on their customers, and those customers almost never value a disruptive technology in its initial stages.
By definition, if your customers are structured to buy your product, they are not going to be immediately open to changing their structure to buy a new product. They are going to be institutionally inclined to stay with their current structure and therefore your current product.
Thus a standard business plan would insist that the return on investment from a disruptive technology does not justify the time and effort necessary to make is successful. In short, it is not technological conservatism or bad management that inhibits the adoption of disruptive technologies by the dominant companies; it is precisely their intense and successful focus on their customers that leads them to rationally reject the future.
Christensen develops case after case in which we can see examples in history where the disruptive technology is developed by a new firm that actually has to go out and develop new markets for the product. Thus the large, successful steam shovel manufacturers were rationally not interested in a new innovation, hydraulic backhoes, because at their inception the backhoes could not do the mammoth jobs steam shovel customers needed (i.e. strip mining). So the backhoe manufacturers, smaller start-up style companies, created their own market when they found that backhoes were invaluable if you had been digging ditches by hand for water pipes. Over time the disruptive technologies are developed and become competitors to the lower end of the existing systems - smaller steam shovels that do smaller jobs could be taken out by a backhoe. Over more time the new technologies can displace the older ones.
Christensen develops a model for thinking about new technologies and for setting up small operations to develop them within a rational framework, while allowing the rest of the firm to focus on existing technologies.
In health, defense, education, and general government administration there are enormous gains to be made by studying Christensen's work and using his model.
For those who find the book useful, Christensen is putting his system on the Internet and has a consulting firm to help companies work on disruptive technologies.
This is a major work for anyone interested in how technologies emerge and how to develop them more rapidly and more profitably.
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14 of 15 people found the following review helpful
5.0 out of 5 stars Could it be "The Structure of Technological Innovations"?, October 16, 2000
Let's admit it, most of the books crowding business sections of large bookstores are nearly trash. If they serve any purpose at all, it is mainly to supply upper- and middle management with a lexicon of faddish buzzwords for reports, presentations and conference calls; in a few years nobody will remember most of these buzzwords and bullet points. "The Innovator's Dilemma" is a rare exception. It does present a new paradigm of how technological innovations actually develop and win over the previous technologies. Many reviewers pointed out key organizational aspects of the "Innovator's Dilemma" - "how great companies fail by doing everything right". I will not repeat them. Instead I will concentrate on the important and overlooked technical side of the issue.
One of the key concepts in the studies of the technological progress that emerged over the last decades is the so-called S-curves. They are usually depicted as a cascade of similar shaped curves, ascending in upper-right directions in a system of coordinates describing the performance of each new technology vs. time. According to this concept, as a new technology emerges, its performance is at first much below than the established one. As it develops, its improvement ran for a while roughly in parallel to the established technology and below it. Then, as the older technology matures, its performance improvement becomes slower and saturated (the upper end of the S-curve), and eventually is overcome by the new technology. Then the cycle repeats itself with yet another disruption.
"The Innovator's Dilemma" in fact proposes a radical revision of this concept. New technology usually wins not because the old one exhausts its potential, but because continued improvement in the performance of old technology becomes progressively less important and valuable, what the author calls "technology oversupply". Instead of the S-curves Clayton Cristensen presents what I'd call a "#-pattern", although he doesn't use this term. The #-pattern consists of two pairs of parallel lines, both inclined in the upper-right direction, but at different angles. The steeper pair of lines represents the "technology trajectory", of which the upper line stands for the established technology, and the lower line - the new, disruptive one. They run roughly in parallel, so that at all times the performance of the established technology is superior to the new one. The reason why the new technology triumphs nevertheless can be understood from the second - less steep - pair of lines which represents the market demand at the lower and upper ends. Initially the trajectory of the disruptive technology establishes a beachhead by meeting low-end market demands (intersecting the lower of the near-horizontal lines of the #-pattern). Then, while both established and disruptive technologies improve faster than the market demand, the disruptive one is capable of satisfying all segments of the market. At the same time at is typically much better by other criteria - e.g. cheaper, smaller, more reliable than the old one. Eventually the old technology is driven out completely.
The problem for the established technology arises not because the a disruptive technology quickly overcomes it in terms of the existing metrics, but the metrics itself changes. For example, 8-inch disk drives could still pack far more megabytes than 5-inch drives in the early 80's. But the new emerging products - PCs - could not yet absorb all the megabytes allowed by the 8-inch drives. The size and the price was more important for them - that is why the 5-inch drives won.
The fact that the established technology continues to hold an edge vs. the disruptive one helps explain why it is so difficult for dominant companies to perform a successful transition, even as they are often first to discover new technology. They see that their current products are far from exhausting their potential for improvement, and their customers continue to demand them. They often happy to relinguish the unappealing lower end of the market to the struggling upstarts, which seem a very long way from being credible challengers. And eventually they lose.
I think that this is a very important thesis, and it is consistently presented and well-explained throughout the book. I was dissapointed to see most of the book reviewers either overlooking it or completely misunderstanding this crucial point. Kudos to C. Christensen for putting forward an original, innovative and convincing concept.
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10 of 10 people found the following review helpful
4.0 out of 5 stars Summary & Comments, January 9, 2000
Companies face a tough decision between making their customers happy in the short-term and the long term. It is a trade off that often results in a company focusing on the short-term while a start-up competitor focuses on satisfying the customer in the long term. This is the Innovator's Dilemma.
The on-going example offered by the book is that of the disk drive market. Historically customers have desired more storage capacity. Firms have sought to make "sustainable" advances in the amount of storage space of their hard drive products. Start-up firms have often introduced hard drives that were smaller, but had less storage space. At first the start-up cannot satisfy the customers that require high capacity, but over time introduce sustainable improvements in capacity that eventually satisfy the high-end market. In the meantime they dominate smaller markets that require smaller hard drives. At some point the high-end market has the option of using a big or a small hard drive, because both satisfy capacity requirements. They tend to pick small, because it also offers something else, reliability (a result of small size, apparently). A technological improvement is called "disruptive" if it provides inferior performance according to current "sustainable" criteria, but has other features of use to smaller markets. Disruptive technologies can be improved over time to eventually satisfy the demands of the high-end market.
The author argues that even very successful companies fall victim the Innovator's Dilemma, because it is a natural law of business for them to satisfy customers. Disruptive technologies do not initially satisfy those customers, so successful companies don't invest in them. To bet on every disruptive technology draws resources away from sustaining current products, so companies tend not to do so. Also, disruptive technologies initially only have application in low-end markets. Since the low-end is not a big money maker for successful companies, they naturally work toward the other extreme, seeking to satisfy customers in higher and higher margin markets. Eventually the disruptive technology improves to the point that it offers equivalent functionality, but by that time the firm has too much inertia toward the high-end market, and can't switch to the disruptive technology.
I found that the Innovator's Dilemma enhances the picture that Crossing the Chasm first illustrated. Crossing the Chasm is a recipe for the start-up that wants to topple giant competitors. The Innovator's Dilemma, on the other hand, shows how giant companies are toppled by start-ups. Both books are useful to all kinds of companies, because all companies face both situations. Start-ups need a strategy for going mainstream, and once there need a way to fight off new start-ups.
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