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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
This review is from: The Innovator's Dilemma: The Revolutionary National Bestseller That Changed The Way We Do Business (Paperback)
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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