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The Innovator’s Dilemma
When New Technologies Cause Great Firms to Fail
The Innovator’s Dilemma is a groundbreaking book by Harvard Business School professor Clayton M. Christensen. It was first published in 1997 and has since become one of the most influential books on innovation and business strategy.
The book challenges conventional wisdom on how successful companies should manage innovation. Christensen argues that companies can be too successful in their existing markets, making them resistant to change and innovation. This creates a dilemma: should they continue to invest in existing products and markets or should they focus on new and unproven technologies?
The book provides a framework for understanding this dilemma by introducing two types of innovation: sustaining innovation and disruptive innovation.
Sustaining innovation is what most companies are good at. It involves making incremental improvements to existing products and services to meet the needs of existing customers. Companies can sustain innovation by investing in research and development, improving manufacturing processes, and streamlining operations.
Disruptive innovation, on the other hand, involves developing new products or services that disrupt existing markets by offering new and different value propositions. These innovations are typically lower cost, lower quality, or less sophisticated than existing products and services, but they have other advantages such as convenience or accessibility.
Christensen argues that disruptive innovations can be difficult for established companies to pursue. This is because they often require new business models, new manufacturing processes, and new distribution channels. Established companies may be reluctant to invest in these new areas because they are seen as risky and unproven.
Moreover, disruptive innovations often have a lower profit margin than existing products and services. This means that established companies may be reluctant to invest in them because they do not offer the same return on investment.
The Innovator’s Dilemma is full of examples of companies that failed to adapt to disruptive innovations and were eventually overtaken by upstart competitors. One of the most famous examples is Kodak, which dominated the photographic film market for decades. Despite having developed the first digital camera in the 1970s, Kodak failed to capitalize on this technology and was eventually overtaken by competitors such as Canon and Nikon.
Another example is Nokia, which dominated the mobile phone market in the early 2000s. Nokia was slow to adapt to the rise of smartphones and was eventually overtaken by competitors such as Apple and Samsung.
The book also provides examples of companies that successfully navigated the innovator’s dilemma. One of the most famous examples is Intel, which was able to transition from making memory chips to making microprocessors. This was a disruptive innovation at the time, but Intel was able to successfully invest in the new technology and create a new market.
The Innovator’s Dilemma is a must-read for anyone interested in innovation and business strategy. It challenges conventional wisdom on how successful companies should manage innovation and provides a framework for understanding the challenges and opportunities of disruptive innovation. The book is full of examples and case studies that illustrate the concepts and make them easy to understand.
Overall, The Innovator’s Dilemma is a thought-provoking and insightful book that has become a classic in the field of innovation and business strategy. It is a must-read for anyone who wants to understand how successful companies can stay innovative and competitive in a rapidly changing business environment.
About the Author –
Clayton M. Christensen was a professor at Harvard Business School and one of the foremost management researchers in the world. He wrote numerous books and more than a hundred articles. The Economist named his book The Innovator’s Dilemma as one of the six most important business books ever.