Innovator's Dilemma: When New Technologies Cause Great Firms to Fail Audio CD – Abridged, January 1, 2000

Very insightful and applicable to this very fast moving world. I would especially recommend it to technology enthusiasts and business strategists.

Using data from various industries, this book discusses dilemma between sustaining and disruptive innovation.Most technological companies drift up-market, improving technology for increasingly high-margin customers. This is sustaining innovation. It can be hard, but if you continue to serve the same market, return on investment is predictable. Sustaining innovation creates vacuum at the low end, and entrants fill it with new technologies, not as capable but better in other ways - simpler, more reliable, suitable in different environments, and typically cheaper up-front. This is disruptive innovation. When a working low-end business model is found, products start to improve until they meet demands of mainstream customers. At this point, being cheaper, or simpler, or more reliable, new technologies win.The entrants often fail, but the wins can be huge. For sustaining innovation, being the first with new technology is not very important - you can serve the same market with incremental improvements to the previous technological generations for a while. For disruptive innovation, the first companies often take it all. They fly below the radar for a while, polishing the processes, and as soon as product is ready for mainstream, they can win overnight. So with more risk of failure, and more to gain, disruptive innovation might be attractive, statistically.Sure smart management will invest in disruptive innovation, then? In fact, engineers at big companies often do have prototypes of disruptive technologies done before anybody else, it just must be marketed. But then, CEO has to decide between sure increase of bottom line next year using sustaining innovation, or betting on a project that might fail, and even if it succeeds, bringing very small revenue initially. Even if top management decides to bet, it is middle managers and sales people who determine resource allocation on a daily basis, and they also prefer sure bonus this year to uncertain huge win 5 years from now, so disruptive projects usually don't get much attention. Everybody waits until disruptive technology matures enough to serve existing markets, while new companies at eating into those existing markets. There were big companies that successfully brought disruptive products to market, but it requires constant attention of CEO for months. In a sense, the capabilities that allow big companies to operate in their current established markets are liabilities when trying to find new markets.The solution suggested in the book is creating independent organizations. It can be a complete new company, or it can be a different office, but that organization must be "independent from normal resource allocation process" of mother company, and be judged on how well it can find and grow new market for the disruptive technology. It also suggests that all plans must be plans for discovery of market ("experts' forecasts will be wrong") and therefore be based about inexpensive experiments into new markets and provide for quick change of course if necessary.The biggest concern about this book is that despite having charts everywhere, it is still more about intuitions rather than any mathematical models. It does mention that company profits can increase as competitions grab low-end market, and it does mention companies that continue to hold nice high-end market after middle-end is occupied by new technology, so decisions are not obvious. There is also a case study of one possible innovation, electric cars, but it only say that their performance is not suitable for mainstream on all metrics (it was before Tesla made it to 60 in 4 seconds) and is increasing faster than market demands. By that criteria, every company should invest in pretty much any new technology. I would have hoped for a more detailed analysis here, but it could be too much to ask from a book that was first to even bring up the innovators dilemma.

The Innovator’s Dilemma is an interesting work written by Clayton M. Christensen in 1997. The book seeks to explain why certain businesses are successful in their ventures and why other firms fail in response to new technologies. Christensen tries to explain throughout the book why some firms, when new technologies enter the market, fail either because they adapt the new technology or not. The author initially believes that new technologies are constantly emerging and all businesses must continually adapt to stay relevant. However, this proves to be false as in his studies not all firms that ignored the new technology failed while not all firms that adapted the new technology succeeded. This is the fundamental dilemma in the book, and Christensen’s main purpose is to figure out a recipe for managers to follow to stay successful when disruptive technologies enter the market. Most of the book revolves around the study of the disk drive market since they were first developed in the 1950’s. The disk drive industry was important because technology was rapidly advancing and smaller drives were being released within a few years of each other. Many of the established firms often chose not to invest in the next smaller disk drive because they did not have enough memory to meet their standards. However, emerging firms would find new markets for the use of smaller drives and also find ways to make them more powerful, eventually drive the existing firms out of business. Christensen eventually concludes that successful businesses often collapse, despite having good managers, because they fail to find the new markets for disruptive technologies while instead supplying current customers with what they currently need.The goal of the book is to educate people in the business world about how new technologies affect firms and to provide a new way of thinking about disruptive technologies. The end of the piece brings the conclusion that leading firms almost always have set technologies that work well for their current customers, choosing not to invest in new technologies because what they are currently doing is working, current customers do not want change. That is, until new technologies grow to be superior than their predecessors. Christensen does a fantastic job in making his point clear as he provides a plethora of studies across different markets to support his claims. The first half of the book is essentially a detailed history of the disk drive industry that has multiple examples of different firms both choosing to invest in smaller drives and continuing to use their already established, larger drives. He uses this information to create hypothesis’ about why these firms made their decisions and whether it lead them to success or not. Essentially, the author’s process in writing the book is to look at different industries that had disruptive technologies and discover what trends lead to success and what trends lead to failure. He spends a lot of time focusing on a single industry, the disk drive. However, he does bring up several other markets including the mechanical excavator, steel, computer, and discount retailer industries. This variety of different scopes enhances his argument, especially since he sees similar trends across all of these different markets. Many of his examples include established firms choosing not to adopt new technologies because it does not fit their current business motives, but then later being replaced by firms that dared to find new markets for the new technology. His claims are definitely unbiased as all of his conclusions are drawn from the hard evidence that he compiles and delivers to the reader throughout the book about the different firms in those industries. It is almost impossible to disagree with his conclusion since all of his evidence accurately backs up his claims.Personally, I enjoyed reading the book but mostly because it appeals to my interests. As a young business major, the book is intended for me to read and may directly pertain to my own future. However, this book would be challenging to read for the average person that is not interested in business. The book is confusing at some times and is clearly designed for educated readers with a basic understanding of the business world. I would say that the book is a must-read for managers of a company that may be facing disruptive technologies in their industry as it does provide direct advice for people of that demographic. It is a book that I would certainly recommend to my peers within my major.Christensen does a decent job in making the book engaging. Some of the chapters where he is providing data are dry and confusing, but he does always provide a summary at the end of chapters to keep the reader focused. A lot of the book is also repetitive in regards to the disk drive industry and the author reiterating his claims about disruptive technologies. Nonetheless, the book is overall definitely a success for its purpose. There is plenty of evidence throughout the book that prove his claims in real-world situations. His main ideas about why firms choose to serve current customers with current technology rather than try to force new technologies on customers also makes logical sense, given the customer-centric market that is present in today’s society. His complex conclusion that disruptive technologies succeed only when they find a market that does not currently exist is confusing, but is definitely supported with his evidence.In conclusion, the book is a great read for those looking to advance their knowledge in the business world and think about topics that are not usually discussed. The author’s conclusions are creative and complex, but are backed up with hard evidence throughout the piece. The insights and advice brought up by Christensen are useful knowledge to any person studying business and the impact of emerging technologies. This is a book that I will definitely keep in mind in the future and I will recommend to others.

Useful infromation for tech business.

As some other reviewers stated:- A bit text book-like and academic in its format- It a bit dated in the industry studiesHowever, after getting through the first chapter or two where he over-explains what he’s going to tell you in the book and how he’s going to tell it, it becomes much easier to read, and enjoyable, as he gets into the meat of it. Stick with it.I found it interesting to read about the older (mostly late 20th century) industries and disruptive innovations he studied. It was informative in a historical way as well as economic and business. Outside of the excavator industry, the author’s research was on relatively recent and modern technologies (disk drives, printers, computers, discount retail stores, etc). And I found the excavator research to be very illuminating due to the simplicity of the technology.While reading the book, I began viewing technology and projects at my work, in my industry, and in other industries with a new lens. I began thinking about what have been disruptive innovations over the past 20 years, and why they were disruptive and who were the companies led the way, and profited. And why they succeeded and others failed. What are the current and upcoming disruptive technologies? A new way for you to look at things, not just for management purposes but also for investment.