The Innovator's Dilemm...

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Clayton M. Christensen

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

by Clayton M. Christensen

4.06 of 5 stars 4.06 · rating details · 5,231 ratings · 245 reviews

In The Innovator's Dilemma, author Clayton M Christensen shows what the Honda Supercub, Intel's 8088 processor, and hydraulic excavators have in common. They are all examples of disruptive technologies that helped to redefine the competitive landscape of their respective markets. These products did not come about as the result of successful companies carrying out sound bus...more

Hardcover, 256 pages

Published June 1st 1997 by McGraw-Hill (first published April 30th 1997)

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Oct 07, 2007 Rod Dunsmore rated it 5 of 5 stars · review of another edition

This is a great book on innovation and how start-up and entrepreneurs ought to fashion their company to go against entrenched incumbents.

The gist of the book is an interesting trend the author found when analyzing the industry. He found that certain innovations were "disruptive" -- meaning they changed the way a market worked, and some were "sustaining" -- meaning they were really just improvements on existing products.

The author traces disruptive innovations through the steel industry, where it...more This is a great book on innovation and how start-up and entrepreneurs ought to fashion their company to go against entrenched incumbents.

The gist of the book is an interesting trend the author found when analyzing the industry. He found that certain innovations were "disruptive" -- meaning they changed the way a market worked, and some were "sustaining" -- meaning they were really just improvements on existing products.

The author traces disruptive innovations through the steel industry, where it took $100M + to build an integrated steel mill. Someone one day discovered a way to make steel with a much cheaper furnace -- a "mini-mill". This mini-mill made steel that was ugly and weak, compared to the integrated steel mills -- but it was good enough for one type of steel: rebar. It could make rebar about 10x cheaper than the integrated steel mills, and it didn't matter that it was ugly.

The integrated mills could not compete with the mini-mill due to costs. But, more importantly, they did not *want* to compete. Rebar was the lowest quality of steel, the most commoditized, and the customers were the least loyal and most price-sensitive (read: difficult). They were happy to walk away from that business...they really made no money in that market anyway. So the mini-mills experienced almost no competition from the incumbant.

After a few years the mini-mills all experienced decreasing profits due to more mini-mills entering the market. Soon, someone discovered how to make the next level of steel -- I forget what it was, elbow joints or something. The same cycle happened...the integrated mills walked away from a fight and the mini-mills saw huge profits for a few years until they all caught up.

Slowly, innovation after innovation ended up eating away all of the business from the integrated mills -- who never once tried to compete for the business they were losing. Today there are no integrated mills in existence.

This is the gist of the book: if you are going to create a new company, you ought to learn from history and fashion a product that will have the existing leaders gladly walking away from the business you are fighting for.

Anyway, this is a long review. Great book, very thought provoking.(less)

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May 01, 2013 Michael Burnam-fink rated it 4 of 5 stars · review of another edition

Shelves: 2013, innovation, academic

I've been trying to get a handle on what innovation is for a while, and Harvard Business School professor Clayton Christensen is a solid introduction to the corporate perspective. Christensen's study is based on the difference between disruptive and sustaining innovations in business, focusing primarily on hard drives but looping into backhoes and motorcycles, along with other topics.

Christensen's big result is that leading firms tend to fail when faced with disruptive innovation, losing out to...more

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Sep 03, 2012 Mark Dunn rated it 3 of 5 stars · review of another edition

Documents how disruptive technological changes happen, based on years of history from several industries. Premis is that while established companies are able to make significant improvements to the technologies they lead in, they are too intimately linked to their supply chain (both customers and suppliers, as well as internal attachments) to break out into disruptive technologies.

The reason proposed is that disruptive technologies do not usually satisfy the existing customer set of the establi...more Documents how disruptive technological changes happen, based on years of history from several industries. Premis is that while established companies are able to make significant improvements to the technologies they lead in, they are too intimately linked to their supply chain (both customers and suppliers, as well as internal attachments) to break out into disruptive technologies.

The reason proposed is that disruptive technologies do not usually satisfy the existing customer set of the established technology, and as a result will not get attention from the established companies. The reason that the disruptive technologies eventually displace the established ones is that while they initially serve a different market, they eventually improve to the point that they also satisfy the previously established markets, resulting in them capturing both new and old customers. This is essentially because the rate of improvement to technology usually outpaces the rate of increased expectations by customers, so while a technology may start below expectations, eventually it will catch up.

A good example of this is disk drives (where a lot of the data for the book came from). PC desktop manufacturers were not interested in smaller footprint drives when they were first developed, as they were more expensive ($/MB) and didn't fit in existing designs. These smaller drives did, however, satisfy the laptop makers, who needed a smaller footprint and were willing to pay the premium. Over time the smaller drive technology improved to the point that it met the price point of the desktop manufacturers, and so was also adopted by them. See p17 for a good pictoral representation of this example.

The approach suggested to overcome this is essentially to isolate new developments from the existing organization so that they can break free of internal barriers as well as work with new customers/markets. In addition to this he suggests non-traditional marketing approaches to breaking into the new markets due to the fact that data usually doesn't exist. The key here is nimbleness in the early stages rather than locking into long-term plans, which cannot be successfully made without knowing some of the unforeseen end-uses of the new technologies.(less)

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Apr 19, 2012 Jeff Yoak rated it 5 of 5 stars · review of another edition

Shelves: audio-collection, read-in-2012

This is one of those books that becomes an instant classic. Everyone talks about it until you think you know most of what it has to say without reading it shortly after it comes out. You can barely carry on a conversation about technology without someone using the term "disruptive." It deserves that reception and as with most cases, there is much more to gain by reading the book than just the popular representation.

The book defined disruptive technologies vs. sustaining technologies and addresse...more

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Mar 16, 2012 Ruhil rated it 5 of 5 stars · review of another edition

Overall, I think the book is very well written with insightful strategies for sustainable growth. The concept of disruptive innovation is definitely worth understanding and applying in today's competitive environment to gain that edge in the marketplace.

The chapter that I found most valuable was chapter no. 2 - What products will customers want to buy? The idea that market research is typically conducted to understand the nature and size of the market and NOT focused around what the customer nee...more

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Jan 29, 2012 Ilia rated it 5 of 5 stars · review of another edition

Biggest question is - how do you figure out something is a "disruptive" technology, not just a fringe/inefficient one. Only somewhat answered by the book - a lot of gut feel goes into that one I guess.

In a way, a tech is disruptive if after building a startup or division around it, you can find a segment of the market that's growing at a fast enough rate to fuel more innovation in this technology, until the new market starts to get big enough to rival the original market. Or if your competitors...more

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May 18, 2010 Glen rated it 4 of 5 stars · review of another edition

Shelves: mohrcollab

Notes from Clayton Christenson, The Innovator’s Dilemma

It pays to be a leader in a disruptive innovation
• Leadership in sustaining innovations gives little advantage
• Leadership in disruptive innovation creates enormous value

But established companies typically fail in the face of disruptive change
• Companies get organized to satisfy current customer’s needs and to facilitate design and production of current products. This organization can then prevent the organization most conducive to developin...more

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Apr 16, 2010 Ben Haley rated it 3 of 5 stars · review of another edition

Good argument, highly redundant.

The central argument is that companies miss important new markets because they are structured to serve the needs of their most profitable customers where new 'disruptive' technologies often emerge from smaller markets who's customers needs are quite different. Eventually the smaller market catches up to the demands of the profitable customers and by that time has developed an insurmountable lead in the utility that its original customers demanded.

The prime example...more Good argument, highly redundant.

The central argument is that companies miss important new markets because they are structured to serve the needs of their most profitable customers where new 'disruptive' technologies often emerge from smaller markets who's customers needs are quite different. Eventually the smaller market catches up to the demands of the profitable customers and by that time has developed an insurmountable lead in the utility that its original customers demanded.

The prime example of this kind of 'disruptive technology' is seen in disk drives where smaller low-cost, low-power technologies have consistently replaced larger more efficient disks. The new disks appealed to customers who needed less power and values the lower cost and size. As Christensen points out, existing companies have consistently missed these changes because their top customers continued to demand storage / $ until the 'disruptive' new technology eventually caught up with that demand.

The same general pattern repeats itself in the steel industry and computer markets. It also repeats itself in Christensen's book which could easily have been 70% shorter w/o loosing any of its message. Still the basic point is great and it leads to some interesting ideas and recommendations:

1. Well structured companies will work to please their top customers regardless of executive orders.

2. Top customers might have different needs from smaller customers.

3. Smaller markets require nimbler company structures to enter. Big companies will find the benefits too small to justify their entry. The potential profitability of emerging markets is nearly impossible to assess correctly and so big companies can easily miss these waves.

4. As smaller markets grow their is the risk that they will overwhelm bigger markets once the big market's performance needs are met. This is usually because they provide a cheaper, and easier to use product.

5. Often engineers are the only people in a company who anticipate the emergence of 'disruptive' technologies. In many cases their fights with marketing have led them to form new companies that end up usurping the companies they came from. If these engineers were funded by the company they came from and given the degree of independence necessary to succeed they might benefit the companies who cultivated their success.(less)

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Jun 19, 2009 Nicholas rated it 4 of 5 stars · review of another edition

Shelves: business, management

This review has been hidden because it contains spoilers. To view it, click here. When you have an established product, listening to your customers cannot keep someone from disrupting your market. The technology will rise form smaller previously unserved markets and then expand into yours. And then the same thing will happen to them. The way to solve this is to build enterprise startups that sell to anyone they can. Anyone who wants the product regardless of market size.

When technology improves faster than market demand for quality eventually a new technology will rise from b...more

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Jan 26, 2013 Heather rated it 3 of 5 stars · review of another edition

Shelves: technology-innovation, leadership

I've wanted to read this book for a while, but it ended up being a good book to skim at the gym. :) It's pretty technical and feels like a textbook. I couldn't explain the examples back to you, but there is a nice summary at the end. The main point is that disruptive innovation is different than sustaining innovation and needs to be handled differently if an organization would like to succeed.

Good management and leadership practices are important, but sometimes the "stay close to your customers"...more

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Mar 28, 2012 Andy Love rated it 4 of 5 stars · review of another edition

Shelves: non-fiction

The author lays out a convincing case, with evidence from a variety of industries, that successful companies can fail not through blunders of management, but through a process by which the company develops increasingly effective and efficient processes for handling the needs of the portion of the market with the highest profit margin, inadvertently allowing other companies to learn, grow and dominate niche markets that address different needs than those that the successful company has addressed...more

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Apr 28, 2013 David rated it 3 of 5 stars · review of another edition

Shelves: audio-book

This is one of the handful of business books that is regularly cited outside of business school. I have heard it referenced so many times -- most recently to explain the decline of print journalism and the rise of the Huffington Post -- that I decided it was time to finally read it myself.

That probably wasn't necessary. Christensen's framework for how innovation disrupts existing business models is pretty simple and can easily be summarized in a two-minute video. The only added value of reading...more This is one of the handful of business books that is regularly cited outside of business school. I have heard it referenced so many times -- most recently to explain the decline of print journalism and the rise of the Huffington Post -- that I decided it was time to finally read it myself.

That probably wasn't necessary. Christensen's framework for how innovation disrupts existing business models is pretty simple and can easily be summarized in a two-minute video. The only added value of reading the entire book is to delve deep into industry-specific case studies -- from the hard disk industry to a major change in big box discount retail stores -- to highlight how some companies adapt well to disruptive innovations (Apple is the best example) while others are caught unprepared, and die out (for example, Hewlett Packard).

In the news industry, the Atlantic is a great example of a print company that has adapted well; the Washington Post, not so much. (Last year Christensen co-authored a report titled Be The Disruptor, which applies his framework to the major changes taking place in the news industry.)

I also wanted to read this book because it is so closely related to Why Nations Fail, my next review. In The Innovator's Dillema, Christensen explains how single companies frequently kill off innovative products because powerful managers are fearful that new products will compete with their current best-selling products and services. In Robinson and Acemoglu's expansive thesis on why some nations are poor and others are rich, they apply the same model to lobbying and public policy. For example, the oil industry lobbies against electric cars, fearful that the innovation will reduce demand for oil. When wealthy lobbyists capture government agencies, a country becomes less equipped to adopt new innovations which drive new industries and create more jobs.

Like all business books, this one, too, suffers from the sort of bombastic prose that will cause students of literature to wince. Still, I'm glad that I read it, if only to ensure that the ideas stay with me. (less)

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Sep 03, 2012 Scott Shepard rated it 4 of 5 stars · review of another edition

Shelves: non-fiction

A very interesesting and insightful read, Calayton Christensen examines why big companies employing talented people and sound managers can be left in the dust by small startups. How come IBM did not attack the desktop computer market when it first appeared? Why are some companies so slow to use the internet in their business? He addresses these questions with something called the Disruptive Innovation Theory. Basically a disruptive technology is a technology that creates a new market instead of...more

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Feb 24, 2011 Liam rated it 5 of 5 stars · review of another edition

"Generally disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted so they could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream." (15)

"Markets that do not exist cannot be analyzed: Supplier...more

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Sep 08, 2012 Lawrence rated it 5 of 5 stars · review of another edition

Read this after it was recommended by a senior leader to the Pre-Command Course at Fort Leavenworth, KS. Superb! Exceptional insights that apply not only to economics but can be extrapolated to government, education, and National Security.

Surprising, even disappointing, however, that a book which cites examples from the "high tech" industry could fail to mention "Moore's Law." Design theory suggests we must understand the underlying environment in which a technology exists - something Christense...more Read this after it was recommended by a senior leader to the Pre-Command Course at Fort Leavenworth, KS. Superb! Exceptional insights that apply not only to economics but can be extrapolated to government, education, and National Security.

Surprising, even disappointing, however, that a book which cites examples from the "high tech" industry could fail to mention "Moore's Law." Design theory suggests we must understand the underlying environment in which a technology exists - something Christensen shows many managers did not. Those who rise to prominence following proven wisdom or the "status quo" are often caught off-guard by change.

Every author has a bias, a perspective - and a desired audience. Christensen candidly states his audience is managers. This said, his work unwittingly excuses executives and leaders for their complicity in the failures of enterprise which fail to adapt to new technologies.

Here the wisdom of Quality Guru W. Edwards Deming provides an important corollary to Christensen. Deming lamented that the reason the Japanese eclipsed American manufacturers for several decades in applying American manufacturing "lessons learned" from World War II was because he taught them to engineers, not executives. The decision to produce quality, Deming notes, is an executive decision.

Seen through a military lens the failure to adapt to new technology is more clearly a failure of leadership. Drew the ire of French colleagues at NATO in 1998 when I pointed out that the French had better tanks than the Germans in 1940 - but that German leadership, imagination, and innovation conceived of a better way to use the new technology of the internal combustion engine, radios, and airplanes than that which conceived the Maginot Line.

In fairness to our French allies all of the world's militaries struggled with how best to use new technology in the 1920's and 1930's. Those who relied too much on theory were at a disadvantage compared to those who were more open to applying practical experience.

General Gordon R. Sullivan in his superb work, "Hope is Not a Method" cites the example of English use of the longbow at the Battle of Crecy in 1346. Here a smaller force under Edward III defeated a larger French army. That the longbow had been around for 200 years suggests that the use and application of new technology "evolves," and that Christensen is perhaps a bit harsh and even unfair in blaming mangers for the failures in the high tech industry during it's infancy.

My feedback to the senior now 4-star leader who recommended this book? Dr. Christensen would have benefited from application of Design theory taught at the U.S. Army School of Advanced Military Studies, which emphasizes the need to understand broader historic and cultural context in developing strategy and concept.

Similar patterns which suggest an "evolutionary" and "visionary" or environmental and executive/leadership "root cause" - a "failure of imagination" - rather than blaming "management" decision for the failure of companies to adequately adapt to or exploit new technology is found in the nascent radio and automobile industries during the 1920s and 1930s.

Ultimately mangers are followers - the real root cause here is at Executive levels and in leadership and the "corporate" culture they create.
(less)

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Dec 29, 2012 Ben Love rated it 4 of 5 stars · review of another edition

I have read this before, many many years ago, and read it again this past week. I did this for two reasons: 1) it’s a title back in fashion thanks to Steve Jobs pointing out his admiration for the book via his biography and 2) I was struggling to frame up a “no regret” + innovation strategy for a wider audience and needed help articulating the nuances of where continuation and disruption part ways.
I do love this book. It is so sensible – in a way that you probably know a lot of what is in here b...more

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Sep 09, 2012 Paul rated it 4 of 5 stars · review of another edition

A very interesting read, populated with numerous case studies from Clayton Christensen's research. The book explores how companies who are successful to the point of being market leaders within their field fail to survive revolutionary technological shifts within their industries (i.e. disruptive technology (by definition :-))).

The main crux of his observation is that as disruptive technology is developed it is unable to service the incumbent market and large companies, with the need to grow the...more

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Feb 15, 2012 Brian rated it 4 of 5 stars · review of another edition

Shelves: goodreads-staff-library-nonfiction, goodreads-staff-library, grbpp

(4.0) Classic business book that's probably actually worth reading

Yeah "probably actually" isn't the strongest endorsement because business books are notorious for extending a set of 3 bullet points into 300 pages with lots of HBR citations. But there is some really good meat here, and fairly good analysis of the cases he chooses.

The meat:

* Disruptive technologies are technologies that initially are unfit for existing markets, that find a home in new, small markets (usually lower-priced markets...more

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Aug 02, 2012 Sundarraj Kaushik rated it 3 of 5 stars · review of another edition

This is one book that will keep coming up whenever one comes across the topic of innovation. It is considered by many as some sort of Bible for innovation. I picked up the book with a very wrong idea in that it is about how to innovate. The book is about how to innovate, but it is from a manager's perspective. It is not for a person who wishes to innovate, but for people who wish to encourage innovation. I should have guessed it better considering that Clayton Christensen is a professor in the H...more

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Feb 09, 2010 Aneel rated it 3 of 5 stars · review of another edition

Recommended to Aneel by: Paul Haahr

Though I don't usually read business books, this one was fairly interesting. The thesis is that established, customer-focused companies are essentially helpless when confronted with a cheap, less-effective alternative. Because the interests of their customers force them to allocate resources towards maintaining and improving their current products, they can't muster the organizational will do develop and market lower-end products that don't meet their customers' needs. Christiansen points out a...more

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Sep 27, 2012 Adrian Fridge rated it 5 of 5 stars · review of another edition

Shelves: thought-provoking

All you have to do is read the introduction to get a sense for what this book is about.

"Disruptive" technology impacts us more than we realize, and companies who don't anticipate the culture change will get left behind, no matter how massively successful they have been in the past. In our fast-paced society, this is a handy guide for avoiding getting caught in a tidal wave of change.

The language in the book is easy, with lots of visuals to help you out. Some of the explanations get very technica...more

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Apr 29, 2012 Julie rated it 3 of 5 stars · review of another edition

Shelves: audiobooks, business

This business book had an interesting take on how companies should tackle disruptive technology - or innovations which create a new market and eventually disrupt and sometimes replace an existing market. The examples in the book were mostly from the high tech sector and included the move from 8" floppy drives to 5.25" floppies (yes, the book is a bit dated). What I liked about this book is it's application to ebooks. Definitely, it has created a new market that was not initially that popular or...more

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Nov 14, 2010 Reuben Rail rated it 4 of 5 stars · review of another edition

"We are all facing the dilemma of succeeding in business and being aware of disruptive innovation in one form or another.

This is a powerful book with a paradoxical premise: that the very nature of success sows the seeds of destruction.

Christensen leads with some great case studies of how 'the mighty have fallen'; not because they were doing anything wrong, but specifically because they were doing things 'right'. They were using the best management and business practices, and they still fell pr...more

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Jul 16, 2012 Diego Petrucci rated it 5 of 5 stars · review of another edition

«Instant classic» direbbero gli anglofoni. Libro che non può non esser letto, dico io. Christensen parla del dilemma a cui si trovano di fronte i manager (e quindi le aziende): non importa quanto bravo tu sia, il solo fatto di agire per il bene dell'azienda porterà questa alla rovina. Non c'è soluzione, o perlomeno: c'è da trovare una soluzione, che si chiama imparare a capire cosa sono le innovazioni «disruptive» e come favorirle all'interno della propria azienda, senza però snaturarla.

Libro ch...more

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Feb 28, 2012 Manuel rated it 5 of 5 stars · review of another edition

Uno de los libros que son lectura obligada de cualquier eprsona interesada en temas de innovacion. Propone una serie de conceptos bien fundados en casos reales de diferentes industrias, de como el exito de una empresa le impide tener exito en la siguiente ola tecnologica, de como puede ser peligroso siempre escuchar a los clientes y de cuando invertir en productos con baja rentabilidad y un mercado dudoso o inexistente, puede ser la mejor opcion de un negocio.

Asi mismo evalua las curvas de incre...more

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Sep 03, 2010 Paul Gier rated it 4 of 5 stars · review of another edition

Shelves: non-fiction

The book discusses the ideas of "sustaining technology" vs. "disruptive technology" and describes with many examples how disruptive technology advances have a very strong negative effect on large established businesses. In general I thought the argument was well laid out and informative. My only complaint is that I would have liked to hear a more balanced argument. The authors did not spend significant time looking at any counter examples to their arguments. It felt a little like the authors fir...more

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Jun 16, 2011 Bonnie Atkinson rated it 3 of 5 stars · review of another edition

Well, this is a mixed bag, this interesting little book. The observations are prescient but the presentation is abominable. I'm sure for those who demand an exhaustive regurgitation of every step in an analysis, it is useful, but I felt that most of the book could have been the research appendices. On the other hand, the conclusions drawn were incisive and incredibly useful. It would have worked well if it had been presented as a research paper with a 10-page abstract. As a practitioner, I could...more

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Sep 17, 2012 Jun rated it 5 of 5 stars · review of another edition

Visit my blog for full review: http://liketoread.wordpress.com/wp-ad...

If you are not interested in history of computer engineering, and/or business strategy, stop reading this review. This is one of those few books that I absolutely loved reading, but can't recommend it to everyone.

Clayton Christensen (Harvard Business School Prof) is probably the most prominent pioneer in the concept of Disruptive Technology, and he is kind enough to share this idea through this book called The Innovator's Dil...more

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Mar 03, 2013 Amit Jain rated it 3 of 5 stars · review of another edition

Though the basic premise of book is good and informative i.e. disruptive technologies cannot be planned but are discovered through iterative efforts, the premise may hold true over ages or times but the examples quoted by author to illustrate are pretty old probably from dinosaur ages, who in current times can relate with terms like mini computers or 12 inches HDD with some MB capacity or excavator or companies like DEC/ Compaq. These examples may be in vogue when the first edition was released...more

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Dec 26, 2012 Landmark Property Services, Inc. rated it 4 of 5 stars · review of another edition

The property management industry is plagued with disruptive technologies. Whether it's a new kind of property management software, mobile leasing solutions or a more innovative approach to Craigslist, as property managers we need to be able to identify those technologies that can help our properties and residents and those technologies that are only short-lived solutions.

Although this book focuses on the production side of disruptive technologies, the insights are also useful from a purchaser's...more

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About Clayton M. Christensen

Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, with a joint appointment in the Technology & Operations Management and General Management faculty groups. He is best known for his study of innovation in commercial enterprises. His first book, The Innovator's Dilemma, articulated his theory of disruptive technology.

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