Nicholas's Reviews > The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business

The Innovator's Dilemma by Clayton M. Christensen
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Jun 19, 09

bookshelves: business, management
Read in June, 2009

** spoiler alert ** 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 below that satisfies the previous key metrics well enough that differentiability moves to other metrics.

The distinction between disruptive innovation vs. radical innovation. One is unforeseen by the customers while the other is in line with their ever increasing demands.

You must be the one to cannibalize your own sales.


Quotes:

"First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms' most profitable customers generally don't want, and indeed initially can't use, products based on disruptive technologies."

"Small markets don't solve the growth needs of large companies: To maintain their share prices and create internal opportunities for employees to extend the scope of their responsibilities, successful companies need to continue to grow. But while a $40 million company needs to find $8 million in revenues to grow at 20 percent in the subsequent year, a $4 billion dollar company needs to find $800 million in new sales. No new markets are that large."

"Principles of disruptive innovation:
1. Companies depend on customers and investors for resources
2. Small markets don't solve the growth needs of large companies
3. Markets that don't exist can't be analyzed
4. An organization's capabilities define its disabilities
5. Technology supply may not equal market demand"

"The fear of cannibalizing sales of existing products is often cited as a reason why established firms delay the introduction of new technologies."

"These companies did not fail because the technology wasn't available. They did not fail because they lacked information about hydraulics or how to use it; indeed, the best of them used it as soon as it could help their customers. They did not fail because management was sleepy or arrogant. They failed because hydraulics didn't make sense - until it was too late."

"While senior management may think they're making the resource allocation decisions, many of the really critical resource allocation decisions have actually been made long before senior management gets involved: Middle managers have made their decisions about which projects they'll back and carry to senior management - and which they will allow to languish."

"They panned to fail early and inexpensively in the search for the market for a disruptive technology. They found that their markets generally coalesced through an iterative process of trial, learning, and trial again."

"Watching how people use products, rather than by listening to what they say."
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