Ben Haley'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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Apr 16, 10

Read in April, 2010

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.
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