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

Clayton M. Christensen

4.03 · Rating details · 48,339 ratings · 1,351 reviews

Harvard professor Clayton M. Christensen says outstanding companies can do everything right and still lose their market leadership -- or worse, disappear completely. And he not only proves what he says, he tells others how to avoid a similar fate.

Focusing on "disruptive technology" -- the Honda Super Cub, Intel's 8088 processor, or the hydraulic excavator, for example -- C ...more

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ebook, 256 pages

Published October 22nd 2013 by Harvard Business Review Press (first published 1997)

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Nov 26, 2013 Mal Warwick rated it liked it · review of another edition

Shelves: nonfiction

Chances are, you’re reading this review on an example of disruptive technology. An iPhone or other smartphone. An iPad or a notebook computer. Or simply a laptop. Every one of these devices turned its industry upside down when it was introduced, driving established companies to the brink of insolvency, or even into oblivion, and paving the way for new actors to enter the landscape.

Today, almost instinctively, we understand the concept of disruptive technology. But it wasn’t until after the publi Chances are, you’re reading this review on an example of disruptive technology. An iPhone or other smartphone. An iPad or a notebook computer. Or simply a laptop. Every one of these devices turned its industry upside down when it was introduced, driving established companies to the brink of insolvency, or even into oblivion, and paving the way for new actors to enter the landscape.

Today, almost instinctively, we understand the concept of disruptive technology. But it wasn’t until after the publication in 1995 of an article by Clayton Christensen in the Harvard Business Review entitled “Disruptive technologies: catching the wave” that the term entered the language. That seminal article was followed in 1997 by Christensen’s pathfinding book, The Innovator’s Dilemma – one of the most influential business books of all time.

Christensen, a long-time professor of business administration at the Harvard Business School, had found an answer to a question that had long mystified the business community: why had such iconic, well-managed firms as Digital Equipment Corporation, Xerox, and dozens of others that had long led their industries fallen by the wayside? The professor’s answer was not that they had simply gotten behind technologically but that they had done everything right — listening carefully to their best customers and catering to their needs by investing in sustaining technologies that offered customers added value. The problem was that the dictates of prudent business practice prevented them from investing in the sort of innovation that could turn their own industries upside down: disruptive technologies. In fact, Christensen wrote, “the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms’ managers set up an autonomous organization charged with building a new and independent business around the disruptive technology . . . There is something about the way decisions get made in successful organizations that sows the seeds of eventual failure.”

A decade and a half ago this was a shattering insight and it explains the acclaim that Christensen’s work has received throughout the world of business. However, if you turn to his book, The Innovator’s Dilemma, in search of deeper understanding of these concepts, you may be disappointed. I was.

Sadly, this book is organized and written in a style that reeks of old-fashioned academia. Chapter One, an introduction of sorts, sums up the book as a whole — in 26 tedious pages, explaining in detail what the reader will find, chapter by chapter. First, Chapter One briefly outlines what the book will reveal, then proceeds to repeat each point in detail. Then, as though that isn’t enough, each chapter repeats the same points, adding considerably more detail. The final chapter repeats each of the major points — again. The repetition is maddening. And so is the overuse of the passive tense, which abounds throughout. Compounding the problem are the long-winded explanations of such things as how disk drives work and the distinction between thin-film technology and ferrite-oxide technology in disk drives’ read/write heads. All this material, no doubt necessary to “prove” Christensen’s thesis to his academic peers (some of whom are still not convinced), gives the book the charm and box-office appeal of a PhD dissertation about the influence of the Greek concept of the soul in 13th Century French literature.

If all you want is to get to the meat of this book and avoid slogging through endless detail about matters only an engineer could love, read the first chapter and the last one. Forget the rest. You’ll thank me. ...more

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Aug 19, 2009 Calsee rated it it was ok · review of another edition

This book was on my list of "Books I should read" for a long time. Maybe this is why it was so disappointing, or maybe I've just read too many modern case studies of business models to find this engaging. It was interesting to read about the origins of many terms that I take for granted (i.e. disruptive technology), but I couldn't really relate any of the examples or theory beyond anything that's already been mentioned by other more recent authors. And its hard for a 20-something to relate to th ...more

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Oct 07, 2007 Rod Dunsmore rated it it was amazing · 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 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. ...more

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Dec 16, 2014 Gabriel Pinkus added it · review of another edition

Sometimes, supply creates demand.

That’s my summary of the book.

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Sep 05, 2017 Athan Tolis rated it it was amazing · review of another edition

Shelves: startups, business

The subject of this classic is disruptive technology.

With the help of many examples from industry (disk-drives being his main workhorse) the author explains what technologies are likely to disrupt, who is likely to be disrupted, why they are likely to be disrupted and what the choices are that the established players have when presented with disruption.

The most important point is that disruption generally comes from the practice of repackaging and marketing already existing, straightforward tec ...more

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Jul 25, 2011 Nico Macdonald rated it it was amazing · review of another edition

Shelves: industry, economics, non-fiction, technology, organisation, business

This is one of the best books on innovation in the last 20 years. I read it in 2000 and still refer to it. Christensen’s core insight/argument is that businesses fight shy of developing innovations that will 1: produce limited profits initially; 2: cannibalise core, high cashflow/profit lines. But that what look like niche technologies – Winchester drives, hydraulic backhoes, etc – improve in capability, reliability and reduce in price to the point that they entirely cannibalise the existing mar ...more

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Jan 25, 2020 Dan rated it liked it · review of another edition

This business classic resonated with my long career in high tech. There were no major conclusions that I took issue with. I nodded my head often while reading.

So in a few words — Christenson really knows his material.

The negatives:

At twenty plus years the examples are dated and presented in an academic manner. Disk drives compose the largest of the industry analyses, so some boring examples in many cases.

The charts and graphs are poorly done and it makes one actually appreciate power point sl ...more

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Jun 15, 2013 Nelson Zagalo rated it really liked it · review of another edition

A good book, but a bit disappointing because totally centred upon business managing. I would like to see the discussion occurring at a lower level, the creative moment, before management decisions. Leave here the five principles stated by Clayton in the book. I generally agree with all of them, being the fifth one the most subjective.

"Principle #1: Companies Depend on Customers and Investors for Resources

Principle #2: Small Markets Don’t Solve the Growth Needs of Large Companies

Principle #3: Mar ...more

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Oct 10, 2015 Martti rated it it was amazing · review of another edition

Clayton M. Christensen writes clearly and analytically, with lot's of examples and research, pleasure to read. Thoughts so logical you wonder how the managers/CXO's he talks about didn't figure this out by themselves already yesterday. A thought provoking read no doubt, even for those not in executive positions.

It's not a 100%, but gets some future predictions right - fun to discover them 18 years later. And it's also interesting to use the frameworks described to think about new technologies th Clayton M. Christensen writes clearly and analytically, with lot's of examples and research, pleasure to read. Thoughts so logical you wonder how the managers/CXO's he talks about didn't figure this out by themselves already yesterday. A thought provoking read no doubt, even for those not in executive positions.

It's not a 100%, but gets some future predictions right - fun to discover them 18 years later. And it's also interesting to use the frameworks described to think about new technologies that constantly keep surfacing on this Information Age we live in.

"It is unclear how long the marketers at Microsoft, Intel, and Seagate can succeed in creating demand for whatever functionality their technologists can supply. Microsoft's Excel spreadsheet software, for example, required 1.2 MB of disk storage capacity in its version 1.2, released in 1987. Its version 5.0, released in 1995, required 32 MB of disk storage capacity. Some industry observers believe that if a team of developerswere to watch typical users, they would find that functionality has substantially overshot mainstream market demands. If true, this could create an opportunity for a disruptive technology - applets picked off the internet and used in simple internet appliances rather than in full-function computers, for example - to invade this market from below."

So essentially Christensen predicted Google Docs, Zoho Docs and similar products in the year 1997. Or if we stretch a bit, cloud services not present on our own devices, but on far away server rooms.

Tenth chapter of this book is basically the manual for approaching electric vechicles as a disruptive technology - a manual for Elon Musk to build Tesla. :)

Although the conclusion the author arrives is not Tesla Model S (a premium product), but rather a cheap and low range Mitsubishi iMiev or Nissan Leaf. Well, that's why you don't predict, but explore and try.

"To measure market needs, I would watch carefully what customers do, not simply listen to what they say. Watching how customers actually use a product provides much more reliable information than can be gleaned from a verbal interview or a focus group. Thus, observations indicate that auto users today require a minimum cruising range (that is, the distance that can be driven without refueling) of about 125 to 150 miles; most electric vehicles only offer a minimum cruising range of 50 to 80 miles. Similarly, drivers seem to require cars that accelerate from 0 to 60 miles per hour in less than 10 seconds (necessary primarily to merge safely into highspeed traffic from freeway entrance ramps); most electric vehicles take nearly 20 seconds to get there.
And, finally, buyers in the mainstream market demand a wide array of options, but it would be impossible for electric vehicle manufacturers to offer a similar variety within the small initial unit volumes that will characterize that business. According to almost any definition of functionality used for the vertical axis of our proposed chart, the electric vehicle will be deficient compared to a gasolinepowered car.
This information is not sufficient to characterize electric vehicles as disruptive, however. They will only be disruptive if we find that they are also on a trajectory of improvement that might someday make them competitive in parts of the mainstream market.
The trajectories of performance improvement demanded in the market—whether measured in terms of required acceleration, cruising range, or top cruising speed—are relatively flat. This is because traffic laws impose a limit on the usefulness of ever-more-powerful cars, and demographic, economic, and geographic considerations limit the increase in commuting miles for the average driver to less than 1 percent per year.
At the same time, the performance of electric vehicles is improving at a faster rate—between 2 and 4 percent per year—suggesting that sustaining technological advances might indeed carry electric vehicles from their position today, where they cannot compete in mainstream markets, to a position in the future where they might."

... "If present rates of improvement continue, however, we would expect the cruising range of electric cars, for example, to intersect with the average range demanded in the mainstream market by 2015, and electric vechicle acceleration to intersect with mainstream demands by 2020."

To which one living in 2015 can chuckle - Tesla Model S came out in 2012 and it definitely beats any average acceleration and range demands. Actually any electric vehicle in production accelerates like a mad horse.

And a last piece for my memo: the parameters by which customers compare the products on the market (from left to right) FUNCTIONALITY - RELIABILITY - CONVENIENCE - PRICE.
In a young market, functionality is almost the same for all products, then they will start looking at reliability to differentiate the product. If that becomes the same, they will look at convenience. And if the products have become all three, the last thing basically will be a price war. ...more

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Apr 19, 2012 Jeff Yoak rated it it was amazing · 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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May 18, 2010 Glen rated it really liked it · 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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Jun 09, 2011 Bonnie Atkinson rated it liked it · 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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Nov 06, 2014 Hikmat Kabir rated it it was amazing · review of another edition

This is such a well articulated and well organized book. The book can pretty much be divided into two parts: the problems that arise with disruptive tech and how to deal with them; they are further dissected into eleven chapters for better comprehension of the topic. Sure, you could grasp the crux of the book by reading the summary provided at the end. But the cases provided to complement the author's points turn out to be pretty great and help the readers gain greater insights into disruptive t ...more

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Oct 17, 2016 Max rated it liked it · review of another edition

Shelves: tech-econ

The ideas are astounding - a must read, however, the book is quite dense. There is a ton of research behind everything, but the presentation can be a bit redundant/overwhelming.

Definitely worth the read - but don't be afraid to skim sections once you've gotten the point. ...more

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Jul 30, 2012 Yevgeniy Brikman rated it liked it · review of another edition

A pretty convincing argument for why large, established companies struggle to keep up with disruptive innovations. It turns out that the very things that make those companies dominant in an existing market work against them when considering new markets. As the pace of disruption accelerates, the lessons in this book become more and more important.

Less convincing are the solutions the book proposes and, at an even more basic level, how to distinguish between what the book calls "sustaining innov ...more

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Jan 16, 2021 Gleb Posobin rated it it was amazing · review of another edition

There are two kinds of innovations: sustaining and disruptive. Sustaining ones are about improving the product along some dimensions, without making it worse along any others: a new iteration of iPhones is an example, or the latest M1 MacBooks. Disruptive ones make the product noticeably worse, except for some dimension that is irrelevant to the users of the current generation. If you are actively using a Nokia smartphone or Windows mobile in 2006, the new iPhone looks like a toy: no copy-paste? ...more

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Jun 01, 2020 Eric rated it really liked it · review of another edition

Shelves: favorites, business

A (relatively) old but thorough book with strong evidence which resonates strongly to this day.

Professor Christensen writes this book as a prescriptive guide on how good managers can fend off disruptive technologies which take over the market and overthrow established firms.

However, entrepreneurs seeking to transform existing markets will also find this book's broad exploration of the topic highly insightful.

What's missing from Professor Christensen's work is an exploration of modern case studie ...more

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Nov 24, 2018 Dorotea rated it liked it

Shelves: tech-innovation-management, read-in-english, bsc-econ

Clayton M. Christensen in The Innovator’s Dilemma argues a distinction between two types of technology change, each with different effects on the industry’s leaders: technologies (either incremental or radical) that sustain the industry’s rate of improvement in product performance, a typical prerogative of dominant firms, and on the other side, disruptive innovations which redefine performance trajectories and result in the failure of the industry’s leading firms.

A longer summary can be found h ...more

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Jan 02, 2021 Divyanshu Madaan rated it it was amazing · review of another edition

One of the most counter intuitive books I have come across. Must read for anyone with a business bent of mind!!

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Jan 24, 2021 Gerald Glover III rated it it was amazing · review of another edition

Shelves: non-fiction

As usual, Christensen has presented an effective framework for considering and handling a topic. Even though this was written in the late 1990s, the principles still hold true.

I have so many ideas for how to properly evaluate and maneuver legal innovations after reading this. It’s pivotal.

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Jul 28, 2016 thethousanderclub rated it really liked it · review of another edition

I've written before I'm not a big fan of many business books because many authors "intentionally or unintentionally, [attempt] to make [their] book some kind of new scriptural canon, demanding of our attention year after year." The Innovator's Dilemma is a different book altogether; it's MBA territory and not meant for readers who enjoy a quick but mostly superficial exploration at self-help techniques. Clayton Christensen's The Innovator's Dilemma is a challenging and enlightening book, which p I've written before I'm not a big fan of many business books because many authors "intentionally or unintentionally, [attempt] to make [their] book some kind of new scriptural canon, demanding of our attention year after year." The Innovator's Dilemma is a different book altogether; it's MBA territory and not meant for readers who enjoy a quick but mostly superficial exploration at self-help techniques. Clayton Christensen's The Innovator's Dilemma is a challenging and enlightening book, which purports to break new ground in the understanding of business and technology but also explores existing principles beneficial to all and not only the entrepreneur or senior manager.

My awareness of The Innovator's Dilemma came while reading the excellent biography Steve Jobs by Walter Isaacson. Isaacson wrote: ". . . Christensen was one of the world's most insightful business analysts, and Jobs was deeply influenced by his book The Innovator's Dilemma." I figured I should pay attention to this book so highly regarded by one of the most influential business leaders in recent memory. Christensen's book attempts to document and explain how disruptive technology differs from sustaining technologies within industries—all detailed and defined, of course—and how entire industries have been significantly changed and how seemingly successful companies have folded or been greatly reduced in capability and reach due to disruptive changes. That all sounds a bit esoteric, and in some ways it is without modest knowledge of businesses and organizations, but I found the information very interesting and useful.

Amazingly, I didn't find The Innovator's Dilemma to be redundant, as many business books are. It seemed that any time the book started to become too repetitious it would pivot to a new theory or model to continue explaining the phenomenon of disruptive technologies. Although I was able to follow with a modicum of confidence the main ideas and principles, I certainly had to slow down a few times, re-read a few sentences, and ponder over a few graphs for a bit longer than usual to truly understand what was being presented and discussed. In some cases, I'm still pondering. As mentioned previously, this is not an easy read. It will push you to dig deeper into seemingly straightforward business cases and consistently use your critical thinking skills.

Clayton Christensen offers something truly valuable and insightful with his book The Innovator's Dilemma. I don't expect to create any disruptive technologies or necessarily be in a senior management situation having to make organizational decisions to deal with one, but I feel much more educated regarding business, organizations, and the constant change that is pervasive through most industries.

On a side note, Clayton Christensen's TED talk, How Will You Measure Your Life?, is well worth listening to and provides an impetus to reflect and examine your life and ambitions.

http://thethousanderclub.blogspot.com/ ...more

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Oct 28, 2019 Antonio Stark rated it really liked it · review of another edition

A short piece on how disruptive innovation fails to bloom in gigantic organizations, and how innovators might act around the "force of nature" of large corporations whose inertia is towards incremental increases on existing customers. The book describes managerial practices, minimum profit margins, and existing data handicapping larger corporations on making investments on risky ideas whose customers do not yet exist. At the same time, dislocation of small self-sufficient teams, cultivating of s ...more

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Mar 04, 2018 Joel rated it really liked it · review of another edition

Shelves: startup, to-read-2017, to-read-2018, economics-finance-business

Clayton Christensen is to the study of innovation what Thomas S. Kuhn is to science. Kuhn's "normal science" is analogous to Christensen's "sustaining innovation", and "scientific revolutions" is like "disruptive innovations". Kuhn sees progress in science not as the discovery of new phenomena, but as fitting existing "anomalies" into a new "paradigm". Christensen too sees disruptive innovation as finding new markets for existing technologies. I'm sure the analogy can be taken further, but in sh ...more

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Jul 18, 2012 Kislay Verma rated it really liked it · review of another edition

A summary of the more complete review at my homepage:

The most elegant, and the most scary part of Disruption Theory presented by Prof. Christensen in this book is the ease of application. Any theory is just a theory, but the contrarian, almost oversimplified approach disruption presents to the question of success of an enterprise is bound to give many managers, and most consultants in the technology world some sleepless nights. The author's presentation of his case on how one-time underdogs can ...more

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Aug 20, 2014 Oksana Hoshva rated it liked it · review of another edition

Shelves: it-innovations

It’s been over a year since I got really passionate about learning more about the disruptive innovation after dealing with it on daily basis as a consumer or just simply as a human being. I bought a book ages ago and it was waiting in a line for quite a while. I prefer articles to books I must admit, but felt like I really need to read the book said to be the mandatory theoretical background for entrepreneurs in all domains.

It was a hard and a dry read for me I must confess. First, due to acade ...more

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Apr 20, 2014 Kumar Ishan rated it it was amazing · review of another edition

Shelves: leadership

Traditional thinking that good decision making, right management skills and listening to customer has led many firms to failure, at the onset of disruptive innovation.

The book with its many examples across industries, presents what is innovator's dilemma and why they fail. It explains why the very nature of disruptive innovation and its proclivity to succeed in emerging market (only), cripples large firm even with their immense resources and expertise.

The book also provides the solution, based o ...more

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May 18, 2015 BuenoBomb aka Andre Bueno rated it liked it · review of another edition

KEY POINTS
Disruptive technologies or innovations upset the existing “order of things”. The process appeals to customers who are not served by the current market. With time, because the capacity/performance of the innovation exceeds the market’s needs, the innovation comes to displace the market leaders.

Market leaders generally don’t react until it’s too late, because they don’t represent an interesting market, being low end and often low cost. One successful strategy might be to hive off a separ ...more

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Nov 20, 2011 Christopher Johnson rated it really liked it · review of another edition

So, the information, the ideas would make this a five star book. It's a way of thinking that helps ward off obsolescence, a way of thinking that gets people to understand where future disruption may come from. The whole idea: that good management (like, truely good) eventually leads to poor decisions is fascinating.

The example: If current customers demand "faster horsers" companies rightly put their energy into faster horses. What the customer says and wants isn't necessarily what's good for the ...more

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Dec 23, 2015 Traian Stancescu rated it liked it · review of another edition

Good book dating back from the 90s. The author's theory should be known by anyone in a position to make strategic decisions. To be honest I was skeptical at first about his ideas, but they quickly became obvious as more and more cases were presented.

Taking away one star for being superfluous -- half of the book comprises the same few takeaways that are repeated over and over again in the introduction, conclusion, and in between each case study.

Taking away one more star for choosing a misleading ...more

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Aug 21, 2011 Jeric rated it it was ok · review of another edition

Shelves: put-down

I don't read many books, but for some reason this one was a bit of a let down especially after all the fascinating reviews. For me it read like a textbook written by an engineer. With so much business/industry vernacular as interesting and ground breaking the content may be, it was boring and a struggle to read.

I'll try again another time, maybe when I'm in a more analytical mood.
...more

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About Clayton M. Christensen

Clayton M. Christensen

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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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“In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.” — 14 likes

“Disruptive technologies typically enable new markets to emerge.” — 12 likes

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