The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)

by Clayton M. Christensen

technology, as used in this book, means the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value.

Companies whose investment processes demand quantification of market sizes and financial returns before they can enter a market get paralyzed or make serious mistakes when faced with disruptive technologies.

These principles are: Resource dependence: Customers effectively control the patterns of resource allocation in well-run companies. Small markets don’t solve the growth needs of large companies. The ultimate uses or applications for disruptive technologies are unknowable in advance. Failure is an intrinsic step toward success. Organizations have capabilities that exist independently of the capabilities of the people who work within them. Organizations’ capabilities reside in their processes and their values—and the very processes and values that constitute their core capabilities within the current business model also define their disabilities when confronted with disruption. Technology supply may not equal market demand. The attributes that make disruptive technologies unattractive in established markets often are the very ones that constitute their greatest value in emerging markets.

When managers aligned a disruptive innovation with the “right” customers, customer demand increased the probability that the innovation would get the resources it needed.

They placed projects to develop disruptive technologies in organizations small enough to get excited about small opportunities and small wins.

They planned to fail early and inexpensively in the search for the market for a disruptive technology. They found that their markets generally coalesced through an iterati...

the desirability of aligning our actions with the more powerful laws of nature, society, and psychology, in order to lead a productive life, is a central theme in many works, particularly the ancient Chinese classic, Tao te Ching.

small, emerging markets cannot solve the near-term growth and profit requirements of large companies.