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

by Clayton M. Christensen

the power and influence of leading customers is a major reason why companies’ product development trajectories overshoot the demands of mainstream markets.

buying hierarchy devised by Windermere Associates, in which competition centers first on functionality, followed by reliability, convenience, and, finally, price.

direct my marketers to focus on uncovering somewhere a group of buyers who have an undiscovered need

no one can learn from market research what the early market(s) for electric vehicles will be.

plan to be wrong and to learn what is right as fast as possible. 9 I cannot spend all of my resources or all of my organizational credibility on an all-or-nothing first-time bet,

Markets are developed with fine products that customers desire to own. No salesman can take marginal product into the marketplace and have any hope of establishing a sustainable consumer base. Consumers will not be forced into a purchase that they do not want.

First, this vehicle must be simple, reliable, and convenient.

Second, because no one knows the ultimate market for the product or how it will ultimately be used, we must design a product platform in which feature, function, and styling changes can be made quickly and at low cost.

Third, we must hit a low price point. Disruptive technologies typically have a lower sticker price per unit than products that are used in the mainstream, even though their cost in use is often higher.

Our technology plan cannot call for any technological breakthroughs on the path critical for the project’s success. Historically, disruptive technologies involve no new technologies; rather, they consist of components built around proven technologies and put together in a novel product architecture that offers the customer a set of attributes never before available.

disruptive products redefine the dominant distribution channels, because dealers’ economics—their models for how to make money—are powerfully shaped by the mainstream value network,

First, the pace of progress that markets demand or can absorb may be different from the progress offered by technology. This means that products that do not appear to be useful to our customers today (that is, disruptive technologies) may squarely address their needs tomorrow.

Second, managing innovation mirrors the resource allocation process: Innovation proposals that get the funding and manpower they require may succeed; those given lower priority, whether formally or de facto, will starve for lack of resources and have little chance of success.

Disruptive technology should be framed as a marketing challenge,

Fourth, the capabilities of most organizations are far more specialized and context-specific than most managers are inclined to believe. This is because capabilities are forged within value networks.

Fifth, in many instances, the information required to make large and decisive investments in the face of disruptive technology simply does not exist. It needs to be created through fast, inexpensive, and flexible forays into the market and the product.

Managers who don’t bet the farm on their first idea, who leave room to try, fail, learn quickly, and try again, can succeed at developing the understanding of customers, markets, and technology needed to commercialize disruptive

Sixth, it is not wise to adopt a blanket technology strategy to be always a leader or always a follower. Companies need to take distinctly different postures depending on whether they are addressing a disruptive or a sustaining technology.

small entrant firms enjoy as they build the emerging markets for disruptive technologies is that they are doing something that it simply does not make sense for the established leaders to do.