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

by Clayton M. Christensen

One theme common to all of these failures, however, is that the decisions that led to failure were made when the leaders in question were widely regarded as among the best companies in the world.

What all sustaining technologies have In common is that they improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued.

It is in disruptive innovations, where we know least about the market, that there are such strong first-mover advantages. This is the innovator’s dilemma.

Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake.

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

Essentially, hedonic regression analysis expresses the total price of a product as the sum of individual so-called shadow prices (some positive, others negative) that the market places on each of the product’s characteristics.