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The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business

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In this revolutionary bestseller, 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 hyd In this revolutionary bestseller, 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 -- Christensen shows why most companies miss "the next great wave." Whether in electronics or retailing, a successful company with established products will get pushed aside unless managers know when to abandon traditional business practices. Using the lessons of successes and failures from leading companies, "The Innovator's Dilemma" presents a set of rules for capitalizing on the phenomenon of disruptive innovation. Find out: When it is right "not" to listen to customers. When to invest in developing lower-performance products that promise lower margins. When to pursue small markets at the expense of seemingly larger and more lucrative ones. Sharp, cogent, and provocative, "The Innovator's Dilemma" is one of the most talked-about books of our time -- and one no savvy manager or entrepreneur should be without.


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In this revolutionary bestseller, 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 hyd In this revolutionary bestseller, 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 -- Christensen shows why most companies miss "the next great wave." Whether in electronics or retailing, a successful company with established products will get pushed aside unless managers know when to abandon traditional business practices. Using the lessons of successes and failures from leading companies, "The Innovator's Dilemma" presents a set of rules for capitalizing on the phenomenon of disruptive innovation. Find out: When it is right "not" to listen to customers. When to invest in developing lower-performance products that promise lower margins. When to pursue small markets at the expense of seemingly larger and more lucrative ones. Sharp, cogent, and provocative, "The Innovator's Dilemma" is one of the most talked-about books of our time -- and one no savvy manager or entrepreneur should be without.

30 review for The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business

  1. 5 out of 5

    Mal Warwick

    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.

  2. 4 out of 5

    Rod Dunsmore

    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.

  3. 5 out of 5

    Martti

    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.

  4. 5 out of 5

    Nico Macdonald

    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 limit 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 marke 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 limit 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 market, leaving the established players high and dry, with no new product lines. (In a way he is reposing the falling rate of profit thesis.) He suggests some rather less convincing solutions in the book, and expounded further in The Innovator's Solution: Creating and Sustaining Successful Growth. I would argue that Apple presents an interesting solution to this challenge, with its creation of new product lines that complement and build on - but, largely, don't cannibalise - its existing product lines.

  5. 5 out of 5

    Calsee

    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 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 the modernity of disc drives.

  6. 5 out of 5

    Nelson Zagalo

    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 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: Markets that Don’t Exist Can’t Be Analyzed Principle #4: An Organization’s Capabilities Define Its Disabilities Principle #5: Technology Supply May Not Equal Market Demand"

  7. 5 out of 5

    Jeff Yoak

    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 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 addresses why good, established companies usually dominate and prosper with new sustaining technologies and often fail or are even displaced because of disruptive technologies. It shows how such companies can cope with the challenge to maximize their chances even though there are systemic biases against it given how an established company must approach resource allocation. In my own career, I'm generally in the place of the smaller companies that effectively utilize disruptive technologies rather than with large, established firms with that problem. It is equally valuable from that perspective because it sheds light on some of the advantages that are felt but perhaps not fully identified and guidance on how you might better exploit them. This book ought to be read by most people interested in business and certainly everyone occupied with computer technology.

  8. 5 out of 5

    Bonnie Atkinson

    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 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 be pretty hard on it because it's missing application, but I get that it was meant to be more academic in its approach, and I'm big enough to draw my own conclusions about implementation. Very dry read. Very good analysis.

  9. 5 out of 5

    บอมบุง พ่อยอดคะน้าอ่อน

    หนังสือคลาสสิคทีตองอาน กับคำถามแทงใจวาทำไมบริษัทยักษใหญถึงลมเพราะ Disruptive Technology ถึงหนังสือเลมนีจะอายุเกิน 10 ปี แตพอมาดูบริบทในปัจจุบัน บริษัทยักษกยังดูจะติดกับสับสนระหวาง Sustained Technology กับ Disruptive Technology แถมยังเดินหนารอวันทีจะถูก Disrupt แบบไมรูรอนรูหนาว แนะนำมากๆ ครับ หนังสือคลาสสิคที่ต้องอ่าน กับคำถามแทงใจว่าทำไมบริษัทยักษ์ใหญ่ถึงล้มเพราะ Disruptive Technology ถึงหนังสือเล่มนี้จะอายุเกิน 10 ปี แต่พอมาดูบริบทในปัจจุบัน บริษัทยักษ์ก็ยังดูจะติดกับสับสนระหว่าง Sustained Technology กับ Disruptive Technology แถมยังเดินหน้ารอวันที่จะถูก Disrupt แบบไม่รู้ร้อนรู้หนาว แนะนำมากๆ ครับ

  10. 5 out of 5

    Athan Tolis

    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 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 technology at a lower price point to a new customer base that is not economically viable for the established players. For example, QuickBooks was marketed to mom-and-pop stores who could not afford to pay an accountant and it was the el-cheapo version of Quicken. It is of no use to a proper corporation. JC Bamford got started with hydraulic backhoes that were good enough for small contractors looking to dig a small ditch but wholly inadequate for the purposes of a miner. 5.25 inch disk drives were marketed to the nascent market for personal computers and were of no use to minicomputer manufacturers. Disruptive technology is cheaper per unit, but its price / performance ratio is much worse than that of the established technology. It’s not good enough for the clients of the established players. Ergo it must be sold on its (lower) price alone, meaning that its purveyors must seek new markets. Flash memory, for example, was first used in cameras, pacemakers etc. Not in computers! There is a large number of reasons that established players will frown upon the new technology: 1. Good companies listen to their clients. Their clients will tell them they don’t want it. They will demand performance and they will pay for performance. 2. Profitability will be lower in the lower-margin disruptive technology. Profit margins will typically mirror cost structures and will thus be higher for the higher-end product. Established players will in the short term make more money if they allocate their resources toward not falling behind their immediate competition for the higher-end product. (i.e. “sustaining” their competitive edge in the higher margin / higher tech market) 3. The processes used by the established players to sell and support the established technology may not be the right ones for the new tech. The main thing to realize is that the technology does not live by itself. It is embedded in a “value network.” A car serves a commuter, a digger serves a mine, a disk drive is screwed down somewhere in a computer etc. The seeds of disruption lie in the fact that the technology itself and its value network may not necessarily be progressing at the same speed. If the technology is improving much faster than the trajectory of improvement of the “value network” (for example, if the desktop PC users demand extra disk storage slower than the industry is capable of delivering extra disk storage), then 1. The point comes when the value network of the established technology does not need the incremental improvements on which the established players are competing with one another to deliver. 2. More importantly, a point comes when the performance of the disruptive technology becomes good enough to be embedded in the value network of the established technology. So 3.5 inch disks developed for laptops can do good enough a job for a desktop, for example, without taking up the space required for a 5.25 inch disk. It gets worse: sure, disruptive technology is deficient in terms of features / performance, but the price sensitive customers who do not care so much about performance often care a lot about reliability. (A small contractor who buys a single backhoe digger cannot afford a maintenance team.) Similarly, the unsophisticated customers of the disruptive technology may care a lot about ease of use. (Mom and pop using Quickbooks have no idea what double-entry book-keeping is!) What this means is that when the performance of the disruptive technology has become good enough for it to be embedded into the value network of the established technology, it often brings with it an advantage in reliability and ease of use. So at that point the disruptive technology is cheaper, more reliable and easier to use than the established technology, all while delivering adequate performance. And that’s how purveyors of the established technology (who have been at war with one another to deliver on the ever-increasing performance their customers have been demanding) find themselves at a disadvantage versus the disruptors when it comes to reliability and ease of use right about when their customers tell them they won’t pay for extra performance or features any more. The disadvantage of the lower-tech disruptor has created an advantage and it’s game, set and match! What’s an established player to do? If I’m running a super successful company and I spot a new technology what am I to do? One thing I should not do is listen to my underlings. The dealers who sell my cars will not want a customer who just walked into the dealership to buy a V8 to drive out in a small electric car. The salespeople will keep asking me for the most expensive product because they will be paid a commission on their margin and will keep pushing me “north-east” on the price / performance chart. Resistance to disruptive technology often comes from the rank-and-file. I also should not listen to my shareholders. Small markets (and all disruptive technology starts small) do not solve the growth problems of large companies. First and foremost, I must understand that the challenge I face is a MARKETING challenge. The tech I’ve got covered. The resources too. If my company’s processes and my company’s values (defined as “the standards by which employees make choices involving prioritization”) are aligned with the marketing challenge, I’m in luck: chances are that for my company this new technology will eventually become a “sustaining” technology. I can get my wallet out and buy EARLY a couple of the new entrants. Early enough that my money is not buying process or values or culture, but merely assets/resources and ideally walking and talking resources (the founders) who will adopt the processes and values of my organization. Alternatively, I can carve out some great people from my organization and: 1. Give them responsibility for the new technology and assign to them the task of identifying the customers for this new technology 2. Match the size of this new subdivision to the current size of the market. 3. Allow them to “discover” the size of the opportunity, rather than burden them with having to forecast it: “the ultimate uses or applications for disruptive technologies are unknowable in advance” 4. Let them fail small, as many times as necessary That’s what IBM did when they ran their PC business out of Florida and what HP did when they realized ink jets would one day compete with laser printers! If, on the other hand, my company’s processes or my company’s values are not aligned with the marketing challenge, then I need to buy a leader in the new technology, and have a finger in every pie. And I need to protect my acquired company from my organization. This is, obviously, a bigger challenge (and one my shareholders may not embrace, as their dollars are as good as mine, but the author stays away from this discussion!) As the succession in technologies plays out, I will then eliminate large parts of my current organization. The author cites an occasion on which this is exactly how things played out. And there you have it! I think that’s the author’s answer to “The Innovator’s Dilemma” Obviously, that’s a very quick sketch. You’ll have to buy the book to see the complete story (and to be convinced, I suppose). Be warned that in the interest of keeping the various chapters self-consistent you may find some repetition, but overall this is a very quick read. I’m aware of people who really dislike Clayton Christensen. I’ve even come across a Twitter account that’s dedicated to trashing him. But I, for one, was convinced that he’s describing a valid concept with many applications. Also, as a guy who established a disruptive business within an established player I totally experienced both the dismay of my superiors when they realized that “small markets don’t solve the problems of large organizations” and the discomfort of trying to shoehorn my project into the rather baroque established processes. So I have lived through many of the steps the book describes and I reckon they are rendered very accurately. The research shows!

  11. 4 out of 5

    Glen

    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 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 developing a disruptive product (Henderson and Clark). • Competencies developed for improving the current product may not be applicable for developing a disruptive product (Clark) • Above two theories don’t adequately describe what happened in disk drive and excavator industries. Value Networks explanation: Companies tend to invest in innovations that fit the needs of their “value network,” which defines the hierarchy of importance of characteristics for current customers. Current customers reinforce this by not needing the innovation. (Christenson) • New entrants find markets with different value networks for innovations • Companies are more likely to seek additional markets upward rather than downward because up-markets are defined and promise larger margins and the investment the companies have gotten used to making for product improvements demand higher margins. Also existing customers move up-market and take their suppliers with them. This leaves a vacuum below, e.g., flash memory instead of disk drives. [Basecamp instead of MS Project:] • New entrants also move up-market which brings them into competition with established companies. New entrants tend to improve faster than established companies and so they will eventually disrupt. • Middle managers avoid career risk of backing innovations for which no market or a down-market is identified. They screen out these opportunities so senior managers don’t even see them as an option. Even if a senior manager decides to pursue a potentially disruptive innovation, there will be resistance if not outright thwarting at the middle management layer (most likely passively through reluctance to allocate resources [see HBS case on Kodak). What established companies need to do • Be able to recognize and enter different value networks • Align disruptive innovation with the “right” customers by embedding the innovative project in a part of the organization (new if necessary) that serves the customers for the innovation and doesn’t have to meet same revenue/margin demands as incremental/sustaining innovation • Be prepared to go through an iterative process that is failure tolerant because forecasting the market is impossible. This process should be a learning process that goes beyond focus groups to actual observation of new customers and new applications. • Use the resources of the big organization but not its culture and processes • Don’t try to push the growth of an emerging market (Apple Newton) and don’t wait until the market is large enough to be interesting. Instead match the organization size to the growing market so that its goals are satisfied by the organically growing market and so it’s cycles match the rhythm of the market. Acquisition may be the solution. • Assess the capabilities of your organization and set up a structure (existing organization, lightweight teams, or heavyweight teams) that makes up for the deficiencies in the existing situation. [Note: these “recommendations are repeated by Govindarajan in 10 Rules for Strategic Innovators]

  12. 4 out of 5

    thethousanderclub

    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/

  13. 4 out of 5

    Joel

    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 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 short, both will change the way you think about how innovation progresses. Just as with Kuhn's book The Structure of Scientific Revolutions, I felt that Christiensen belabours his point a little too much, yet each chapter adds a few good points - like the Resource/Process/Values framework, or watching your customers rather than listening to them, and many others I cannot recall. If you like business books, this one is a classic. It does feel outdated at times until you think about how its lessons are still applicable today yet so frequently neglected.

  14. 4 out of 5

    Oksana Hoshva

    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 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 academic approach the book takes. Second, due to the cases the study and book is built on (I have neither expertise no any interest in hard disk drive or mechanical excavator industries) . I agree with other reviews saying the book could have been 70% shorter or one can get the idea by just reading the first and the last chapters. So far, I’ve found the concept of sustaining and disruptive innovation quite useful in understanding the innovator’s dilemma and hopefully will avoid the type of ‘good management that can lead to failure’. I believe I will have to re-read it a bit later again more passionately and thoughtfully.

  15. 4 out of 5

    Chris Johnson

    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 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 company. Meaning: everyone wants something and they lie about their wants. This book is about how to differentiate between "Sustataining innovation" (more megabytes) and "disruptive innovation" (a different form factor, a different approach.) This would score very poorly on the "Flesch Reading Scale," and I found the writing to be opaque at times - it's easy to write sentences with multiple qualifiers . It's more difficult to write like the Heath Brothers.

  16. 5 out of 5

    Traian Stancescu

    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 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 title -- a better title would be 'The Corporation's Dilemma'. The book is targeted to successful executives as opposed to ambitious innovators and the author never gives credit to innovators that don't match his narrow definition of 'disruptive', (not even in 2015). Many companies today disrupt through quality execution and/or network effects: Uber, Facebook, Apple, Tesla. Still I feel that for its intended target (corporate executives) this book is a must read.

  17. 5 out of 5

    Jeric

    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.

  18. 5 out of 5

    Max

    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.

  19. 5 out of 5

    Gabriel Pinkus

    Sometimes, supply creates demand. That’s my summary of the book.

  20. 4 out of 5

    Onkar

    If you are sick of hearing cliches like - "The customer is always right", this book is for you. The author Clayton Christensen who is very well known for his research, takes examples of industries like disk drive, excavation and such to demonstrate how successful and innovative companies fail precisely because they listen to their customers. The author proves that getting customer feedback, tracking competition, allocating resources carefully, using tried-and-tested processes, all hallmarks of g If you are sick of hearing cliches like - "The customer is always right", this book is for you. The author Clayton Christensen who is very well known for his research, takes examples of industries like disk drive, excavation and such to demonstrate how successful and innovative companies fail precisely because they listen to their customers. The author proves that getting customer feedback, tracking competition, allocating resources carefully, using tried-and-tested processes, all hallmarks of good management eventually kill the spirit of disruption. He also talks about how experts that try to predict disruptive technologies fail miserably. Successful companies are aware of disruptions and some of them do build disruptive products in parallel with existing ones, but because of small margins they get by selling disruptive products in insignificant markets, those products do not get the limelight resulting into companies missing their market share. The dilemma that the author refers to is two-fold - 1. The value to innovation S-curve: Developing a product takes iterations. Early iterations provide less value but as product matures, the values raises exponentially. At some point, all valuable additions to the product are complete, and value per iteration goes down again. For this reason, customers of successful companies are not interested in new / disruptive products, instead they focus on innovating existing products. Newcomers on the other hand do not have this obligation, and they go deep into the S-curve, thereby providing great value to their customers. 2. Newbies vs. existing players expectations: Existing companies have to keep up with high expectations of their share holders while newcomers can pursue a small segment of the market. Newcomers do not have to satisfy their investors or increase sales. This allows them to focus on innovation. This is a very insightful book and even if you are not into management, it is very useful. My only problem is the highly redundant and academic style of narration. Perhaps, the author could have made it friendlier for non-management folks, but a good read nevertheless!

  21. 5 out of 5

    Yevgeniy Brikman

    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 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 innovations" and "disruptive innovations". It seems that the definitions rely on hindsight (ie, a disruptive innovation is one that turns out to, uh, disrupt the leaders) and are not particularly predictive. And since the solutions the book proposes only work for the disruptive ones, this is a rather big weakness. Still, the book is worth reading for building your awareness and vocabulary around these issues. The writing is a bit dry and academic-sounding, but there are plenty of good examples that, if you've ever worked at a large company, will feel all-too-familiar. Some good quotes from the book: First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms’ most profitable customers generally don’t want, and indeed initially can’t use, products based on disruptive technologies. By and large, a disruptive technology is initially embraced by the least profitable customers in a market. Hence, most companies with a practiced discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely able to build a case for investing in disruptive technologies until it is too late. While managers may think they control the flow of resources in their firms, in the end it is really customers and investors who dictate how money will be spent because companies with investment patterns that don’t satisfy their customers and investors don’t survive. The highest-performing companies, in fact, are those that are the best at this, that is, they have well-developed systems for killing ideas that their customers don’t want. As a result, these companies find it very difficult to invest adequate resources in disruptive technologies—lower-margin opportunities that their customers don’t want—until their customers want them. And by then it is too late. With few exceptions, 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. Such organizations, free of the power of the customers of the mainstream company, ensconce themselves among a different set of customers—those who want the products of the disruptive technology. In dealing with disruptive technologies leading to new markets, however, market researchers and business planners have consistently dismal records. In fact, based upon the evidence from the disk drive, motorcycle, and microprocessor industries, reviewed in chapter 7, the only thing we may know for sure when we read experts’ forecasts about how large emerging markets will become is that they are wrong. Simply put, when the best firms succeeded, they did so because they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers’ next-generation needs. But, paradoxically, when the best firms subsequently failed, it was for the same reasons—they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers’ next-generation needs. This is one of the innovator’s dilemmas: Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake. My findings consistently showed that established firms confronted with disruptive technology change did not have trouble developing the requisite technology [...] Rather, disruptive projects stalled when it came to allocating scarce resources among competing product and technology development proposals [...] Sustaining projects addressing the needs of the firms’ most powerful customers [...] almost always preempted resources from disruptive technologies with small markets and poorly defined customer needs. Successful companies want their resources to be focused on activities that address customers’ needs, that promise higher profits, that are technologically feasible, and that help them play in substantial markets. Yet, to expect the processes that accomplish these things also to do something like nurturing disruptive technologies—to focus resources on proposals that customers reject, that offer lower profit, that underperform existing technologies and can only be sold in insignificant markets—is akin to flapping one’s arms with wings strapped to them in an attempt to fly. Such expectations involve fighting some fundamental tendencies about the way successful organizations work and about how their performance is evaluated. One of the dilemmas of management is that, by their very nature, processes are established so that employees perform recurrent tasks in a consistent way, time after time. To ensure consistency, they are meant not to change—or if they must change, to change through tightly controlled procedures. This means that the very mechanisms through which organizations create value are intrinsically inimical to change. In order for a $40 million company to grow 25 percent, it needs to find $10 million in new business the next year. For a $40 billion company to grow 25 percent, it needs to find $10 billion in new business the next year. The size of market opportunity that will solve each of these companies’ needs for growth is very different. As noted in chapter 6, an opportunity that excites a small organization isn’t big enough to be interesting to a very large one. One of the bittersweet rewards of success is, in fact, that as companies become large, they literally lose the capability to enter small emerging markets. Disruptive technology should be framed as a marketing challenge, not a technological one.

  22. 4 out of 5

    Ganesh Muthupalani

    A brilliant book on Innovation & Strategy! Prof Christensen aims to why Great Firms always lose out to Disruptive Innovations. The book is divided into two parts: Why Great Firms fail & How Great Firms can defend their empire. The juice lies in the first part! 3 Key Points from the Book on Why Great Firms Fail 1) Disruptive vs Sustaining Innovations. *Sustaining innovation = improvements to the current performance thru tech advancements. *Disruptive innovation = Creating a brand new value A brilliant book on Innovation & Strategy! Prof Christensen aims to why Great Firms always lose out to Disruptive Innovations. The book is divided into two parts: Why Great Firms fail & How Great Firms can defend their empire. The juice lies in the first part! 3 Key Points from the Book on Why Great Firms Fail 1) Disruptive vs Sustaining Innovations. *Sustaining innovation = improvements to the current performance thru tech advancements. *Disruptive innovation = Creating a brand new value proposition (possibly with the same tech) e.g. iPhone with features any smartphone in the market had but re-positioned as simple, elegant, lifestyle device. 2) Big Firms don't want to enter into disruptive technologies because cost is high, low-profit margins, cannibalizes existing products sales (e.g CD makers unlikely to make Thumbdrives). 3) Performance oversupply. Sustaining innovations take place at a rate that it exceeds what consumers want (e.g. Apple vs. Samsung specification war. Extremely powerful processor, pixel-perfect screens, Animojis and a whopping 1+k price tag). Do customers really need them? This opens up the lower end market (new entrants like Xiaomi, Huawei). I was surprised to find out that the book was first published in 1997. But the principles and ideas discussed are relevant till today. Steve Jobs said he was profoundly influenced by this book! Definitely worth a read!

  23. 4 out of 5

    Shubham Bansal

    A must read theory for anyone who is into Problem Identification. Basically everyone :) I started this book 3 years back, read 25-30 pages and gave up as I did not found it interesting. I started it again last month, but now I already read 2 other books by the same author, just to realize that the language in this book was too tough for me to understand 3 years ago mainly because of my level of understanding. As I have mentioned in the reviews of other books by Clayton Christensen, the theory in A must read theory for anyone who is into Problem Identification. Basically everyone :) I started this book 3 years back, read 25-30 pages and gave up as I did not found it interesting. I started it again last month, but now I already read 2 other books by the same author, just to realize that the language in this book was too tough for me to understand 3 years ago mainly because of my level of understanding. As I have mentioned in the reviews of other books by Clayton Christensen, the theory in this book is a very fundamental one which deals with WHY-of-X. While reading, I was applying this to other areas of my life apart from Business (which is the context of the book), like communication skills, relationships, personal learning etc and they are so true! If you want a full grasp of Clayton's theory, read his all three books and you will feel the dots-are-connecting effect, giving you a 360-degree view of looking at a situation in every aspect of your life.

  24. 5 out of 5

    Sashko Valyus

    Чому купують стартапи? Куди потім вони діваються? Навіщо витрачати такі гроші, замість того що робити це самому? Чому Google Docs відбирають все більше аудиторії Microsoft Word? І в решті решт чому компанії не можуть вчасно ослідлати інновації, і їх обігрують новачки за декілька років? Дана книга дасть відповіді на ці питання ці питання. Не обов'язково читати всю книгу. Вистачить першу і три останніх глави. Ще декілька виразів, записую для себе щоб не забути: - Коли порівнюються рішення, спочатку шу Чому купують стартапи? Куди потім вони діваються? Навіщо витрачати такі гроші, замість того що робити це самому? Чому Google Docs відбирають все більше аудиторії Microsoft Word? І в решті решт чому компанії не можуть вчасно ослідлати інновації, і їх обігрують новачки за декілька років? Дана книга дасть відповіді на ці питання ці питання. Не обов'язково читати всю книгу. Вистачить першу і три останніх глави. Ще декілька виразів, записую для себе щоб не забути: - Коли порівнюються рішення, спочатку шукають ті що підходять по функціональності, потім вже по надійності, зручності і ціні. Ось чому UX продається на фоні одинакових додатків - надлишок якості -- коли ти заточуєш твій продукт на ринки із специфічними потребами, в той час, коли більшість користувачів, використовують лише базову функціональність - неможливо дослідити ринок якого немає, потрібно випустити і подивитися як користувачі будуть його використовувати ( я так розумію на період написання книги такого поняття як MVP ще не було) P.S. 4 зірки за "водянистість" книги спочатку

  25. 5 out of 5

    Caroline

    Pretty boring. Basically 250 pages of somewhat-repetitive research. This is a summary I wrote for class. Although disruptive technologies are "typically simpler, cheaper, and more reliable and convenient than established technologies," the greatest firms often adopt them in ways and at times that cause them to lose millions or billions of dollars in revenue. This seems ironic, because successful large firms have the resources to develop, and even develop markets for, new tech. Too frequently, how Pretty boring. Basically 250 pages of somewhat-repetitive research. This is a summary I wrote for class. Although disruptive technologies are "typically simpler, cheaper, and more reliable and convenient than established technologies," the greatest firms often adopt them in ways and at times that cause them to lose millions or billions of dollars in revenue. This seems ironic, because successful large firms have the resources to develop, and even develop markets for, new tech. Too frequently, however, these firms are slow to move into risky areas when they do not perceive a competitive advantage. Many examples are given, like the electric-powered car, disk drive, and steam shovel industries. In each of these examples, a revolutionary, disruptive technology was developed and eventually needed to be integrated into industry leaders' portfolios. Whether through acquisition or internal development, these companies always did adopt the technology, but they often did it late, halfheartedly, or without the proper market research, missing out on potential revenue and huge chunks of market share. Christensen's book suggests that spinning off an independent organization to develop and market the technology, even if customers may not relate it back to the parent company, is often a successful strategy for these great firms to use. These independent organizations are more organic and therefore can navigate into new markets faster, with more success and less risk because of the parent company's resources. Additionally, disruptive and sustaining technologies often need different strategies, so choosing one strategy to take in regards to innovation will not always lead to the greatest market share.

  26. 5 out of 5

    Jill

    This is one of those books that so many people mention/name drop that I just had to read it to see what it was all about. (Next on the list: Game of Thrones). It was well worth the read. In the Innovator's Dilemma, Christensen argues that in some cases the reason why good, solid companies fail to stay ahead of the competition is not because they are incompetent, but because their structures/ processes/ incentives are all geared towards managing "sustaining technological change", as opposed to "di This is one of those books that so many people mention/name drop that I just had to read it to see what it was all about. (Next on the list: Game of Thrones). It was well worth the read. In the Innovator's Dilemma, Christensen argues that in some cases the reason why good, solid companies fail to stay ahead of the competition is not because they are incompetent, but because their structures/ processes/ incentives are all geared towards managing "sustaining technological change", as opposed to "disruptive technological change". When disruptive technologies emerge, the market for them is often not clear. The performance specs of these disruptive technologies do not meet the needs of companies' existing customers (e.g. in terms of capacity for disk drives) but have other attributes (e.g. physical size) that could potentially be of value to other (as yet undefined) markets. But in good companies, their processes are geared towards developing products that will meet the needs of their existing customers. Moreover, these firms are embedded in a larger "value network" that encompasses both customers and suppliers geared towards meeting the needs of existing customers. Small emerging markets also do not address the "near-term growth and profit requirements of large companies". These companies are therefore great at managing sustaining technological changes but poor at handling disruptive technological change. To manage disruptive technological change, therefore, Christensen asserts that managers need a fundamentally different approach - "discovery-driven planning", i.e. planning to learn vs planning to execute. Assume you don’t know anything for certain. Be clear what are the assumptions upon which your plans or objectives are based. Test these assumptions. This requires you to ensure that your strategy will allow you to make shifts and adjustments as necessary and that these shifts are not costly. The most insightful chapters for me were Chapt 8 on "How to Appraise Your Organisation's Capabilities and Disabilities" and Chapt 10 on "Managing Disruptive Change: A Case Study". In Chapt 8, Christensen breaks down how managers can assess the ability of their organisation to manage different kinds of innovation by looking at (i) the kind of resources it has; (ii) the mechanisms/processes by which the organisation creates value, which is "intrinsically inimical to change" in order to ensure consistency; and (iii) the values of the organisation that employees use to make prioritisation decisions. Christensen notes that "the larger and more complex a company becomes, the more important it is for senior managers to make independent decisions about priorities that are consistent with the strategic direction and the business model of the company....[but these] clear, consistent and broadly understood values, however, also define what an organisation cannot do." Dealing with disruptive change therefore requires managers to create new capabilities, whether by acquiring an organisation whose processes and values match the new task (and keeping them separate from the existing organisation) or separating out an independent organisation and developing within it the new processes and values required. In Chapt 10, Christensen takes us through a step-by-step guide of how he might hypothetically think about managing the potential disruption posed by electric vehicles, if he were a manager of an auto maker. First, assessing whether electric vehicles represent a disruptive change, based on whether their trajectory of improvement might some day make them a viable option for the mainstream market, i.e. will the trajectory intersect the trajectory of market demands. Second, finding a potential market for the vehicles, by getting out there and trying to sell the product to different kinds of customers to see what hooks. Third, having a strategy to learn (or rather, to fail, fail fast and try again). This entails conserving resources for multiple iterations, rather than putting all of one’s resources in designing the perfect product the first time round. Although Christensen’s book looks at the commercial sector, you can apply the insights from the book to other domains, including the public sector. What might it mean for the public sector to manage disruptive change, in the way organisations and teams are set up and resourced? What might a strategy for learning mean in the context of designing public services and infrastructure? In IT for instance, might it entail a shift away from the “waterfall” method of designing infrastructure towards the agile methodology?

  27. 5 out of 5

    Danuta Janiszewski

    God, business books can be so dense and boring. While I do believe Clayton Christensen is right on the money with his hypothesis, framework and careful (OH SO CAREFUL) curation of case studies in disruptive/innovative tech and business, I really wish he and his editor worked together to make this a bit more easily digestible. My favorite break down was towards the end with exemplifying electric cars versus gas cars and drawbacks. Because the metaphor and case studies were more current and recent God, business books can be so dense and boring. While I do believe Clayton Christensen is right on the money with his hypothesis, framework and careful (OH SO CAREFUL) curation of case studies in disruptive/innovative tech and business, I really wish he and his editor worked together to make this a bit more easily digestible. My favorite break down was towards the end with exemplifying electric cars versus gas cars and drawbacks. Because the metaphor and case studies were more current and recent, the premise was much easier to grab onto than disc space and computer case studies.

  28. 5 out of 5

    Bob

    The book is a bit long and circuitous, but provides some useful mental models. However, the theory maybe too complicated to apply in practice. Chapter 1: 1. The author poses a question in this chapter which he attempts to answer in the following chapters: `Why do very successful companies fail at disruptive competition?`. To study this question, he looks at the harddrive industry and concludes that there are 3 patterns 1. disruptive innovations are relatively straightforward 2. the technological b The book is a bit long and circuitous, but provides some useful mental models. However, the theory maybe too complicated to apply in practice. Chapter 1: 1. The author poses a question in this chapter which he attempts to answer in the following chapters: `Why do very successful companies fail at disruptive competition?`. To study this question, he looks at the harddrive industry and concludes that there are 3 patterns 1. disruptive innovations are relatively straightforward 2. the technological breakthroughs tend to sustain the growth trajectory 3. despite the technological prowess of the established firms, it was the new entrants which moved first. Having read the rest of the chapters, I can see that new entrants have a technological advantage but no process or resource advantage. If the business is high tech, new firms have an advantage. However, I am not so sure about the first 2 patterns. Even if the technology seems straightforward (i.e. has been applied to an adjacent area), it is not at all clear that it can be applied to another area. What is very clear to one person, maynot be clear and straighforward at all to another person with a very different background. Chapter 2: 1. The popular slogan “stay close to your customers” appears not always to be robust advice. One instead might expect customers to lead their suppliers toward sustaining innovations and to provide no leadershipor even to explicitly misleadin instances of disruptive technology change. 2. Talks about the fact that its usually the companies with resources who create the next generation of products. But due to beauracracy or otherwise it never gets to its implementation. I guess now it makes sense why Apple is so secretive about its products. Perhaps, its only Steve Jobs who can see the potential of a mouse when nobody cares about it while being developed in Xerox. Its probably true that he stole the idea of a mouse from Xerox, but if nobody cares about the idea and is freely giving it away, is it really stealing? That is the nature of innovation. It was also probably not that easy, as I am sure he also saw a hundred other things, which he had to discard. Figuring out what is noise and what is the signal, really depends on the person as in Steve Jobs. There's also probably hundreds of other people who saw the same thing who didn't see its potential. Another interesting thing I find about Apple and Tesla is that despite being huge companies when the founder (steve jobs at Apple) and now Elon at Tesla, they have been continuously innovating and disrupting the space. When I look at other companies and even at Apple (at its current state, because Steve Jobs is no longer there), it seems these huge companies only iteratively improve on the products. So even though Steve Jobs repeatedly talks in various speeches about how the success of the Apple is because of its engineers, perhaps its really that Steve Jobs was the engine behind why Apple was able to dream of and execute on those plans? Chapter 3: 1. It seems that cable-based and hydraulic-based excavator industries have a similar trend as disruption in other industries. In the 1920s, cable-based excavator industries followed the best management guidelines and followed customers insights to provide the best cable-based excavators that they could build. In the mean time, there were hydraulic-based excavator machines that were coming up. In the beginning, hydraulic-based excavator machines couldn't perform at par with the cable based machines. The cable based machines had much higher capacity, better turns, had higher degrees of freedom and were mainly cattered to the mining industry. The hydraulic based machines couldn't compete with the cable-based ones in the mining industry. So the companies that did come out focused their effort on pipe contractors and small excavators. In time and by learning from the small excavators, the hydraulic companies overcame the problems and became competitive. In hindsight, it always seems that the cable-based excavator industry leaders should have seen this happening. What Clayton mentions is the how the hydraulic industry disrupted the cable-based excavator industry. However, I wonder if there were other types of excavators in the industry as well. The thing, is its only after decades of work, that the hydraulic based excavator came on par with the cable-based excavator. If there wer not just the cable based and hydraulic based excavators, how on earth is the cable-based excavator industry leader understand that hydraulic based excavators are going to disrupt them? So is this just chance, or are you supposed to just take a lot of shots, and then one may become big? Chapter 5: 1. Give responsibility of disruption to an organization whose customers need it: It is the nature of customer centric businesses to try to meet the needs of their customers. So if you give the responsiblity of innovation to a group whose customers don't need it, then they will reject it and try to meet the needs of a customer who is interested in sustaining innovation. 2. Gives examples of how Quantum and Control Data succeeded. On the corrolary when Micropolis tried to satisfy existing customers as well as enter a new territory, the person leading the charge went through a exhausting phase. Quantum and Control Data on the other hand just create a separate company for the same change. Chapter 6: 1. Give small opportunities for disruption to small organizations: Because innovations are typically made by acheivement-hungry individuals, giving the task to innovate on a breakthrough technology while being part of a bigger organization wont work, as they will have to deliver to the needs of the bigger organzation. In these cases, its better to create a separate org whose task is to just create the technology Chapter 7: 1. Gives examples of 3 companies: Intel (microprocessor), Honda (dirt-bike) and Hewlett Packard (Kittyhawk). What the author concludes is 1. The first attempt to succeed in a disruptive market will rarely be successful. So you need to plan for 2nd and 3rd attempts. In order to do so, you need to make sure that even though you dont deliver the products your promised to your customer, you still maintain the relationship. 2. You need to plan to learn rather than plan to execute. In recent history, I remember how Elon Musk planned for 3 rocket launches rather than the 1st attempt to succeed. When even 3 weren's successful the planned yet another one by betting his entire networth. <-- Despite all the shit people are throwing at Elon these days, this is why he is probably successful at the crazy shit he dreams of. 2. Mistake made by HP technology was to assume that their idea was right, rather than that their idea was wrong, as admitted by the executives later on. Assuming your idea is right works for sustaining technologies, not disruptive technologies. Chapter 9: 1. Example of Eli Lily vs Novo: Eli Lily developed a very pure insulin replacement by investing 1B$, while Novo solved a more human problem of how the insulin was injected. The question arose as to why Eli tried to get from 10ppm of impurity to 0ppm of impurity, and it turns out that purity was the highest objective in the industry and every marketer though that if they could get to 10ppm customers will be willing to pay a premium. Because of the the giant that Eli is, it was impossible to change course once that it had decided to follow through. While, it may seem obvious now, after Novo commanded the 30% premium, that Eli should have done more market research, it is very difficult to a popular concensus within a company if it has decided to go down a wrong direction. Perhaps, its because that if you have made a decision, its in the interests of the managers and the managers of the managers to keep going in that direction just to save face, and not destroy their career, as Clayton points out, earlier. 2. Weaknesses of Disruptive products are its strenghts: It is better to create a market for a disruptive technology rather than try to modify it to the needs of the market. 3. Disruptive products typically create a simpler use case. I can see that this may be true when the disruptive product attempts to enter the majority of market, but this definitely not true at the start. Disruptive products at the start are messy, break down often, but meet the needs of a few customers who value it highly. While looking for Stuart Mabon, CEO of Micropolis, I came upon this article from 1987: http://articles.latimes.com/1987-02-1.... Its humbling to see articles about past technology, and the immense amount of effort to create them. We stand on the shoulders of giants, most of whom we will never know about.

  29. 4 out of 5

    Nicholas

    This review has been hidden because it contains spoilers. To view it, click here. When you have an established product, listening to your customers cannot keep someone from disrupting your market. The technology will rise form smaller previously unserved markets and then expand into yours. And then the same thing will happen to them. The way to solve this is to build enterprise startups that sell to anyone they can. Anyone who wants the product regardless of market size. When technology improves faster than market demand for quality eventually a new technology will rise from b When you have an established product, listening to your customers cannot keep someone from disrupting your market. The technology will rise form smaller previously unserved markets and then expand into yours. And then the same thing will happen to them. The way to solve this is to build enterprise startups that sell to anyone they can. Anyone who wants the product regardless of market size. When technology improves faster than market demand for quality eventually a new technology will rise from below that satisfies the previous key metrics well enough that differentiability moves to other metrics. The distinction between disruptive innovation vs. radical innovation. One is unforeseen by the customers while the other is in line with their ever increasing demands. You must be the one to cannibalize your own sales. Quotes: "First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms' most profitable customers generally don't want, and indeed initially can't use, products based on disruptive technologies." "Small markets don't solve the growth needs of large companies: To maintain their share prices and create internal opportunities for employees to extend the scope of their responsibilities, successful companies need to continue to grow. But while a $40 million company needs to find $8 million in revenues to grow at 20 percent in the subsequent year, a $4 billion dollar company needs to find $800 million in new sales. No new markets are that large." "Principles of disruptive innovation: 1. Companies depend on customers and investors for resources 2. Small markets don't solve the growth needs of large companies 3. Markets that don't exist can't be analyzed 4. An organization's capabilities define its disabilities 5. Technology supply may not equal market demand" "The fear of cannibalizing sales of existing products is often cited as a reason why established firms delay the introduction of new technologies." "These companies did not fail because the technology wasn't available. They did not fail because they lacked information about hydraulics or how to use it; indeed, the best of them used it as soon as it could help their customers. They did not fail because management was sleepy or arrogant. They failed because hydraulics didn't make sense - until it was too late." "While senior management may think they're making the resource allocation decisions, many of the really critical resource allocation decisions have actually been made long before senior management gets involved: Middle managers have made their decisions about which projects they'll back and carry to senior management - and which they will allow to languish." "They panned to fail early and inexpensively in the search for the market for a disruptive technology. They found that their markets generally coalesced through an iterative process of trial, learning, and trial again." "Watching how people use products, rather than by listening to what they say."

  30. 5 out of 5

    Chris

    Incredible analysis of how disruptive technology works. Fundamental insight that companies that get disrupted generally get disrupted BECAUSE of good management is a key understanding for just about any corporate worker. This happens because good management teaches you to listen to your customers, make higher-cost / higher-margin products, and invest capital behind plans with relatively confident financial projections. However, disruptive technology that upends industries typically starts cheape Incredible analysis of how disruptive technology works. Fundamental insight that companies that get disrupted generally get disrupted BECAUSE of good management is a key understanding for just about any corporate worker. This happens because good management teaches you to listen to your customers, make higher-cost / higher-margin products, and invest capital behind plans with relatively confident financial projections. However, disruptive technology that upends industries typically starts cheaper / lower margin, is not something customers know to ask for, and has no way to hold to precise financial projections. Therefore, good managers will tend to dismiss / ignore disruptive technology until it's too late. Also a great read for start-ups as a great lens through which to think about how you will enter big markets with mature incumbents.

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