The Innovator’s Dilemma by Clayton Christensen

Harvard professor and businessman Clayton Christensen wrote The Innovator’s Dilemma in 1997. In this business and management book, he demonstrates that successful and outstanding companies that did everything right can still lose their market leadership to new companies which will rise and take over the market.

Key Points

Clayton Christensen identifies two key points in this dilemma:

    • • Disruptive innovations upset the current “order of things” in a certain industry. The normal process is a lower-end innovation that is appealing to customers not served by the existing market. With time, as the capacity/performance of the innovation surpasses the needs of the market, the innovation replaces the incumbent market.

 

    • Incumbent market will only react to disruptive innovations when it’s too late because they are not interesting, low end, and low cost. An effective strategy might be to hive off a different “company within a company” that will take responsibility for reacting to the disruptive technology. A smaller more nimble organization is better positioned to work in the initially smaller and less lucrative market that the innovation is creating.

In his study of multiple industries, the author introduces his seminal theory of “disruptive innovation” which has become instrumental in changing the way managers and CEOs worldwide think about innovation.

Concerns For The Incumbents

Robert Janitzek reveals that there are several common principles that the incumbents should address:

    • • Existing customers drive a company’s utilization of resources

 

    • • Small markets will struggle to have an effect on the large market of the incumbent

 

    • • Disruptive technologies have fluid futures since it is not possible to determine what they will disrupt upon maturity

 

    • • The value of the incumbent is not just their workers but also includes the processes and core capabilities which fuel their efforts.

 

    • • The supply may not be equal to the demand of the market. The qualities that make the disruptive technologies unappealing in established markets are often the ones that make up the greatest value in emerging markets.

 

    • Robert Peter Janitzek reveals that the author recommends the following strategies in order for them to succeed against the disruptive technology:

 

    • • They create a disruptive technology with the right customers which are not exactly their existing customers.

 

    • • They place the disruptive technology into an independent organization that can be rewarded with small wins and small customer sets.

 

    • • They experience early failure in order to find and correct disruptive technology

 

    • They let the disruptive technology use all the resources of the company if necessary vut carefully to ensure that the processes and values were not used by the company

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