The Innovator's Dilemma: The Revolutionary Book that Will Change the Way…

Clayton M. Christensen is a professor at the Harvard Business School. In the Innovator's Dilemma, he presents his research into business life cycles and how larger companies find it difficult to innovate. He shows how these larger companies eventually are replaced by innovators who make inroads by taking the bottom markets willing ceded to them by the bigger companies. Little by little, the smaller companies eat away until they have market dominance themselves, leaving the once market leader without a place to go.

The concept of how small companies can thrive in a world dominated by large companies is an interesting one, especially for the entrepreneurs facing Goliath. Christensen lays out several test cases where the larger company couldn't innovate, allowing smaller companies to enter at the bottom of the market. He even shows how and why it made sense for the management of these dominant companies to allow this to happen - at the time. Innovation is not an easy prospect for large companies because their large existing customer base often will not allow the innovations to move forward because it doesn't fit their needs. Innovations often bring a different customer and large companies are not always able to choose to service both.

Christensen provides a few examples of this phenomena in excruciating detail, studying the rapidly changing industries of disk drives and steel production. He rounds out the book with a discussion of the steam shovel and how it lost out to hydraulics. In a final case study, he examines how the principles could be applied to a potential disruptive technology - the electric car. He lays out a complete game plan for a company to take the innovations available and capture a new market. Sadly, in the years since publication in 1997, it doesn't appear anyone has taken up the challenge, although perhaps Tesla Motors has come the closest.

The problem I have with Christensen's book is his writing style. He is definitely a Harvard Business School professor. He delves deeply into his research, explaining every nuance of the industry in such detail as to leave no doubt he has done an extensive study. I grew up in IT, living just miles away from one of the great innovators of the disk drive industry, yet I learned many things about disk drives. I hadn't imagined I could get a technical education from a book on business management.

Christensen's writing style was the biggest barrier to the material. His explanations were too deeply steeped with details that didn't move the story forward. While the datum was valid and important, it didn't necessarily have to be presented in long, exhaustive detail. Today's readers do not have a lot of time or desire to spend long stretches of deep explanation. I found it necessary to spend at least 45 minutes reading before getting "into" the book. I couldn't help comparing the style to that of Jim Collins in Great By Choice. Yes, Collins is also a researcher who loves detail. The difference is that Collins moves all his detailed explanations to the appendix where those who desire it can find it. The book itself is organized into fast moving, short chapters laying out the salient points distilled from the exhaustive research. I would really have appreciated this approach in this book by Christensen. Collins is a storyteller where Christensen is a Harvard professor.

Christensen's insight is worth the slog through the knee deep data. Just be ready with a canteen for dry stretches of endless detail as far as the eye can see. ( )

We are all familiar with the story of the innovative and nimble startup surpassing the corporate leader with a disruptive technology that the larger corporation was blind to. Why this happens is the subject of Clayton Christensen’s thoughtful Innovator’s Dilemma. Although originally published in 1997, it’s a highly relevant and useful read today.

Christensen was interested in how the market leaders missed the disruptive innovations. At the time, most thought the corporate leaders were just too arrogant or too bureaucratic to see the disruption coming. Could there be more structural forces at play? Turns out, there are.

The first half of the book follows the development of the disk drive and the hydraulic excavator to understand and make clear these forces. First, the author distinguishes between sustaining technologies and disruptive technologies. Market leaders, it turns out, are capable of innovation but those innovations typically occur as incremental evolutionary changes to existing products – sustaining innovations.

Where they get tripped up is the development of disruptive technologies which fundamentally transform the existing product. In many cases the market leader also developed early forms of the disruptive technology or were at least aware of the development of the technology.
Christensen, a professor at the Harvard Business School, makes the case that in ignoring the disruptive technology, the market leader was acting quite rationally. They were following their customers’ and corporation’s best interests.

Christensen discovered that the disruptive technology yields a product that is inferior as measured by the traditional metrics for product quality. In the case of the disk drive it was price/unit storage. For the excavators, it was reach. For the disk drives, the disruption was the introduction of smaller and smaller drives. At each step of the way, these products were costlier than the existing larger drives in terms of price/unit storage. However, their advantages, in terms of other characteristics such as size, weight, and power consumption outweighed nominal improvement in the price/unit storage ratio provided by sustaining technologies. Eventually, price catches up and the disruptive products are better in both sets of characteristics.

For the excavator (a big digger), the existing machines used cables to extend and control the basket. The overriding measure of performance was reach and capacity – how far out could the basket reach and grab a bucket of dirt. When hydraulic excavators appeared, their reach was very limited because of the physics of the hydraulic cylinders needed to control the baskets. Even today, a cable excavator will give you a longer reach. However, the hydraulic excavators had advantages of safety (no cable breaks) and had significantly lower maintenance costs. Eventually, as manufacturing of hydraulic excavators grew in practice, reach extended and for many uses such as building foundation excavation and utility pipe laying, as soon as the reach was sufficient for the task, the improvement in safety and the reduced maintenance costs made the hydraulic excavators superior.

This book will change the way you think about innovation and the structures needed not only to spark the ideas, but get them built into new product lines.

My name is David Marquet, from Practicum, Inc and we help our customers get everyone be a leader and avoid casting employees into follower roles. To continue the dialogue respond to david.marquet@practicuminc.com or follow our blog or follow us on twitter. @totheleadernyou. ( )

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The Innovator's Dilemma tries to explain why great companies fail, how successful companies innovate, and what the differences are between innovating sustaining technologies versus disruptive technologies. One of the reasons why companies fail is because they are held captive by their customers. It is possible for customers to continually ask for the same product they have been using for ages, but with bigger, faster, better features.... however, they might not be aware of or willing to use something that is different and potentially better. This can prevent a company from creating technologies that will be useful to the customer in the future or for entering a new growth market.

Organizations need more than capable employees to innovate. The organization needs to provide resources, processes, and values that support innovation of disruptive technologies. This can be difficult for some companies because small markets don't solve the growth needs of large companies. Management does not want to invest in markets that don't exist because they can't be analyzed. The tolerance for failure can be high in some organizations too. Smaller companies, on the other hand, are able to compete in small markets and markets with smaller margins and still create growth for the company.

Matching markets to disruptive technologies can be difficult to do. Organizations can be more specialized than they think, which can make it more difficult to innovate new technologies. Leadership in disruptive technologies can create enormous value. Established companies may not have leadership values within its organization since it is less important in creating sustaining technologies. ( )