The Innovator's Dilemma, Clayton Christensen
(back to books)
- Substrat: customer focus creates excellence & underinvestment in disruptive technologies
- in practice, it is a company’s customers who effectively control what it can and cannot do
- many companies move up-market, over-satisfying original customer demands -> creates vacuum at lower price points
- successful companies have systems (e.g. require quantification of returns) for killing ideas that established customers don't want
- established technology strong until disruptive technology intersects with mainstream customer demand (too late to react)
- disruptive innovations: cheaper, simpler, more convenience, strong first-mover advantage
- formula for success: take action before careful planning
- requires:
- organisational capability to change strategies and cost structures
- product capability to quickly change features at low cost
- new distribution channels
- improvement trajectory that eventually intersects with market demand
- primary development challenge is marketing: build or find a market for the product
- embraced by least profitable customers (emerging/insignificant markets)
- might be best to set up autonomous organization with appropriate cost structure
- $40 million revenue company needs $8 million to grow 20 percent; $4 billion company needs $800 million
- this is only effective with disruptive (and not sustaining) innovations
- sustaining innovations: trajectory is known, weak first-mover advantage
- formula for success: careful planning, followed by aggressive execution
- customers lead their suppliers toward sustaining innovations and provide no leadership or mislead in times of disruptive technology change
- how to recognise disruptive innovation:
- graph trajectories of demanded performance improvement vs realised performance improvement from technology over time -> potential for disruptive innovation, if supply outpaces demand
- typical evolution of customer demands: functionality -> reliability -> convenience -> price