Business & Management

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

Name: The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail
Author: Clayton M. Christensen

Clayton M. Christensen

27 minAudio9 insights

What you'll learn

•Why well-managed firms often fail when facing disruptive technologies
•The difference between sustaining and disruptive innovations
•How value networks shape firm strategy and innovation outcomes
•The importance of organizational capabilities and the RPV framework
•Strategies for managing disruptive innovation including autonomous units
•The role of market discovery and agnostic marketing in emerging markets
•How performance oversupply influences market competition and product life cycles

Who should read this

✓Business Leaders Facing Technological Change
✓Innovation Managers and Executives
✓Entrepreneurs Launching Disruptive Ventures
✓Students of Business Strategy and Innovation

About this book

A seminal guide explaining why good companies fail with disruptive innovations and how to manage innovation strategically.

Did You Know?

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The term 'disruptive technology' was popularized by Clayton Christensen in this book.

Audio Summary

Section 1

Why Good Companies Fail: The Paradox of Listening to Customers

3:45

9 Sections

Preview: Why Good Companies Fail: The Paradox of Listening to Customers

In the world of business, we often celebrate companies that listen closely to their customers and innovate in response to their needs. Yet, there lies a paradox: this very attentiveness can sow the seeds of their downfall. Imagine a company so dedicated to satisfying its existing clientele that it inadvertently ignores emerging technologies that initially serve niche or less profitable markets. This is the heart of the innovator’s dilemma.

Consider the story of a retail giant once hailed as a paragon of management excellence. In the 1960s, this company was praised for its natural, seemingly effortless success. Yet, as discount retailers and home centers emerged, it clung to its traditional customer base and methods. Its failure to recognize the changing landscape led to a precipitous decline, despite its reputation for good management.

This phenomenon is not isolated. In the disk drive industry, rapid technological advances and shifting market demands created opportunities for new entrants to overtake established leaders repeatedly. These incumbents excelled at sustaining innovations—those that improved performance along dimensions valued by their mainstream customers. However, disruptive innovations—simpler, cheaper, and initially lower-performing technologies—found fertile ground in emerging markets that incumbents overlooked.

The paradox deepens: companies that diligently listen to their best customers and invest aggressively in innovations that serve them are often blindsided by disruptive technologies emerging in markets they deem insignificant. As these technologies improve, they eventually meet mainstream needs and displace established products, leading to the downfall of once-dominant firms.

Thus, the first insight is clear: good management principles, when applied without awareness of disruptive dynamics, can lead to failure. This sets the stage for understanding how companies can recognize and manage disruptive change, a journey we will explore in the next section.