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Innovation

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

“The Innovator’s Dilemma”, published in 1997, had quite a bit to do with establishing Christensen’s fame (and I guess fortune as well…). The Innovator’s Dilemma was actually the first book Christensen ever published. And it promptly received the Global Business Book Award as the best business book of the year. In 2011 The Economist named it as one of the six most important books about business ever written. High praise indeed!

The book is centered around two key concepts which are closely interlinked:

  • Low end disruption
  • Innovator’s dilemma
    (I believe that Christensen calls this “Organizational Capabilities” and refers to the innovator’s dilemma as the result of the combination of the two, but I personally find the terminology less evident like that)

Low end disruption occurs, when companies innovate faster than their customers’ needs evolve. This eventually ends up in products that are too sophisticated, too expensive, and too complicated for many customers. By doing so, companies open the door to “disruptive innovations” at the low end of the market.

What does this mean? It means that the disruptor does not compete on the same terms as the incumbents. While the incumbents compete on a set of product features, the disruptor launches a product that is actually not competitive following the traditional criteria, but outperforms incumbents along a different dimension. These entrants target a small market sub-segment or even a completely new market — and over time, as they innovate and become better, they start to eat into the incumbents markets, eventually displacing them.

There are numerous examples of this phenomenon, especially in technology. One very good example are digital cameras — when they started, they were A LOT worse than traditional cameras along most traditional criteria. The quality of the pictures was abysmal, the options provided absolutely minimal, and so on. But they outperformed the traditional technology in some key areas, mainly when it came to the number of pictures that could be taken and how easily the pictures could be processed and used afterwards. The rest is history…

The key question that Christensen’s book tires to answer is:

Why does this happen to innovative, well managed, successful companies?

The answer is — in my personal view — the most brilliant insight of the entire book. It does not happen becouse these companies are unaware of the disruptive technology — often times they are the ones that designed it in the first place! The first digital camera was built by — guess who — KODAK!

It happens precisely because these companies are innovative, successful and well managed! These companies by design — by their organisational capabilites , as Christensen calls it— are built and run in a way that makes it very unlikely for them pursue disruptive innovations. All the methods and processes designed to successfully innovate and operate in their existing market result in disruptive innovations being weeded out and never making it to the market.

That is the true innovator’s dilemma — the fact that the very things that make you successful are also the ones that eventually will lead to your downfall.

What do I think about the book?

Do you know the phenomenon when you hear about something and then suddenly that thing crosses your path all the time? This is what this book did to me. Once you have understood the two concepts, you see them at work everywhere.

I have rarely read a book as eye-opening as this. It has changed the entire way I think about competition, market entry, organisations and business in general.

I can not recommend this book enough.

About the author

Clayton Christensen is a professor at Harvard Business School, where he teaches some of the most popular classes. He is regarded as one of the world’s top experts on innovation and growth — largely due to the book I am discussing here and the accompanying work. Christensen was named as the most influential business thinker in the world in a 2011 poll among business leaders.

You probably get it, the guy is something of a big shot.