When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)

A fascinating book on innovation, natural monopolies and their eventual downfalls. Great to read from front to back. Would be great to have an updated version that compares the predictions/suggestions in the final chapter (regarding electric vehicles) with what is happening with Tesla Motors and the wider electric vehicle market.

Precise explanation on why disruptive businesses, products, are often passed over by established companies, with good management.
What did you great in throats might hamper your progress into he future.

15 years later and the book still resounds with relevant wisdom.

You can see it presage concepts found in Steve Blank's Customer Development and Eric Ries' Lean Startup. Plus it predicts Google Docs and smartphone apps.

Any manager interested stewarding their business responsibly should read this classic book.

I've met this engaging author and even attended one of his classes at Harvard Business School in October 2011. Here's how it started. A brilliant local inventor with 9 patents asked for my help in commercializing his exciting new technology AND clued me in to this fascinating book which explains why new, disruptive technologies are so difficult for well-managed companies to adopt despite the risk that not adopting them can lead to their failure. I'm currently using this book and follow-on writings from Clayton Christensen to help guide our technology commercialization efforts.

Can’t believe after publishing for 20 years, this book is still so mind blowing, relevant and inspirational. I surprisingly find out that the theories in this book can still explain the current realities very well.

Prior to reading this book, I chalked up the misfortunes of the well run companies of our time to the vagaries of the market place and put them in the same shoulder shrugging category of "bad things happen to good people." But now I have a new way of looking at success and failure due to disruptive technology. I better understand my own frustrations of trying to do new things in a large corporation given the further insight from Christensen that assets are really managed by customers, not our own managers. That is what makes this book scary. There seems little hope of any large corporation staying on top of disruptive technology unless they follow the prescription of segregating those innovations from the usual corporate overhead structure. That means spinning off groups, taking equity positions in start-up firms, and/or completely funding start-ups to grow the new markets. The writing is clear, the data gathered is thorough and fully documented with ample notes, the logic is concise, and the conclusions are entirely logical. Christensen gives us formulas for success including agnostic marketing to help us recognize emerging markets. The case studies are at once interesting and compelling. This is a must read for managers in any industry. Dr. Andrew S. Grove, Chairman and CEO of Intel Corporation had this to say, "This book addresses a tough problem that most successful companies will face eventually. It's lucid, analytical-and scary."

Excellent research into business and innovation. Thouroughly investigated with great examples. Interesting read, not just facts and figures with charts that give you a headache. Well organized. HIGHLY recommended

Does an excellent job of explaining core ideas but is repetitive. Leaves the reader better prepared to identify disruptive technologies in a given market and how best to deal with the. Technology trajectory graphs are very informative when constructed to determine if a new innovation is worth investing resources.

Throughout human histror, it is not hard to notice the pace of innovation is slowing down. Thanks to the internet and mobile communications, the exploding knowledge base has left very few areas that are untapped or unexplored. Thus the revolutionary technologies (and products) are harder to get by. The investment thesis has always been one of these "quicker", "better", and "cheaper". However, that's all under the same framework when you benchmark it. When we can't use the past to project the future, it is truly a dilemma. This is a great book to read. It is also a sad reality that all high tech companies are facing their inevitable fate. When innovation slows down, the paradigm shift will cripple an established company easily.

Lots of good assessments in other reviews, but I'll share my take nonetheless. I'm the CEO of a relatively small software firm, and this book as helped us make the right decisions through two significant technology transitions in our industry (since I first read it in 2004). There are a handful of books that I've read that I can't imagine what would've happened to our company had I not read them; this is one of them. Required reading for our key staff.

For a would-be entrepreneur interested in innovation, this book is something of a dream. It presents readers with a number of realities within the world of technology, the most interesting and fundamental being that making an existing product better (even much, much better) in no way guarantees a new product's success. In fact, sometimes giving people something much worse in certain respects than the current market leader is the best path to take. The book reinforces this fundamental point, as well as many others, with a rich set of examples. It's a quick, stimulating read, as well as a real eye-opener. I'd highly recommend this book to anyone interested in becoming an innovator.

This is an interesting examination of the first generation of technology innovation by the person who coined the phrase disruptive innovation. However, his updates since then and innovation speak are beyond his or any professorial grasp; it must be expanded upon by hands on experience in the startup world to truly understand the current state of technology and innovation. While a landmark in his time, Clayton Christenson is a bit dated for the today's Internet social media, and now space age, which is explored by Internet billionaire Naveen Jain in his s upcoming book, "Moonshot - The Next Generation of Disruptive Innovation". Christenson has little or no experience founding companies and running startups, so while valuable academically and conceptually, the Innovators Dilemma, will be replaced by such masterpieces as Antonio Garcia Martinez's Chaos Monkeys and Jains aforementioned "Moonshot". These authors take you beyond the original concepts of marketplace disruption, and venture into the reality of a "marketplace Prigogine-esque" chaos theory and its impact on modern startup experimentations.

Solid theory and practical examples albeit a bit dated. Highlights how solid companies could benefit from giving every employee at least 4hours a week to explore pure innovation as part of the job role.

Solid theory and practical examples albeit a bit dated. Highlights how solid companies could benefit from giving every employee at least 4hours a week to explore pure innovation as part of the job role.

For decades, the United States has been the bastion of great Capitalist Innovation. With the American system, it was thought, you had the greatest chance to take a great idea to tremendous wealth and power. What does that really mean? It means having a great education system, a great financial system, and a great patent system. When you finally take your widget to the market, your accountant might even tap you on the shoulder and ask you about taking the company public. An IPO (Initial Public Offering). Taking the company public is a great way to motivate your employees (they can be paid in stock), and allows the company to grow rapidly in value, based on public perception. A few years later you're issuing quarterly reports and the stock price is bouncing up and down based on the contents of that report. After a few years, the company begins to stall out: your widgets are more advanced than they ever were, but you latest model hasn't done so hot in the market. Your loyal customers are content with last year's model, so the growth prospects are middling, and the stock starts to slide.

What the hell just happened?

The Innovator's Dilemma reveals the true source of groundbreaking and game-changing technologies, and why the Modern Corporate System works against real innovation. If you can understand why certain companies and entrepreneurs stall out, you can understand how to avoid it.

Notice the word Dilemma in the title. These are failed companies. They're enormously successful ones. Once you understand that these companies are very smart and very successful (and still subject to this effect), you get a hint of cause. Having an army of loyal customers sounds like a great place to be right? This book is about how those very same customers, if you listen to them, if you focus group them, if you beg them for feedback, will probably run your company into the ground.

There are two forms of Innovation mentioned in this book: sustaining and disruptive. Sustaining technologies are essentially evolutionary upgrades: taking the same product and bumping up the specs, giving it a bigger screen, or a faster processor. Shallow things like `new colors' also fall into this category. And these sustaining innovations are exactly the kind of things that customers want, and will ask for, if you're listening. Customers look at the widget and ask, "Can you make it smaller? Can you make it so there's no noise? Can you do one in gun metal grey?" The technologists in the company declare, "Sure we can! Because it's been about 9 months since we released a new model, and in that time, the price of those high end chips has come down, and they're even smaller. Here you go." And the next version is released. If you listen to your customers, you will keep putting out tiny evolutionary upgrades like this. As we learned in Lean Startup, most of the time focus groups lead you astray. But listening to your actual customers...as a bad thing? What happened to `Customer is King' or `The Customer is always Right?' I suspect those little sayings were actually cooked up years ago by bosses told to their employees, especially in retail operations, to cut down on complaints. That is not a very good mantra for R&D Labs. If the customer was `right', he'd be working at Boeing, Microsoft, or 3M.

The Customer isn't an expert. Rather than let them boss your around, maybe you should start to take away a little bit of their power. Sometimes the customer isn't the end user, but the retail store. Retail stores like Walmart won't be eating the food your company makes, or wearing the clothes. They just want your stuff a dirt cheap prices, and will push you do make uncomfortable compromises to hit those price targets. Are you sure you want to let these guys ruin your flagship product? Sometimes, like Enterprise computing, the customer is the IT department. They want your stuff to be cheap and modular, and they don't care about the User Experience, because they're not the ones using the product. To get around this, many companies have done their own distribution channel (open your own retail stores, or just quit retail altogether and go to the web directly), or fired their customers (by killing a product that wasn't part of the company's core competency). As a result, these companies are leaner, better branded, and more focused (and more profitable).

So what if you can ignore the customer for a few minutes, and consider developing a disruptive technology. What is that anyway? Intuitively, if sustaining technology is evolutionary, then disruptive must be revolutionary, right? Not quite. Disruptive technologies take a current technology and apply them to a new market. This is like when Nintendo released the Wii. They found a way to make Videogames less expensive, and more fun, to a broader market (everyday people, women, girls, seniors,etc). The result was the most dominant era in Nintendo's history. Little did they know that they would be disrupted a few years later by ... mobile phone gaming. Part of the reason why disruptive technology is so great is that it takes really long to copy. When Microsoft set about copying the Nintendo Wii, first they had to wait a few quarters to see if it was successful (because it was a brand new gaming experience, no one knew if it would take off). For the first 18 months of release the Nintendo Wii was sold out everywhere. Microsoft decided to start copying them. To make up for lost time, they looked around and acquired (link) a company with similar tech, that didn't even require a controller. While they set about integrating the `Kinect' into Xbox, Sony was doing their own copycat device (Sony Move Controllers). All this time, Nintendo is reporting amazing financial numbers. They were in the Blue Ocean, and making billions. When the Sony and MS devices came out, they were very late, and the response was middling at best: while the Nintendo tech camed bundled with every Wii, the Sony/MS versions would be add-ons, which meant developers had a very small market to develop for this new gameplay. Who wants to sell a game aimed at 15 million users, when they can sell almost the same thing on a Wii, and hit 85 million users? The result is almost no Kinect/Move games are being made, and tech isn't really being used. Kinect is currently being developed for Windows.

The Sony and Microsoft technologies didn't fail because management was arrogant; the management team was just being conservative, and smart. They failed because the technology (which had been available for years and years) didn't make sense until it was too late (when Nintendo showed them the way). You can't get their by copying, you can only get there by having a visionary leader who looks at the technology and says, "We need to invest in this, even if it doesn't make sense right now. This is where the industry is going." The Nintendo Wii, launched in late 2006, had been in development since 2001.

Disruptive technologies can also evolve. This is where you start to see amazing changes in the Industry. The iPod was disruptive at the low end, but eventually evolved into the iPhone, and later the iPad. The iPad sell about 25 million units per quarter now, and is reason both Apple and Microsoft are drastically redesigning their OSes. Mac OS X Lion released this year, has many touch elements, fullscreen mode and even an iOS-style launcher. Many expect Apple to ship iPads running OS X within the next 5 years. Windows 8, due out next year, will be Microsofts answer to iOS for iPad. It will have an App Store and fully touch interface. Can you imagine back in 2001, when Bill Gates first gawked at the iPod, he ever thought his company would redesign their cash cow Windows business because of it's disruptive powers? the store did the same thing with the Kindle. Disrupt at the low-end, fine tune it, then move it up the market (in price and features). In just a few years, I expect Kindle to be putting out some very beautiful Kindle Fires, to give Apple fits.

It's obvious how the innovators dilemma works for companies. Rather than listen to the customers, ignore them and try to make the best products you possibly can, by eliminating assumptions about what a product should have. I wonder though, if that same lesson can be applied to people. How can people be rapidly innovative and creative? By ignoring the career that makes us the most money, and follow our instincts about what a ideal lifestyle looks like? Why do I have to be married? Why do I have to own a home? Maybe I live in a new city every year, and rent beautiful apartments. Maybe I live with friends and couchsurf for a few years. Maybe I spend ten years mastering my favourite languages and living in various countries around Europe. Or maybe, I'm constantly changing jobs, looking for new work, emulating Howard Roark-an idealist a snob, who falls ass backwards into money and repute? Or maybe, just maybe, following your own path, will lead you to tremendous wealth and power (and just maybe, those white collar guys who told you to get a `real' job, will find themselves sideswiped by disruptive technology).

After all....what could be more replaceable (either by software, or machinery, or outsourcing) than a passionless, unoriginal, hopelessly conservative and painfully average employee?

More Reviews like this on 21tiger

Classic book on how successful large businesses fail to deal with the rise of disruptive technologies - ones that frequently put them out of business. Very readable. This is one of those books you read because you want to learn something. You would be hard pressed to read this and not end up with that result. Impressive work. Hard to put down. Highly recommended.

I have watched engineering innovation for over four decades--in hardware and in software. Clayton Christensen presents an excellent discussion of the risks associated with choosing the WRONG TECHNOLOGY PATH. This can result from what Christensen calls a failure to focus on "disruptive technology" and explains why it's sometimes not right to listen to your customers. This is an absolutely incisive look at the dilemma of technological innovation. It's a "must read" for every engineering and marketing manager or CEO worldwide.

Great read that helps explain behavior in the context of an organization's value network (what's valued in a given organization and it's suppliers).

Sometimes the answer, especially when dealing with disruptive innovation, isn't a change is process or skills. Sometimes you have to find a new market or create,
buy, or otherwise use another organizations.

The forces described in the book, where successful companies lose their market leadership due to disruptive technologies, are very relevant today. With accelerating technical advancements and shortening product life cycles, we see many examples of market leaders being disrupted in a very short time such as Kodak, Nokia, Japanese electronics etc...

Brilliant analytical approach. The logical progression of competition on functionality, reliability, ease of use and price in a hierarchy of user needs. Recommended for top management of companies providing products or services to have the disruptive technologies in their wings rather than overthrown by them. Also useful at the lower end of the spectrum on how to challenge the big players. Very good theoretical approach with practical use.

This book is more "dense" than books such as "The Lean Startup" or "Rework" but it provides an excellent foundation for anyone looking to build a great company and product. By defining the characteristics that make disruptive technologies change the world, we're able to see why great companies become irrelevant and "startups" have changed the world.

Well written, insightful book on why it is so difficult for market-leading companies to innovate successfully. Lays out a set of detailed case studies to make his argument clear and compelling. Highly recommended.

Great book as widely known by everyone, only two comments: 1. Language is somewhat complex with long compound sentences. 2. It has lots of graph and complicated graphical representation of the data, typical for such academic author

Excellent book with a great discovery, and explanation, of the reasons innovations fail or succeed. The thoughts in the book forced me to critically look at my company and suggest new approaches to driving innovation.