Certified Global Analyst®
Copyright 2007 WACGA® - All Rights Reserved

The Innovator's Dilemma
by Clayton M. Christensen

Central Theme: Thinking outside the box is so critical.
The Dilemma: "It is about well-managed companies that have their competitive antenna up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose market dominance."

Sustaining vs. Disruptive Technologies: "Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value."

How Can Great Firms Fail? "A few stunningly simple and consistent factors that have repeatedly determined the success and failure of the industry's best firms."

Disk Drive Industry Lessons: "The problem established firms seem unable to confront successfully is that of downward vision and mobility, in terms of the trajectory map."

Value Networks: "Within a value network, each firm's competitive strategy, and particularly its past choices of markets, determines its perceptions of the economic value of a new technology."

Technology S-Curves and Value Networks: "In its mature stages, the technology will asymptotically approach a natural or physical limit such that ever greater periods of time or inputs of engineering effort will be required to achieve improvements."

Managerial Decision Making and Disruptive Technological Change: "Addressing the needs of the firms' most powerful customers almost always preempted resources from disruptive technologies with small markets and poorly defined customer needs."

Example of Managerial Decisions: Seagate Technology "The popular slogan, stay close to your customers appears not always to be robust advice."

Implications of the Value Network Framework for Innovation: "Value networks strongly define and delimit what companies within them can and cannot do."

Mobility into Other Networks: "Rational managers can rarely build a cogent case for entering small, poorly defined low-end markets that offer only lower profitability."

Resource Allocation and Upward Migration: "Projects that fail because the technologists couldn't deliver often are not regarded as failures at all, because a lot is learned from the effort."

Principles for Harnessing Disruptive Technology: "There were four fundamental principles of organizational nature that managers in successful firms consistently recognized and harnessed."

Organizational Implications of Disruptive Technologies: "The team should be structured to facilitate the cross-functional interaction that is characteristic of different types of projects."

Discovering New Markets: "Markets that do not exist cannot be analyzed: Suppliers and customers must discover them together."

Discovery-Driven Planning "Failure is intrinsic to the search for initial market applications for disruptive technologies."

Performance Oversupply: "As it creates the threat or opportunity for a disruptive technology, performance oversupply also triggers a fundamental change in the basis of competition in the product's market."

When Does a Product Become a Commodity? "A product becomes a commodity within a specific market segment when the repeated changes in the basis of competition completely play themselves out."

Disruptive Technologies and Product Life Cycles: "The firms that were most successful in commercializing a disruptive technology were those framing their primary development challenge as a marketing one."