Sunday, January 13, 2013

Review of The Innovator’s Dilemma by Clayton M. Christensen


Main Thesis – Companies need to invest in disruptive technologies, technologies which are typically low spec, more expensive and not required by their current customers in order to stay competitive in the long term. If they don’t, companies which do develop these new technologies will soon develop them into a main stream product which will displace the previous industry standard and the company will not thrive.

There is a difference between sustaining innovations, which improve existing ways of doing things, and disruptive technologies, which do things in quite different ways or way a significantly lower cost.
Christensen’s findings include:

  • Companies need to invest in disruptive technologies early on.
  •  They usually need to do so by starting a new company or spin off which is solely dedicated to developing the disruptive technology, commercializing it and finding or creating the right market to sell it into. They need to do this because trying to dedicate sufficient resources within the parent company may be theoretically possible but in practice it usually fails. It is very hard to prevent valuable resources being diverted to solve urgent problems with the main technology which address existing customer’s needs. 
  • Disruptive technologies need to be develop is a very flexible way which will allow them to be reengineered as the market becomes clear. Large scales up-front investment in a fixed product design is not advisable.

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