Book Byte #46 "The Innovators Dilemma" by Clayton Christensen
When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)
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📣 Curious Quotes from the Author:
“Creating an independent organization, with a cost structure honed to achieve profitability at the low margins characteristic of most disruptive technologies, is the only viable way for established firms to harness this principle.”
“One theme common to all of these failures, however, is that the decisions that led to failure were made when the leaders in question were widely regarded as among the best companies in the world.”
“Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake.”
“In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.”
“Disruptive technologies typically enable new markets to emerge.”
“The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.”
“disruptive technology should be framed as a marketing challenge, not a technological one.”
“First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms’ most profitable customers generally don’t want, and indeed initially can’t use, products based on disruptive technologies.”
“To succeed consistently, good managers need to be skilled not just in choosing, training, and motivating the right people for the right job, but in choosing, building, and preparing the right organization for the job as well.”
“Three classes of factors affect what an organization can and cannot do: its resources, its processes, and its values.”
“When commercializing disruptive technologies, they found or developed new markets that valued the attributes of the disruptive products, rather than search for a technological breakthrough so that the disruptive product could compete as a sustaining technology in mainstream markets.”
“The techniques that worked so extraordinarily well when applied to sustaining technologies, however, clearly failed badly when applied to markets or applications that did not yet exist.”
“This is one of the innovator’s dilemmas: Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake.”
“An organization’s capabilities reside in two places. The first is in its processes—the methods by which people have learned to transform inputs of labor, energy, materials, information, cash, and technology into outputs of higher value. The second is in the organization’s values, which are the criteria that managers and employees in the organization use when making prioritization decisions.”
📚 Cognition of the Book’s Big Idea:
Stuck in the innovator's dilemma is a terrifying place to be. Is there any way out? In Gillette's instance, it's too early to say whether its home delivery subscription service will be sufficient to fend off competition. However, Christensen's book is not actually about finding a route out. Its main takeaway is that managers must avoid the trap in the first place.
According to Paul Steinberg, chief technology officer at Motorola Solutions, Christensen's message is that firms must learn to incubate new ideas or perish. Steinberg adds that the message "scared the crap" out of him when he first read The Innovator's Dilemma. He was not alone. Christensen's most lasting contribution may be that he taught a generation of business leaders that fear is frequently the best guide on the road to success.
🛠️Fixing the Tech Industry
This Book has come to be known as a field guide for the Tech Business of Silicon Valley. The Tech Industry has been the biggest disruptor of businesses in the last century. Even they fall victim to its methods sometimes.
But if a company has a competitive advantage, it can pivot, and spin-off a new company with a new culture to head up the new, lesser working innovation into the solution it needs to be to change the world. Apple did this many times, and Microsoft is doing this now, as Amazon always does so many experiments now to not be outdone. Even if we need to follow a similar pattern, we need to look outside our day job into opportunities that might benefit us.
🤝Collaborate with others with this Social Media Prompt:
What is one innovation you can make in your life or career today that would allow you not to be “Disrupted” if you were laid off or fired today?