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The Innovator's Dilemma

The Innovator's Dilemma

by Clayton M. Christensen

How to handle disruptive technologies

"If history is any guide, companies that keep disruptive technologies bottled up in their labs, working to improve them until they suit mainstream markets, will not be nearly as successful as firms that find markets that embrace the attributes of disruptive technologies as they initially stan...

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Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value.

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By and large, a disruptive technology is initially embraced by the least profitable customers in a market. Hence, most companies with a practiced discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely ...

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If good management practice drives the failure of successful firms faced with disruptive technological change, then the usual answers to companies’ problems—planning better, working harder, becoming more customer-driven, and taking a longer-term perspective—all exacerbate the problem. Sound execu...

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When faced with a threatening disruptive technology, people and processes in a mainstream organization cannot be expected to allocate freely the critical financial and human resources needed to carve out a strong position in the small, emerging market. It is very difficult for a company whose cos...

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Companies whose investment processes demand quantification of market sizes and financial returns before they can enter a market get paralyzed or make serious mistakes when faced with disruptive technologies.

The very processes and values that constitute an or...

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The basis of product choice often evolves from functionality to reliability, then to convenience, and, ultimately, to price.

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Generally disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches.

They offered less of what customers in establ...

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The fear of cannibalizing sales of existing products is often cited as a reason why established firms delay the introduction of new technologies.

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Companies’ organizational structures typically facilitate component-level innovations, because most product development organizations consist of subgroups that correspond to a product’s components. Such systems work very well as long as the product’s fundamental architecture does not require chan...

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