Book Review: The Innovator’s Dilemma

The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business by Clayton Christensen.

Why does it seem that so few big companies successfully catch the wave of new technologies and stumble as a result? Is it because big companies are naturally just dumb and slow? While incompetence can always be present, even well managed companies can get blindsided by new technologies. These themes are explored in The Innovator’s Dilemma, along with strategies that managers can employ to ride the waves of disruptive innovation.

In essence, technologies can often outpace the growth in market demand, so what the main market will demand or require is often only a part of what a given technology can deliver. Hence, simpler, more convenient, and overall cheaper technologies (called disruptive technologies) on similar trajectories can “come from underneath” and usurp market share seemingly out of nowhere. The incumbent companies will usually respond by moving upmarket (perhaps displacing yet further companies) and in the short run make massive profits before suddenly declining into irrelevancy.

A fair portion of the book Christensen devotes to managerial strategies to allow executives at incumbent corporations to deal with these disruptive technologies and make a ton of money doing so. I wasn’t particularly interested in those aspects (not being a manager and all) since it doesn’t really matter to me whether large firms spin off new companies or new ventures emerge wholesale to create new markets. Rather, what I enjoyed was reading all the histories and case studies of disruptive innovation. The central history of the book is the hard drive industry, though many others from the excavating business to insulin firms are covered.

Near the end, as a case study in applying the methods developed in the book, Christensen looks at the electric vehicle industry and postulates that it too will be a disruptive innovation. Another one that I’ve been thinking a lot of recently is 3D printing or additive manufacturing, which could in the coming years take over huge swaths of the manufacturing industry (I think).

In summary, I’d say The Innovator’s Dilemma is an interesting and worthwhile look at how disruptive technologies affect both markets and companies, even if you’re not interested in becoming a manager or starting a technology business.

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