The Innovator’s Dilemma

I finally read (listened to) The Innovator’s Dilemma by Clayton Christensen. This book is at the center of life and strategy for the technology industry. It is referred to, knowingly or not, constantly by every startup that hopes to “disrupt” a market. It’s a fascinating study of how adaptability is easy to understand in theory but hard to practice in business, as in life.

After listening to the book my understanding of technological disruption boils down to this. As a business gains success in the market they continually push upmarket, meeting higher cost, higher profit needs. This path seems to ossify the firm’s ability to respond to new customers. Meanwhile, competitors have opportunities at the lower cost, lower profit end of the market to introduce a just-good-enough product that serves slightly different needs. These lower cost, slightly different solutions eventually become good enough for larger unserved portions of the market, undercutting the established firm’s position. Most of the time these upstarts are ignored because the incumbent is focusing on doing what they do best and finds it difficult to turn the ship for a smaller market that might not grow at all.

Christensen demonstrates how this has played out over and over again in many different industries, steel mills, hard drives, the automotive industry, and more. His proposed solutions for established firms include setting up independent businesses who can act without worrying about ignoring the businesses current profit center, or acquiring disruptive firms when the time is right.

There’s a lot to love in the book. Other factors play into the rise and fall of businesses, but The Innovator’s Dilemma’s basic ideas are treated as foundational for a reason. It’s a good book, well written, persuasively argued. I recommend it.