The Innovator’s Dilemma: When New Technologies Cause Great Firms To Fail, by Clayton M. Christensen
As someone who has read a fair amount about creativity and innovation, there is a lot about this particular book that I find deeply interesting and thought-provoking. There is something lost and something gained by focusing aspects of creativity on technology, although someone who was an art historian or a music historian would recognize that changing trends are at least broadly similar in that great artists, just like great firms, can be left behind by changes in the markets. Anyway, this particular book takes a very detailed look at several lines of business, some of which I have studied in my own academic career (like the disk drive market) and then examines that what made companies successful in their lines of business also made it very hard for them to pivot successfully when their business was threatened by new developments and technologies and approaches. The insights this book discusses are backed up by a very detailed look at market sizes and market share of existing or new lines of business and there are definitely some ways that the author explains how it is that large established firms can manage to successfully engage in innovation efforts without jeopardizing existing business approaches that are well worth considering.
In a bit more than 200 pages, the author discusses the dilemma of innovation in several different lines of business that show similar patterns that the author uses to draw general insights that can be applied to present and future situations. The first part of the book examines why great companies can fail (I), discussing some insights from the hard disk drive industry (1), examining value networks and the impetus to innovate (2), discussing the mechanical excavator industry (3), and looking at the inability of companies to reverse upmarket retreats (4). After that the author discusses how companies seek to manage disruptive technological change (II) in spinning off new organizations or divisions (5), matching the size of the organization to the size of the market (6), discovering new and emerging markets (7), appraising an organization’s abilities and weaknesses (8), looking at the product life-cycle and how it relates to market demand and performance (9), a case study in managing disruptive technological change (10), and a summary of the dilemmas of innovation, followed by a group study guide. The insights provided show plenty of failures but at least a few models for success when it comes to harnessing innovation successfully.
There are at least a few insights that a reader can grasp easily from this book. For one, companies tend to tailor their approach to the sort of market they are already in, and it can be very hard for them to deal with uncertain situations as well as the low profit margins that exist in new and emerging markets. Even when a company recognizes a technological change and develops a new product or service to meet it, existing customer relationships and company culture makes it very hard for companies to change and shift their approach without threatening their own existence. But getting passed by when it comes to technological change means that one becomes limited to small niche markets while one’s large profits move to new markets with new companies that are dominant and have established relationships with new customers. The best solutions the author discusses are to have different divisions competing with each other to see which technologies will prevail in an uncertain market or for companies to establish spinoffs that are able to capture new and emerging markets in collaboration with an existing company, doing plenty of investigation of what works and saving enough resources to be able to build the solutions that are found to be successful. And one must remember that in a world of constant change that no success or excellence is permanent.