Strategy
The Innovator's Dilemma
Clayton Christensen
1997
Summary
Clayton Christensen's landmark work explains one of business's most puzzling phenomena: why well-managed, customer-focused companies with great products get destroyed by inferior, cheaper upstarts. The answer is disruptive innovation. Disruptors enter at the low end of the market, below the radar of incumbents who are rationally serving their best customers. Over time they improve and move upmarket, taking customers the incumbent can no longer serve profitably. Understanding the dilemma is the first step to avoiding it — or exploiting it.
Key Takeaways
- 1Disruptive innovations start as worse products on metrics incumbents' customers care about
- 2Listening too closely to current customers causes companies to miss disruptive threats
- 3Incumbents are structurally unable to fight disruption with their existing business model
- 4Create a separate, independent unit to pursue disruptive opportunities — it cannot live inside the core
- 5Disruptors win new markets by competing against non-consumption, not the incumbent's offering
- 6Sustaining innovations make good products better; disruptive innovations change what good means