Categories Book Review, Theories of innovation

Book Review : The Innovator’s Dilemma by Clayton Christensen


Different kinds of innovation

A top 6 business book in its class according to The Economist, The Innovator’s Dilemma is it profound analysis of why leading companies fail to innovate and ultimately go bankrupt in the wake of disruptive innovation. The Harvard innovation management professor begins by distinguishing two different types of technologies: sustaining technologies and disruptive technologies. 

Improving operations

Well versed in top-notch execution incumbents excel at improving existing technologies and increasing operational effectiveness throughout there are current value chain, they tend to work the skills, culture, processes, and mindset to spot develop and the poi disruptive technologies. To be clear, incumbents Focus their resources on growing existing technologies by enhancing their performance mostly through extended functionality and increased capacity to the point where they end up over shooting what customers really want think of the number of features that Microsoft has built into Excel that most customers never use. 

Disruptive innovation

As opposed to sustaining technologies disruptive technologies change the landscape of an entire industry and spark a new one altogether because they aim at solving a problem that has never been addressed so far and yet meets the unvoiced needs of a set of people. Think of Google sheets enabling people to work on the same document seamlessly around the world without having to go through the tedious tasks of versioning. 

 
In his book Clayton Christensen talks about IBM finding it easy to build thinner hard disks and yet harder to switch to 1.5 inch format disks while the day’s 14-inch standard was selling best. 

Getting disruption right

Clayton Christensen also talks about how disruptive innovation works. New entrants overtake industry Titans by targeting low margin niche markets, a space that incumbents are happy to flee. Indeed, these modestly sized markets fail to deliver the kind of revenue that big corporations need to secure if they want to meet the ambitious financial targets that shareholders expect from them. In addition, large corporations assets—its resources, processes, intellectual property, and values—turn to liabilities as they don’t fit the needs of the disruptive market. To be it differently, large corporations have a hard time addressing these low margin niche markets because of their existing resources, processes, intellectual property and values. Think of Kodak who had invented digital photography but failed to turn it into a profitable market because analog photography was generating the company’s revenue.  

Clayton Christensen also shows how the market leaders can succeed at disruptive innovation. Incumbents should set up a subsidiary independent from the mother organization operating on values, process and resources that are fit to developing disruptive innovations in a low margin market niche. That’s what IBM did when the computer industry evolved from mainframe computers to personal computers. Their subsidiary in charge of developing PCs succeeded quite beautifully. 

 
To sum up, in The Innovator’s Dilemma, Harvard professor, Clayton Christensen, explains why leading companies fail at innovation and end up going bankrupt. The main reason: a preference for efficiency over imagination. Incumbents own their eventual failure to their focused dedication to improving existing operations rather than developing entirely novel offerings, working on fresh value chains, harnessing state-of-the-art technologies and business models. To meet this challenge, Clayton Christensen suggests that incumbents set up an independent subsidiary whose sole purpose is to develop disruptive innovations. 

In brief…

To sum up, in The Innovator’s Dilemma, Harvard professor, Clayton Christensen, explains why leading companies fail at innovation and end up going bankrupt. The main reason: a preference for efficiency over imagination. Incumbents own their eventual failure to their focused dedication to improving existing operations rather than developing entirely novel offerings, working on fresh value chains, harnessing state-of-the-art technologies and business models. To meet this challenge, Clayton Christensen suggests that incumbents set up an independent subsidiary whose sole purpose is to develop disruptive innovations. 

 
Clayton Christensen offers a profound analysis of dynamics in leading companies. Although he mentions that incumbents can face the disruptive innovation thread by setting up an independent subsidiary, Clayton Christensen does that go into the details as to how to build disruptive innovations. 

No comment

Leave a Reply