The Innovator Dilemma
by Clayton Christensen
January 23, 2012
During the VCIC boot camp presentation at Cooley, I heard from Tien Wong said that this book suppose to be one of Steve Job's favorites. I am both glad and disappointed after reading it. I am glad that I read it and I can see how this is one of the Harper Classics. I am disappointed that I just enrolled in the Strategic IT course in my MBA program. After I spent $3000 on the course, only to find out that first 30% of the course so far are covered in the book, for at least the first $1000 in the education, I could have save it for under $12 bucks.
Clayton address the question of why do well-management companies fail? Using the Hard Drive Memory Disk industry as the primary example and a few others, he explains how disruptive technology affect the market landscape and offer some advice to the managers.
Principle of Disruptive Technologies or why it happens
1. Managers faces an inherent difficult challenge of allocating scarce resources to disruptive technology that are yet profitable. Managers need to answer to customers and investors for resources.
2. Large companies have difficulty to target small new markets. The capabilities forged within its value network are hard to transfer to a new business environment that are geared for small markets. Environment for handling a sustaining innovation differs from the handling of a disruptive technology. Think of it as big ship are good at transporting but much harder at maneuvering.
3. Un-established markets are hard to analyze.
4. Technology supply may not equal to market demands. At first market demand exceeds technology, but technology growth outpaces the market demand, and eventually technology will exceeds market demand. New technology will replace older technology when critical mass occurs for the new.
What to do?
1. Allocate resource to organization whose customers need the disruptive technology.
2. Set up separate organization so that they are motivated by the small gains.
3. Don't bet all your eggs. Think of the initial efforts as learning opportunities. Think Cook's Ready, Fire, Aim.
4. Transition slow. Mainstream may not ready for disruptive technology, but find the market that are ready, and build upon it.