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Summary: FACE YOUR FEARS AND BE FIRST WITH "DISRUPTIVE TECHNOLOGIES"
Review: I had heard rave reviews of this book before I read it, and now, I strongly encourage others to read it too. The idea is stunning. It offers a new perspective on why companies "stall". The idea is that by focusing too much emphasis on current customer needs, companies fail to adapt to new technologies that will meet customers' future needs. He calls these "disruptive technologies". It reminds me a little of Andy Grove's inflection points, except those are not limited to technologies. It sounds like Prof. Christensen agrees and suggests that to succeed, you should be first with the disruptive technology. What is most startling about this book is that the well done research looked at the highest technology companies, who should have been developing the next generation technologies. Clearly, this calls for a different model of how to succeed in business. In "THE 2,000 PERCENT SOLUTION", the inability of the existing companies to do this is called a "stall", much like Professor Christiansen's barriers to entry for the established firms. The Tradition Stall describes the perils of not questioning how and why things have been done the same way for decades. For example, one required change will be to update the financial system and resource allocation process that companies use today which hinders investing and does not accurately capture cost and returns.. Similarly a company that prides itself on focusing on customer needs may not have a good process to develop possible future needs of customers and translate them into new technologies that would be better, easier and cheaper technologies to satisfy those needs. Clearly a new management process is required. Professor Christensen begins to take us through this thinking using the electric car example. The process described in "THE 2,000 PERCENT SOLUTION" takes a complementary approach. It teaches how to create the ideal solution to solve a problem, or, for example, serve customer's current and future needs, to achieve twenty times the benefits or get there twenty times as fast. The "disruptive technology" becomes necessary as the way to get there. Read "THE INNOVATOR'S DILEMMA". It will become part of the standard business vocabulary.
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Summary: Fascinating (and logical) account of why great firms fail
Review: The sobering idea presented by Christensen is the very way good managers in successful firms make decisions sows the seeds of eventual failure. A paradigm example is drawn from the time condensed development of the computer disk drive industry. In every case, the leaders in one generation of disk drives (14", 8", 5.25", etc.) were displaced in the next. The author marshals compelling and extensive evidence this was not due to a technological or managerial failure, but rather to a marketing one. The fundamental distinction on which the entire argument (and book) turns is that between sustaining and disruptive technologies. This is closely related, but not reducible to, Utterback's discussion of discontinuous change and the emergence of a dominant technological design (1). A sustaining technology is a kind of technology that is either incremental or radical (discontinuous). But it maintains the same performance trajectory and provides the same basis for competition. Disruptive technologies show up as lower performance products, promising lower margins, in small, emerging markets. As sustaining technologies progress upmarket, a vacuum is created at lower price points into which competitors, employing disruptive technologies, can enter. Good managers, listening carefully to customers, in large markets, risk following these customers into oblivion, or, at least, ending up there themselves. One of this text's strong points is the wide variety of examples, extending beyond computing technology. Subsequent chapters disclose a strikingly similar pattern . Firms are blind-sided in diverse businesses, including, earth moving equipment, motor cycle manufacturing, pharmacology, discount retailing, minimills/steel. The technological risks involved in new product development for a known customer (market) are dwarfed by the risks of entering a new and undefined market. "They [firms] exchanged a market risk, the risk that an emerging market for the disruptive technology might not develop afterall, for a competitive risk, the risk of entering markets against entrenched competition" (p. 132). A significant technical product development risk for a known market is easier to justify using corporate hurdle and pay- back-period calculations than a "no brainer" but innovative product with an undefined market. Result? "One crucial additional disabling factor that afflicts established firms . . . is that the larger and more successful they become, the more difficult it is to muster the rationale for entering an emerging market in its early stages, when . . . that entry is so crucial" (p. 132). Resource allocation is really determined by what the big customers want. Sometimes, listening to customers can do us in. Once again, our strengths are our weaknesses. In the face of fatal sounding "gotchas," Christensen's strength lies in seeing the way out of the fly bottle: embed the disruptive technology initiative in a separate organization (subsidiary) or geographically remote laboratory. There a smaller scale market matches the size of the nascent technological initiative. Instead of trying to improve the disruptive technology enough so that it suits already defined markets - and meanwhile it sits on the shelf -experience shows firms that succeed commercially looking to find (or incubate) a new market for the disruptive technology. Having established a foothold, the new product then moves upmarket along competitive dimensions that favor the disruptive technology. The basis of competition is shifted by the new technology. This practical recommendation - though by no means trivial to implement - is an obvious starting point. At times, the reader may wonder how new technologies ever succeed in establishing themselves and flourishing at all. Consider: "Rational managers . . . can rarely build a cogent case for entering small, poorly defined low-end market that offer only lower profitability" (p. 77). Have we exchanged one puzzle - good firms failing -- for another - poorer products succeeding? Enter the role of the "value network" - commonly known as infrastructure - in determining the outcome of innovation. Edison's light bulb is just a clever cludge - indeed inferior to illuminating gas - without the right of way for wires and generators needed to deliver electricity. The overlooked - but not to be neglected part of innovation - lies in the construction of the alternative network of values (a differing trajectory for competition). The puzzle disappears as the reader realizes that an important aspect of innovation consists in building the value network within which the innovative product is to be embedded. This text exemplifies excellent writing, scholarship, editing, and publishing. The footnotes, which make excellent reading, contain useful references for further research. The author exemplifies the aphorism that those who see further stand on the shoulders of others - in this case Utterback and Moore (2) -- who came before them. The point, however, must be emphasized - Christensen really does see further. Share his vision. (1) Utterback. J.M. Mastering the dynamics of innovation: how companies can seize opportunities int he face of technological change. HBS Press, Boston, 1994. (2) Moore, Geoffrey. Crossing the chasm. New York: Harper/Collins, 1995. -- excerpt from my review published in COMPUTING REVIEWS, February, 1998
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Summary: Deep insights into the process of technology change
Review: Clayton Christensen refuses to accept the simple explanation of why large, incumbent firms often lose market share to new technologies -- poor management. Instead, he persuasively argues that good management very capably advances sustaining technologies -- technological advances that improve the performance of their proven products -- but fails to advance disruptive technologies. This distinction of sustaining and disruptive technologies provides powerful insights. The author shows in case after case how the disruptive technology is initially inferior to the established technology, and consequently has nothing to offer the established customers. Those customers effectively drive the resource allocation decisions of well managed firms and cause them to focus on further improvements to their proven and money making products. Eventually, these proven products are developed beyond the needs of the market and create a vacuum at the lower end of the market. Meanwhile, smaller organizations push the disruptive technology, find new markets where some unique attribute of the new technology creates value, and begin their own experience curve. Over time the disruptive technology is improved in features, reliability and value to the customer, and often penetrates the lower end of the traditional technology's market. The lessons Christensen draws about how large and successful firms can develop disruptive technology will prove valuable to everyone running a business. The small firm trying to develop a new product or new approach can think about whether their product/approach is disruptive or sustaining, and will learn that their probability of success in penetrating an existing market with a sustaining technology is small, but 37% of the new entrants with disruptive technology survive. Even more reassuring to these pioneers is the dismal record of established firms to see and embrace the distruptive technology before the entrants are too far ahead to catch. Overall a fascinating read.
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Summary: Insightful, revolutionary, and inspiring
Review: The Innovator's Dilemma is one of the few books that warrants a second reading. The book is filled with crucial information that helps explain revolutionary technologies and the impact such technologies have on business. Christensen has a very clear and concise writing style that lends credibility to his arguments. The book is very well focused and effectively delivers a strong message.
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Summary: This is a great book for budding revolutionaries!
Review: This is a great book because it points out why, and how, opportunities continually open up in markets. It tells large companies where they are vulnerable. It also points out to budding revolutionaries ways to attack a large company. I also knew that it was hard for a high-end company to attack the low end or middle market and now I know why. I say that this book is an instant classic. One of my top ten business books.
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Summary: An Excellent and Thought Provoking Book
Review: I work for a small, very high technology that has been in business for 50 years. This book really calls into question some of our strategies for the future. Are we developing disruptive or sustaining technologies? Are we staying too close to our customers in the federal government? I need to reread this book again and discuss its implications with my work team. I recommend it highly. It is very well researched and written.
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Summary: Sycophants Beware!
Review: Businesses that employ sycophantic practices must adopt a new paradigm in order to subsist. Christensen's logic is inexorably favorable towards the intransignetly individualistics businesses that shun their competior's sycophantic practices. All you sycophants-you blind conformists to societal and business norms- you must beware!
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Summary: "Watch your Bottom", could be the subtitle of this book.
Review: Clayton Christensen offers a spellbinding account of how inferior technologies can overwhelm and displace. If you ever wondered about the similarities between sailing ships, steam shovels and disk drives, you must read this book. If you are a productline planner, strategist, venture capitalist, then read this book (unless you are my competitor). Mr Christensen also theorizes upon, as well as chronicles tactics to harness innovation. If any "sufficiently advanced technology is indistinguishable from magic", then any "suffiently disruptive technology is indistinguishable from the mundane", might be a thesis of this work. Another might be "The evils of listening to your customers!"
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Summary: A new paradigm
Review: We have all seen large, powerful, and successful corporations upstaged and driven out of business by startups using new ideas to grow exponentially and dominate the new business landscape. In his book "The Innovator's Dilemma," Clayton M. Christensen provides a unique and novel theory that explains why entrenched corporations often fail to capitalize on such new ideas, and fall prey to firms with fewer initial resources. With enough data and case histories to make even the skeptic sit up and take notice, Christensen sculpts an argument that demands our attention at once. Step by step he shows that such extinctions come about not necessarily because of arrogance and dogmatism (though these play their parts) but because of the architectural and organizational structures that make good companies good. Like Einstein's theory of relativity, with its concepts of relative time and space, some of Christensen's conclusions seem unintuitive. Others even seem contrary to phy! sical reality. Sometimes it really is wrong to listen to your customers. Sometimes it is better to build a product with low margin and a limited market rather than build a product with high margin and large, virtually guaranteed market. Christensen builds his thesis upon the notion that technology comes in two broad flavors: sustaining and disruptive. Established product lines use sustaining technology to make incremental improvements. In the language of biology, sustaining technology facilitates gradual Darwinian evolution where incremental improvements coupled with survival of the fittest lead to gradual product improvement. For example, tire manufacturers use sustaining technology to enhance the tread, sidewall, and belt design of automotive tires. Sustaining technology is not trivial, and often involves tremendous expenditures of capital. It is, however, what established companies do best, and these companies have developed very effective organizational and manag! erial structures for dealing with it. Disruptive technol! ogy, on the other hand, approaches product evolution outside the sustaining envelope. Disruptive technologies typically offer a cheaper solution to a small, often unidentified subgroup. Once established within this small market the disruptive technology evolves through sustaining technology until it eventually satisfies the performance criteria of more traditional markets. When this happens, the disruptive technology bursts onto the scene, attacking the soft underbelly of the established corporations, often with fatalistic consequences. In the parlance of evolutionary biology, disruptive technology is like punctuated evolution; fast with significant changes in the gene pool. Christensen may be excused for lacking the breadth to discuss similarities between such diverse fields as biology and business management. Still, the book would have benefited immeasurably by a co-author in the field who might have offered greater insight into universal principles governing the evol! ution of complex systems. Repeatedly I found myself going to books by authors such as Richard Dawkins and Stephen Jay Gould to refine my mental image of the multidimensional landscape in which biological organisms and industrial businesses compete for the resources of survival. The book is well written and persuasive in its arguments. It questions many established ideas and shows that often these ideas fail to apply to disruptive technologies. Often the best corporations are especially susceptible. Defense against disruptive technologies does not come from being smarter and working closer with customers. Paradoxically, working closely with customers and following established rules for corporate investment often make a company more susceptible to harm from disruptive technologies. Companies naturally evolve toward higher-end products with greater margins. Consequently, they find it difficult to enter markets with disruptive technologies that often begin with low margi! ns, are technologically simple, and do not have a clearly d! efined customer base. Such markets are ideal for start-up firms. The author suggests, with several case histories, that one of the best ways for established firms to deal with disruptive technologies is to spin off autonomous organizations that exist within the economic constraints of disruptive technologies. The author does an excellent job of using examples, drawing most from the disk-drive industry. He also includes examples from the computer, motorcycle, steel, automotive, and earth-moving industries as well. In each case he explains how disruptive technologies emerged and often destroyed well-run companies that were following all the established rules. This drives home the fact that disruptive technologies pose such a great risk precisely because they can destroy industries not only in spite, but because they follow established business practices. After describing disruptive technologies, with historical cases to illustrate points, the author ends with a case st! udy involving electric vehicles. I found this chapter to be among the weakest, and something of a distraction from the more substantial earlier material. Ironically, in the process of trying to frame electric vehicles as disruptive technology, the author seems to have missed one of the best examples of a disruptive technology, and one that nearly destroyed America's foremost industries: small cars. Overall, Christensen's work is on a high academic level, though some of the technical material is inconsistent. For example, the ordinates in figures 1.4, 1.5, and 6.1 disagree with each other. The text on page 128 also disagrees with figure 6.1, while the text on page 150 disagrees with figure 7.1. These may be simple examples of typographical errors, but they lessen confidence in the book's technical accuracy. On the positive side, the book has excellent organization and lots of pertinent examples, as well as extensive notes and documentation. The index is also very co! mplete and thorough. Though Christensen's ideas are new! and radical they are so lucid, logical, and clear that anyone involved in American business cannot afford to ignore them. Duwayne Anderson
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Summary: A rare book - new insight into market dynamics and strategy!
Review: A thoroughly readable and enjoyable book with the author bringing new insight into an extensively researched area.
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