Rating: 
Summary: Seeming Irrationality and Corporate Cassandras
Review: Christensen is a Karl Marx of change: "Innovators of the world, unite!" could easily be the subtitle of a very readable book.
The thesis is that change comes as a surprise to those who have enjoyed success. The old business saying, "whom the gods would destroy, they first give 40 years of success," applies here. High profits, and entrenched customer and supplier communities can thwart change, until it is too late.
Using the disk drive industry as his first case study (because, he writes, like fruit flies, the average company life cycle is so short), Christensen examines how, when a new technology came along, the company housing the innovators failed to capitalize, with only the rarest exceptions. The paradigm discovered by Christensen is that of the value network. Companies have scarce resources for which there are alternate uses: Common sense dictates that they be directed to satisfying the demands of current, paying customers, and not be diverted to risky projects for markets that either do not yet exist, or which are low-profit. Research and development continue in their established courses and product cycles, and at some point, the product may have excess value - performance than the average user needs, but for which they must pay, if they but the product.
The result of this eminently rational decision-making process is that when a new product establishes itself, it is usually the work of a start-up company, which has little to lose and is willing to accept lower profits than mainline companies will, or can. (Cost structure in bigger firms may make low-end products unprofitable.) At some point, the rising product becomes good enough to substitute for the established one. At this point, crisis looms. The expertise, experience, and momentum are with the upstarts. The replacement process is likened to a tornado, wherein only a few use the new product at first, but as its' capabilities cross the threshold of minimum utility for the mass market, a sudden whirlwind of change happens, and seemingly overnight, the mainlines have lost control of the market. The mainline companies may choose to cede the bottom end of the market to their rivals, and focus on the upscale, highly profitable segments. This Christensen relates in telling of the rise of Nucor Steel and other minimills as challengers to US Steel and other giants of industry.
The Nucors started out only working the bottom of the steel market: "Rebar" steel, low-tech and low-profit. As they advanced on the learning curve, they moved upmarket, into Big Sttel's remaining baliwicks. At each juncture, better business models and lower cost structure allowed innovative technology to help the upstarts capture market share. At each stage, Big Steel retreated, and by concentrating on only the highest-end, lucrative parts of the market, and masked their decline (even to themselves)with record profits. Only when the minimills came knocking on the door for their last market did they wake up and start playing serious catch-up.
The lesson in all of this, retold in a page-turner style suitable for light summer reading, is that radical change is seldom accomplished by those on top - it comes from the outside. Vested interests, within and without the organization, will fight for their budgets, their turf, and for their status. Only top management buy-in, the continual dedication of resources, and, optimally, setting up a seperate entity to innovate the radical (as opposed to incremental) change process holds real hope for success. (GM setting up Saturn as a wholly-owned but otherwise independent company is an example.)
One of the interesting points that the author makes is how, at some point, products may become commodities, and brand names lose influence, relative to price, in driving sales. Looking ahead, if this process begins to happen, one can expect that substitution with cheaper alternatives is not far away. (Linux' rise vis a vis Windows may be the beginning of this process in the PC Operating System market.)
This model has application far outside the business world. One can think of many examples, such as generals preparing to fight the last war, while innovators, like Erwin Rommel or Billy Mitchell, develop the weapons and tactics that will win the next one. One can see it in politics, where major parties have ignored culture and immigration as issues, only to find Pat Buchannan, the late Pim Fortuyn, and others making it their signature issues. If Christensen's model applies, them the rise to power of third parties will follow, unless established ones move quickly to co-opt their issues, at the risk of offending their current constituencies. Gary North (linkable through lwerockwell.com) wrote a column that described the rise of Methodism and Baptist churches in early America. His explanation parallels what Christensen wrote regarding the disk drive, excavator, and steel industries: lower fixed costs (lay preachers vs. seminiary-trained ministers), an unexploited market (frontier settlements vs. back East), and a product that could be substituted for its extablished competitor (mainline churches), led to sudden growth and market capture. Other examples will occur to the reader, which is part of the electricity of this book - it stimulates the mind to apply its' teachings elsewhere. "The Innovator's Dilemma" is well worth your time.<
-Lloyd A. Conway
Rating:
Summary: Great analysis of the dilemma
Review: The author explains the innovator's dilemma in true Harvard style with case studies. And many of them. He addresses all the key issues about the dilemma, starting with the difference between sustaining & disruptive technologies. He explains how a company may identify a disruptive technology coming on and how it can best strategize with its resources, values & processes to handle the new technology most effectively. He takes the reader through detailed case studies of several industries -- disk drives, excavators, minimills, etc. He also provides specific examples of companies that have dealt with such changes in the past -- IBM, HP, Apple, etc.His analysis of companies that have proven themselves successful through a wave of disruptive technology provides insights about what a company must do differently ... in terms of managing its resources, processes and values. He also compares first-to-market consequences for both disruptive & sustaining technologies. Having worked for both a big company & a startup myself, I can appreciate the differences between the two establishments and how each would deal with technology changes (sustaining or disruptive). He does a great job of explaining how companies could fail by doing all the "right" things -- listening to customers, planning a certain growth rate, projecting demand, etc. He explains how customers could adopt a completely different technology overnight leaving companies in the lurge. This book is not just about the tech industry -- it offers insights on how companies can effectively deal with changing technologies. If you have ever wondered what it takes for a company to be constantly on top of things, and how some companies seamlessly adopt new technologies while keeping their customers happy and their financial goals right-on, this book is for you.
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Summary: Awful!
Review: This could hardly make enough material for a 2-pager. I can't believe people rate this as excellent. I want what the rest of them are smoking.
Rating: 
Summary: Good on the subject, better if it was simply an article
Review: The book is well researched and written to effectively educate on that information. Some chapters go into excruciating detail. You may realize after reading 1/3 of the book that the rest is innocuous. This would make (and perhaps did make) a fine HBR article. It is excessive as a book.
Rating:
Summary: Highly Recommended
Review: Great book. Highly recommended reading on why large technology companies are often unable to win against startups. Also recommended: 'The Slingshot Syndrome: Why America's Leading Technology Firms Fail at Innovation' by Reid M. Watts
Rating: 
Summary: Interesting theory for big company innovations
Review: This book focuses on new product ideas at big enterprises and how they should be pursued. If there is no current market for these new products and naturally no customer base, these technologies are called disruptive technologies.
And Christensen is telling us, the only way to make these new product technologies successful is to spin off a new division and treat it like a startup with corporate financial backing.
His studies show that the corporations that do not follow this rules have always failed.
I recommend this book to product managers, senior engineers at big corporations with new product ideas. This book should be helpful to define a strategy to form the idea into a commercially viable product or service.
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Summary: Un classique
Review: Un livre passionant pour les européens, même de langue francaise!
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Summary: Exploring a Multi-Dimensional Paradox
Review: Having just re-read this book, I admire it even more now than I did when it was first published. In his Introduction, Christensen makes his objective crystal clear: "This book is about the failure of companies to remain competitive when they confront certain types of market and technological change....the good companies -- the kinds that many managers have admired for years and tried to emulate, the companies known for their abilities to innovate and execute....It is about well-managed companies that have their competitive antennae up, listen astutely to their customers....invest aggressively in new technologies, and yet they still lose market dominance." Why? For Christensen, the answer is revealed in what he calls "the innovator's dilemma": the logical, competent decisions of management which are critical to the success of their companies are also the reasons why they lose their positions of leadership. In Part One, Chapters 1-4, Christensen builds a framework that explains why sound decisions by great managers can lead to failure. In Part Two, Chapters 5-10, he attempts to resolve the dilemma by examining why and under what circumstances new technologies have caused great firms to fail. He makes an important distinction between sustaining technologies and those which are disruptive. He offers four "laws or principles" of disruptive technology: #1: Companies depend on customers and investors for resources (Chapter 5) #2: Small markets don't solve the growth needs of large companies (Chapter 6) #3: Markets that don't exist can't be analyzed (Chapter 7) #4: Technology supply may not equal market demand (Chapter 8) Actually, these four could also be viewed as guidelines as well as check-points by which to detect early-warning danger signs. Unless and until, however, it becomes obvious that a given technology will create sustaining rather than only temporary disruption. One of the book's most important points seems to confirm what Pogo the Possum once said: "We have met the enemy and he is us." Nearly all of the corporate wounds which Christensen examines are self-inflicted. If not in all instances avoidable, at least the damage done could at least have been reduced. For example, Christensen examines companies in which (a) disruptive technologies were first developed internally, (b) marketing personnel then sought reactions from lead customers, (c) the pace of sustaining technological development was accelerated, (d) disaffected employees created new companies and (by trial and error) located markets for disruptive technology, (e) moved upmarket in direct competition, and (f) caused established firms to respond in defense of their own customer base. In essence, well-established companies ("incumbents") thus become threatened by "entrants" and a disruptive technology change. In response, they re-allocate resources away from those technologies which address their customers' needs. When reading this book, note in particular Christensen's detailed analysis of a disruptive technological change in the mechanical excavator industry (Chapter Three) and the correlations between value networks and characteristic cost structures (Chapter Four). Once again, he reveals how and why sound management decisions can often be "at the very root of [a 'good' company's] impending fall from industry leadership." In Part Two, Christensen describes in detail HOW managers can address and harness four principles by which to prevail against disruptive technologies. Once again, he asserts that a company's customers effectively control what it can and cannot do. Managers who deny or ignore this do so at great peril. To support his assertion, Christensen examines several quite different companies: Quantum, Plus Development, Control Data, Micropolis, DEC, IBM, Kresge, Woolworth, and Hewlett-Packard. In some of these companies, the innovating managers who were faced with disruptive technologies created organizations whose cost structures enabled them to make money in the value network where the disruptive technology was taking root, and where customers' power and the managers' intentions were aligned. The emphasis is on alignment. In Chapter Six, Christensen insists that managers must be leaders, not followers, in commercializing disruptive change. Hence the importance of a strategic decision: To be a leader or a follower? It is often prudent for "incumbents" to be followers, resisting pressure from customers, until opportunities to commercialize disruptive technologies are sufficient and appropriate. As Christensen suggests, "In sustaining technologies, in fact, evidence strongly suggests that companies which focus on extending the performance of conventional technologies, and choose to be followers in adopting new ones, can remain strong and competitive." Chapter Ten summarizes various key points. By now Christensen has offered dozens of examples of "some very capable executives in some extraordinarily successful companies, using the best managerial techniques, who have led their firms toward failure." Lest this brief commentary suggest otherwise, managers in every organization (regardless of size or nature) eventually must resolve "the innovator's dilemma." Christensen's book provides invaluable assistance to completing that immensely difficult process. It remains for each of his readers to answer questions such as these: Which customers do we want? Which technologies will help us to get and then keep them? For each technology, which strategies will be most effective to sustain it? Should we attack competitors with disruptive technology? How can we best defend ourselves against it? How should our resources be allocated? What about timing? Should we lead or follow? If we follow, should we prepare to lead later? Finding the correct (i.e. most appropriate) answers to questions such as these will obviously help to clarify today's realities and to suggest strategies for an uncertain future. But beware of taking anyone or anything for granted. As Christensen explains so eloquently and compellingly, the process of resolving one major dilemma may well reveal others. Hence the importance of alertness, speed, flexibility, and (yes) passion.
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Summary: Original and Important Thinking on Tech Business Strategy
Review: REVIEW: The author's key theme (my oversimplification) is that new technologies can be separated into "sustaining technologies" (for improving established products)and "disruptive technologies" (fundamentially new products or markets) and that while established firms do an excellent job at exploiting sustaining technologies, disruptive technologies often cause them to stumble and lose leadership. The book explores the reasons why this has ocurred despite the established firms having good management and following good management practices. For those who are Peter Drucker fans, I believe Christensen has independently found and expanded upon two Drucker concepts in a fresh and original way. The Drucker concepts embedded here include: (1) key changes always start with a company's non-customers and (2) the "new" (e.g. a company's new products) should be developed separately from the old, should be sheltered, and should not bear the same burdens as the company's established products. The book is based on solid research and is well written. Highly recommended for those interested in high-tech manufacturing business strategy. STRENGTHS: The book is organized very well giving the reader the option of a quick read or a detailed read. For example, there is an excellent introduction that summarizes the main points of the book. Also, each chapter has detailed footnotes allowing the reader to go deeper into the material if desired. The book has plenty of case studies and graphics to illustrate key concepts. WEAKNESSES: The book has a bit of an academic feel and is not written in a casual way as found in many popular business books. This didn't bother me as I found the content first rate and very interesting. WHO SHOULD READ THIS BOOK: Exectives responsible for strategy in technology product companies. ALSO CONSIDER: Andrew Grove - Only the Paranoid Survive; Peter Drucker - Management Challenges for the 21st Century; Michael Porter - On Competition [feedback welcome]
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Summary: What is the Innovator's Dilemma?
Review: In The Innovator's dilemma, Clayton Christensen describes the dynamics by which some of the largest, most successful companies in America fail due to "good" management. In his analysis, firms that dedicate themselves to listening to and serving their customers the best, place themselves most at risk for future failures as they are overtaken by smaller upstart competitors with innovative technologies. The Innovator's Dilemma makes a compelling argument based on the author's study of the computer disk drive industry. Disk drive manufacturing was chosen for its frequent turnover of technology and competitors in a relatively short timespan. Cristensen places technological innovations in two categories: sustaining and disruptive. Sustaining innovations are those that help sustain an organization's existing customer base by improving the performance, capacity, reliability, or value of an existing product technology. Disruptive innovations produce products that are technologically inferior from the perspective of a firm's existing customer base. Disruptive products, however, may include improvements that, while unimportant to the existing market, hold potential for new and emerging markets. Christensen uses the example of the introduction of small 50cc Honda motorcycles in the late 1950's. From the perspective of the existing motorcycle market at the time, the Honda was inferior compared to larger, more powerful motorcycles such as Harley Davidson and BMW. Honda found a niche, however, as a dirt bike - an emerging market that had not been explored by other manufacturers but was ideally suited for a small, inexpensive motorcycle. Once a market is established for a disruptive technology, it can then evolve into the mainstream and become technologically improved to the point of competing with and eventually overtaking existing mainstream technologies. In the case of Honda, once a market was established, small motorcycles were technologically improved to the point of appealing to a mass market rather than just dirt bike enthusiasts. Organizations overlook disruptive technologies for a variety of reasons. Often, larger organizations listen to their existing customers and what is important to them, overlooking small, emerging markets. The innovator's dilemma is that at the time disruptive technologies are introduced, mainstream companies are often wildly successful marketing their sustaining technology to existing customers. Investing in disruptive technology necessitates a diversion of resources away from the organization's most profitable activities that its customers are asking for, toward an unproven technology with a small, uncertain market. Disruptive technologies are often not as cost effective to manufacture or sell when they are viewed from the perspective of existing markets. Small 3.5 inch disk drives, for example, initially cost more per megabyte of capacity compared to larger 5.25 inch drives while, and they had less overall capacity Although they were not attractive to desktop computer manufactures, they represented a cost effective solution to the needs of the emerging mobile computer market where size was more important than large capacity. Citing examples from a number of industries, Christensen makes the point that traditional business planning works well for established markets and sustaining technologies. In the case of disruptive technologies, however, he argues that strategy should be based on discovery of new opportunities and that individuals working on the development and marketing of disruptive technologies should be organizationally separate. Overall, the Innovator's Dilemma is a concise, well written book in which the author is able to effectively convey a technically complex study on a technically complex industry. Overall, the Innovator's Dilemma should be required reading for anyone in an business planning role.
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