The Innovator's Dilemma
by Clayton Christensen
Key Concepts
Disruptive Innovation
Simple, affordable innovations that create new markets or redefine existing ones, eventually outperforming incumbents.
Sustaining Innovation
Incremental improvements to existing products for current, high-value customers.
Value Networks
Companies are constrained by their customers' demands and the economic structures of their current markets.
Resource Allocation
Established firms struggle to fund low-margin, small-market disruptive ventures due to existing resource allocation processes.
Small Market Trap
Disruptive innovations initially target unappealing small markets, which large companies ignore until it's too late.
Action Items
Establish separate, autonomous units for disruptive innovations.
Embrace initial low margins and small, emerging markets.
Don't force disruptive technologies into existing customer bases; find new ones.
Be prepared to cannibalize existing products and business models.
Recognize that 'good management' can be a liability when facing disruption.
Core Thesis
Successful companies often fail when faced with disruptive innovations because their established processes and values prevent them from embracing new, initially inferior technologies.
Mindset Shift
The very practices that lead to success in sustaining innovation can become liabilities when confronted with disruptive technologies.