The Innovator's Dilemma
Clayton Christensen
Geneticists study fruit flies because they have short life spans. Christensen studies disk drive manufacturers for the same reason. Of the 17 disk drive firms in 1976, all large diversified firms such as Diablo, Ampex, Memorex, EMM, and Control Data, all except IBM's disk drive operations had failed or been acquired by 1995. During this period, an additional 129 firms entered the industry; 107 of these failed. Bright people, phenomenal improvements, savvy organizations. What happened?
Time and time again, established firms continued to invest in "sustaining technology," making what they had better, while a start-up came out of left field with a "disruptive technology" that redefined the rules of the game. Big companies miss the strategic inflection points.
High-tech advances can outpace the needs of customers. While an upstart is pioneering tomorrow's disruptive technology, the established firm's customers are saying "we don't need that." Use trajectory maps, not customer wish lists, to figure out what's going on.
To the managers of the established firm, making things better always seems a safer bet than investing in disruptive technology.
Disruptive technologies grow better in different markets than sustaining technologies.
(Laptop makers value small drives; don't try to sell them to minicomputer manufacturers
early on.) These new markets may not offer enough potential to get the attention
of the established companies.
The established players can't goof up in sustaining improvements; they may find it tough to accommodate the inevitable failures that accompany disruptive technologies.
What makes sense for the little guy may not make sense for the big one. A minor market for one is a giant opportunity for the other. Successful companies have a genuinely hard time doing things that don't fit their model for making money.
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