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on January 19, 2018
A lot principles to learn
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on September 24, 2017
So many typos make this book absolutely incomprehensible.
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on September 17, 2017
An interesting book, particularly for those in the tech industry.
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on August 2, 2017
Another great strategy book by Clayton.
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on July 19, 2017
Not the most entertaining writing style, but the concepts in this book are a MUST read for anyone in business today. This book changed the way I run my business.
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on June 22, 2017
Helped to spark ideas and projects. An enjoyable read.
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on May 31, 2017
Absolutely revolutionary idea. Loved every bit of this book.
The information in here is extremely insightful and well thought out.
Any businessman/entrepreneur worth his salt would have read this book and familiarized her/himself with the idea of disruption.
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on March 31, 2017
Highly recommended, especially if you are in a large organization that can't seem to get better. Pushes you to excel in spite of organizational paralysis.
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on February 11, 2017
Great, but I did not know it is an abridge version!!!
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on January 27, 2017
I guess the first question about reviewing “The Innovator’s Dilemma” will be why review a nearly 20 year old book? Two reasons: time reveals the validity of theories and it was a new book for me. I’ll talk about the validity later, but it never ceases to amaze me that I can spend years struggling with an issue and discussing it with colleagues only to find that hundreds of scholars have printed thousands of papers examining the same issue. I would put “The Innovator’s Dilemma” to top of the list of books I wish had been recommended to me.
“How did [retailer] do it? In a way, the most arresting aspect of its story is that there was no gimmick. [Retailer] opened no big bag of tricks, shot off no skyrockets. Instead it looked as though ever body in its organization simply did the right thing, easily and naturally. And their cumulative effect was to create an extraordinary powerhouse of a company.”
Who is this quote about? Costco? Wal-Mart? Ikea? No, it’s a quote about Sears from Fortune magazine 1964. For those following retail, Sears seems to be stuck in about 1964. It missed the bargain retail trend, the warehouse trend, the luxury retail trend and the bargain design furniture trend (if I’m allowed to call Ikea a trend). Moreover, they missed these opportunities while having the best data, the best managers in retail and (previously) a mountain of cash.
“The Innovator’s Dilemma” by Clayton Christensen attempts to explain how companies that seem the best prepared to spot trends and profit from them, are often the very companies that are left behind. I think most designers have some understanding of this since we seem to be the ones most capable of listing the failures: Blackberry, the old GM, Kodak, iOmega, Nokia, Motorola, the music industry, etc. Typically, we bemoan their reluctance to enter the next obvious technological evolution of their product. However, we don’t have any understanding of why the best managers in their fields can fail to green light these projects. After a few whiskey sours at a design conference, we loudly declare them incompetent, but is it that simple?
Christensen lays out a theory that it is the very management techniques and structures that sustain successful companies that discourages, or limits their ability to, act upon “disruptive technologies”. He bases his theory on years of management consulting and the case studies that he has seen as a Harvard professor.
The theory rests of these points:
• Companies are organized to constantly improve their product’s performance even when it surpasses their customer’s desires. Think of how Blackberry dragged its feet on developing a touch screen phone because they were so focused on lengthening battery performance. Blackberry’s battery life went beyond what most users needed, while the iPhone’s touchscreen offered a new kind of browsing experience that took advantage of the dropping price of mobile internet access.
• Companies are biased to allocate resources to the “best bets” that sustain their market position over projects with a bigger growth potential, but are perceived as more risky. This reminds me of a podcast with comedians Greg Fitzsimmons and Doug Benson.
Fitzsimmons had recently had a game show turned down from several TV networks. They all said, “no one is buying game shows right now”, because a year earlier all the networks had rushed to copy success such as Deal or No Deal. Since the copies had failed, the networks were no longer buying game shows. Benson pointed out that TV management thought that by copying what is already successful they were not running a risk, but in fact any TV show is an equally big risk.

Personally, I’ve seen this nearly everywhere. Managers prefer to divide an established market rather than try to succeed at a new (and potentially much larger) market.
• Companies have a hard time bringing products to market through new channels. For example, think of how Nest distributed through electronics stores such as Best Buy. Not one of the biggest thermostat companies in a multi-billion dollar industry had though to retail their products at electronics stores. That’s because thermostat company managers and sales people were all concentrated on their customers: hardware stores and HVAC distributors. Those customers would never be able to tell them about the potential of electronics stores. That’s the problem with new market channels, they are invisible to a company’s senses.
• Companies find it hard to adjust to new cost structures and margins. When a company is competing in a professional market with 40% margins looks at entering a mass-market category with 30% margins, it is difficult to get the organization behind the effort. In my experience, the opposite can be just as difficult to see. Take thermostats again. $100+ thermostats were thought to be only of interest to a small population of HVAC installers who needed powerful product to make complicated systems work. No one in these organizations could understand that there was a mass market ready to pay $250+ (with bigger margins) for a more beautiful and easy to use product like the Nest.
• Related to the Nest again is the fact that market data doesn’t exist for new products and markets. We can estimate, but those always vary widely and aren’t believed by most managers. Therefore, it’s difficult to get organizations behind unknown markets and opportunities. Worse yet, these markets tend to have powerful first mover advantages that block established late comers from entering the market after its discovery. Note that Honeywell is the only established thermostat company to challenge Nest at electronics stores, but with mixed success.
• Companies need to adopt different strategies for different types of innovation. Leadership is important for disruptive technologies, but much less important for sustaining technology. For example, the many engine technologies of the last 20-30 years have been applied at widely different speeds by manufacturers with little influence on sales (technologies such as variable valve timing, direct injection, turbocharging, cylinder deactivation, etc.). However, it is already a huge challenge to confront Tesla’s lead in electric cars.
So, how does the theory stand up? Pretty well it seems. Most critiques that I’ve read deal with marginal aspects of Christensen’s theory. The counter examples all seem to be time sensitive. Such as the iPhone. Christensen argues that the iPhone will decline as low cost competitors enter the market. So far, Apple has maintained a strong sales position, but that might already be changing. When it does, the theory will be proved again.
Finally, I think designers (and engineers) need to listen to Christensen to learn how to sell our more creative ideas. I think designers and engineers are uniquely placed to see the evolution in performance, technology and society that lead to disruptive technologies. However, we often lack the business arguments to build coalitions to tackle these opportunities. I think we need to start pushing our clients to set up, or partner on, start ups in these emerging markets. Start ups that are right sized to respond to the challenges of dealing with the ambiguity inherent in new markets. I think “The Innovator’s Dilemma” can give our arguments the gravitas and data that we need to accomplish it!
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