Friday Book in a Page: The Innovator’s Dilemma

The Innovator’s Dilemma by Clayton Christensen

Sustaining innovation is the cornerstone of all business growth.  Releasing new updates and new versions of your product or service is vital to staying relevant in business.  However, what about those innovations that disrupt an entire industry?  i.e. Could Blockbuster have stopped Netflix just by having better customer service or a smoother check out process?  Unlikely.  The innovation of Netflix disrupted an entire industry and forever changed the world of not only movie rentals, but all movie and TV watching habits.  The examination of sustaining innovation and disruptive innovation is the central discussion of this book.

Key Messages of the Book:

  • There are two types of innovation:
    • Sustaining innovation
    • Disruptive innovation.
  • Sustaining innovation is about meeting customer demands in an expected way. Usually, this is through new products or improved customer service.  i.e. IOS 13.5.1 can do things slightly better than IOS 9.
  • Disruptive innovation is when the underlying need of a customer is met in an entirely different way.  (I find one of the best quotes to explain disruptive innovation is Henry Ford’s: “If I asked customers what they wanted, they would have said a faster horse”.
  • However, the majority of customers do not quickly embrace change, and the new entrant who owns the disruptive technology usually needs to uncover a small group of true believers or early adopters for their customers.
  • Often the company with disruptive technology attracts these customers through offering the product or service at a lower price and thereby not attracting the attention of the dominant companies in the industry (until it is too late).
  • A low selling price, coupled with a small market (to begin with) also usually means that disruptive innovation is (not at first) financially attractive.
  • Christensen’s conclusion is that in order to be competitive, you must create an autonomous group to address emerging markets and free this group from ‘this is the way we have always done it’ mindset and the same profit targets at the core business.

Sometimes the direct competitor you think you are going head to head with is not the competitor who can put you out of business.

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