The Innovator’s Dilemma Summary
What’s the Big Idea?
The Innovator’s Dilemma is a title for a book on why big, successful firms so often fail not because they are poorly run, but because they are too good at what they do. The book describes how new, small firms with “disruptive” ideas can quietly move in and transform whole industries, while the giants fall behind.
Disruptive vs. Sustaining Innovation
There are two types of innovation:
- Sustaining innovation: When companies improve upon what they are currently selling. An example is a phone improving the camera or a car going faster and being safer. Large companies excel at that type of refinement.
- Disruptive innovation: When a new business provides something that’s worse initially cheaper, easier, less glamorous but it’s for people who couldn’t pay for or didn’t want to pay for the high end one. This new thing improves over time and ultimately dominates the market. That disrupts the big businesses.
Why Big Companies Struggle: The Innovator’s Dilemma
Large firms typically listen intently to their most valued customers. These customers demand improved products, and the firms concentrate on providing just that. However, that concentration causes them to overlook the small, nascent markets where innovative ideas begin.
Since these new concepts appear too little or too unprofitable initially, large firms pay no attention—until it’s too late.
Real-World Example
Christensen applies the case of disk drives. Big companies in the tech industry developed powerful, pricey disk drives for large computers. Then small businesses began producing minuscule, inexpensive drives for personal computers or new products. Those new drives weren’t very good at first, but they improved—and now the old businesses couldn’t catch up.
It was the same with industries such as steel, retail, and even health care.
What Can Companies Do?
Christensen proposes a few good moves:
- Look to small markets – Observe what the startups are accomplishing. Don’t overlook them just because they are small.
- Make small teams – Organize distinct teams or even spin-off organizations to pursue disruptive concepts without being held back by the large company’s regulation.
- Settle for small profits initially – Disruptive innovations tend not to generate huge profits immediately. Have patience.
- Be comfortable with failure – Experimenting with new stuff involves risk-taking. Some will fail—but some might be the next big hit.
The Innovator’s Dilemma Details
| Title | The Innovator’s Dilemma |
| Author | Clayton M. Christensen |
| Publishing Date | January 1, 1997 |
| Genre | Business, Nonfiction, Entrepreneurship, Management, Leadership, Technology, Business |
| Rating | 4/5 |
The Innovator’s Dilemma FAQs
Large corporations fail not because they’re dumb, but because they’re too busy being successful at what they currently are. In order to remain ahead of the game, they must be comfortable experimenting, risk-taking, and even competing against themselves at times.
So here’s the “dilemma”:
Should large companies continue to do what’s successful and what their customers demand (which is profitable today), or should they make an investment in something new and uncertain that may disrupt their current success?
