"...the management practices that allow companies to be leaders in mainstream markets are the same practices that cause them to miss the opportunities offered by disruptive technologies. In other words, well-managed companies fail because they are well managed."
Why do successful companies fail? Because they have previously been successful. Seldom is it incompetence or a bad product. Then what causes them to fall from their success? It is this question that Harvard Business Professor Clayton Christensen answers in The Innovator’s Dilemma. Paradoxically, Christensen explains that successful companies often fail because they continue to do what made them successful rather than continuing to innovate. This problem is what he refers to as the Innovator’s Dilemma.
The Big Idea
Work with disruption, not against it
"If good management practice drives the failure of successful firms faced with disruptive technological change, then the usual answers to companies’ problems—planning better, working harder, becoming more customer-driven, and taking a longer-term perspective—all exacerbate the problem..."
Christensen’s answer for why successful companies fail revolves around the difference between sustaining innovations vs disruptive innovations. Sustaining innovations account for the majority of innovations, they improve an existing product usually helping to increase margins, while a disruptive innovation “transforms a product that historically has been complicated or expensive” into something that is more “accessible.” Often a disruptive product is of “inferior quality that with time is able to move up the market and eventually disrupt the previous market leaders.”
Christensen explains that there are certain principles of disruptive innovation that must be followed in order to not be swallowed up in the disruption. He explains further by comparing adoption of the principles of disruption to man’s first attempt at flight. The first attempts at flight tried to succeed based on raw determination and bigger ideas, with larger wings attached to limbs at more elevated distances. It was only when man approached the problem by applying the principles of drag and lift that actual flight was the result. “When people then designed flying systems that recognized or harnessed the power of these laws and principles, rather than fighting them, they were finally able to fly to heights and distances that were previously unimaginable.” Most people try and fight disruption and get lost in the battle rather than try to understand and work with its principles.
Christensen explains several Principles of Disruption relating to businesses. Two that are most relevant for businesses and individuals are:
(1) “Failure is an intrinsic step toward success.”
(2) “The ultimate uses or applications for disruptive technologies are unknowable in advance.”
Be active, not passive
"...managing better, working harder, and not making so many dumb mistakes is not the answer to the innovator’s dilemma."
Solving the Innovator’s Dilemma cannot be done by merely making fewer mistakes than others. Rather we must adopt an active approach and create rather than merely iterating. If we are always focused on improving what we have rather than creating something new we will be unlikely to innovate and will fall behind regardless of how well we run our business. Successfully navigating disruption requires an active step and will not happen by default. Lock step improvements on the status quo may sustain us in the short term but are woefully ill-equipped to compete tomorrow with new products.
Thriving amidst the uncertainty that is disruption is not a question of management acumen or having a superior product, but a willingness to take a step into the unknown.
Have a plan for learning, not execution
"I must therefore plan to be wrong and to learn what is right as fast as possible. I cannot spend all of my resources or all of my organizational credibility on an all-or-nothing first-time bet... I need to conserve resources to get it right on the second or third try."
Learning rather than execution should be our focus when dealing with disruption. Disruptive products are impossible to predict. Because they are disruptive we are unable to use the tools of prognostication that work with startling accuracy for sustaining innovations. Therefore, it is important that we maintain a learning focus rather than adhere to a predetermined approach.
We know nothing about how we will use a disruptive product and therefore should not bet the proverbial farm on a potentially disruptive idea. Christensen uses the examples of tech giants who made big bets on a product they thought was going to disrupt the market such as Apple’s Newton or HP’s Kittyhawk drive that each company invested billions in but ultimately abandoned because the company could not adapt the product for sale. Christensen explains that companies who want to thrive because of disruption “need to fail early and inexpensively in the search for the market for a disruptive technology”. To not be swept away with disruption we must be flexible and learn as we go.
Since I spend most of my day in a classroom rather than an office I initially struggled with how to apply the ideas from The Innovator’s Dilemma. However, I eventually decided to apply the book’s principles on a more personal level. I am setting aside time to prepare and learn so that I will be read for a disruption in my own life. I created a Beta folder on my iPhone with new things relevant to my interests and studies that I spend time learning and tinkering with. I am trying to take active steps to learn about new ideas and opportunities relevant to my field of study to prepare me for tomorrow.
How do you plan to prepare for disruptive innovations in your field?