The Innovator’s Dilemma

This book focuses on analysing disruptive technologies and the devastating impact they have on big companies. In particular, it explains the reasons for their failure, and the strategies we can put in place to help companies ‘keep up’, and ride the wave of innovation.

During the course of the book five fundamental principles of organisational nature that managers in successful firms have recognised and harnessed:

• Companies depend on consumers and investors for their resources. Managers deal with keeping the financial situation under control, but the truth is that the company’s financial situation really lies in the hands of consumers and investors.
• Small markets do not help big companies satisfy their need for growth. The higher a company’s turnover, the more difficult it will be for it to launch in a new, small market, because the potential increase in profit is too low in relation to their costs.
• Markets that do not exist cannot be analysed. This makes classic market forecasting useless; companies need a new strategy. There should be plans for learning and discovery, rather than plans for execution.
• A company’s abilities also define its limitations. What we mean by this is that when a company declares its strengths, its weaknesses automatically emerge.
• The technology offered might not correspond with market demand. When technology advances, it standardises for all brands. At this point, the product becomes a simple commodity, and customers’ will make their choice based on price. This creates fertile ground for disruptive technology.

The book is split into two parts: the first part analyses the reasons why great companies fail if they cannot manage disruptive technology; the second part offers suggestions to help ride the wave of disruptive technological change.