February 11

What you could learn from ‘The Innovator’s Dilemma’ by Clayton Christensen (1997, 228 pages)

Customers train companies to allocate resources.  Customers only buy products and services they value, based on functionality, reliability, convenience & price.  This encourages well-managed companies to develop sustaining technologies that improve their existing products in ways that matters to their existing customers.  This focus on existing products and incremental improvements prevents companies from creating disruptive technologies.

Clayton states that ‘disruptive technologies‘ are very different from ‘sustaining technologies‘.  He argues that disruptive technologies offer a very different value proposition by focuses on servicing the least profitable customers (see bel0w).

 

r1512b_big_model

 

A company’s process and values define how resources are combined to create value.  Clayton argues that this should force companies to create a skunk-works or x-lab to create disruptive technologies.   By creating a new company, or at least a unit at arms length, this new organisation is free to develop new process and values, that can focus on new customers and new products.

 

Link to Clayton’s latest article on HBR

Link to the book on Amazon UK