The innovator’s Dilemma by Clayton Christensen
The innovator’s dilemma is a book that attempts to answer the question why a large number of outstanding companies doing the right things fail. Such companies fail to maintain market leadership when faced with abrupt competition. This book demonstrates how similar practices that contribute to the success of those good companies contribute to the demise of such companies. The book is intended to revolutionize how people conduct business.
The first chapter of the book approaches the question on how good firms can fail using the concepts of Hard drive Industry. In essence, hard drive Industry is portrayed by widespread and fast changes and common and intense failures. In this industry, companies that have had success are those firms that have been keen to their customer’s needs. This book demonstrates that the failure of good companies is caused by the emergence of disruptive technologies.
The second chapter ‘value networks and the impetus to innovate’ introduces a new theory that causes good firms to fail. Value network is characterized by having a particular rank on the features of products that are perceived valued by customers. The chapter posits that the value network that a company competes in affects how that firm is able to have necessary resources and potential to overcome challenges of innovation.
The third chapter analyses how the emergence of disruptive technology influenced the mechanical excavator Industry. This chapter notes that when the mechanical excavators were replaced by hydraulics, all the existing manufactures ceased to operate. The chapter demonstrates how new entrants beat the good companies by introducing new technology. The established companies respond to the disruptive technology when it is too late.
The chapter” what goes up do not come down’ demonstrates how leading companies are able to drift easily to top markets. However, migrating downward is not automatic as the enhanced financial performance and reputation makes it difficult to move to lower-end markets. The chapter notes that reasonable allocation of resources is a factor influencing upward and downward mobility of companies to lower markets. In this chapter, three factors that affect immobility to lower markets have been discussed.
Chapter five of the books discusses a theory on dependence of resources. The main idea here is that the autonomy of actions of a firm has its limit on meeting the needs of those external entities such as customers and not on the executives. This is because the external entities provide a firm with the resources it requires to stay in the market. The chapter proposes that good resource allocation eliminates disruptive innovations.
The next chapter states that the undersized markets do not solve the needs for growth needed by large companies. The chapter posits that those firms that follow sustaining technology do not influence the market share. Disruptive technology is more relevant in the market. The chapter emphasizes the fact that leaders in the disruptive technology create huge value.
The other chapter is about discovering the emerging markets. The chapter notes that with disruptive technologies, managers have to take actions before planning as opposed to sustaining technologies. This owes to the fact the markets for the disruptive technologies are not known. The chapter notes that most skills possessed by managers are not appropriate and may lead to the failure of firms.
The eighth chapter addresses the concern that the capabilities of a firm may also be its disabilities. This chapter notes that what defines an organization is its resources, its processes and values (RPV). It is noted in the chapter that emerging firms spawn initiates unique processes that are matched with requirements. For organizations to have consistent success, the managers have to put in place right organizations.
The next chapter notes that technology supply may not match market demand. The chapter notes that when there is oversupply in performance, an opportunity is created for disruptive technology which attacks the existing companies. The chapter introduces the features of disruptive technologies that influence market dynamics.
The tenth chapter is a case study on how to manage the change in disruptive technology. This chapter applies applied in the previous chapters to demonstrate how managers can defeat failure when faced with changes in disruptive technology. The case study is based on electric automobile show and suggests that innovators have to identify customer needs and market niches.
The last chapter is a summary of the entire book. The chapter provides seven primary insights derived from the study of an innovator. The chapter notes that new organizations are able to innovate easily given disruptive technologies because they are not influenced by organizational norms and old-fashioned values.