what is the innovator's dilemma

The Innovator's Dilemma
The Innovator's Dilemma
Business theory book on disruptive innovation
Clayton Christensen
Publication Year
Main Concept
Explores how new technologies cause successful companies to fail by focusing on high-value products and ignoring disruptive innovations
The innovator's dilemma refers to the difficult choice that successful, established companies face when deciding whether to invest in disruptive innovations that could cannibalize their existing product lines and revenue streams, or continue focusing on sustaining innovations that improve their current offerings for their mainstream customers. The core idea is that while disruptive innovations may initially appear unattractive or insignificant from the perspective of the incumbent's existing customers, they can gain a foothold in simple applications or low-end markets. Over time, the performance of the disruptive technology improves to the point where it can displace the incumbent's mainstream product and cause a shift in the market. Established companies often struggle with this dilemma because:
  1. Their existing customers typically do not want or cannot benefit from the disruptive innovation initially, so there is little incentive for the incumbent to invest in it.
  2. The disruptive innovation may render the company's existing product lines obsolete, cannibalizing their revenue streams.
  3. The processes, values, and resource allocation priorities of the incumbent company are geared towards sustaining innovations that improve their existing products, rather than disruptive innovations that could make them obsolete.
The innovator's dilemma highlights the difficulty that successful companies face in embracing disruptive innovations that could eventually displace their core business, even when they are aware of the potential threat. Overcoming this dilemma often requires companies to create independent organizations or spin-offs to pursue disruptive innovations without being constrained by the incumbent's existing processes and priorities.
examples of companies that faced the innovator's dilemma
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