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The Innovator's Dilemma

The Innovator's Dilemma is a concept that describes the challenges faced by established companies when disruptive technologies emerge in the market.

These technologies often start as niche products with limited capabilities, but over time, they improve and become serious competitors to established players. The dilemma arises when companies must decide whether to invest in these new technologies or continue focusing on their existing products and services.

mantra

Don't let success make you complacent, attack your operating model before someone else does

Perspective​

Understand the two types of technological advancements:

  1. Sustaining technologies improve existing products in ways that mainstream customers value. Incumbents have the advantage here.
  2. Disruptive technologies are initially inferior but improve rapidly and eventually displace incumbents. Startups have the advantage with disruption.

Definition​

5 Laws of Disruptive Technology

  1. Companies depend on customers and investors for resources.
  2. Small markets don't solve the growth needs of large companies.
  3. Markets that don't exist can't be analysed.
  4. An organization's capabilities define its disabilities.
  5. Technology supply may not equal market demand.

Incumbents​

Advice for Established Organisations:

  • Create an independent organization to pursue the disruptive technology. Match the size to the market.
  • Use "discovery-based planning" for disruptive technologies, not traditional market research.
  • Appraise your organization's capabilities and values to see if they match the disruptive opportunity.
  • Acquire disruptive threats or found independent subsidiaries to pursue them. Equip them with the right resources.

Upstarts​

Advice for Disruptive Upstarts:

  • Target an incumbent with a cheaper, more convenient (but inferior) product, not a sustaining improvement. Let them "flee" upmarket.
  • Understand the "job" customers hire your product to do. It's more about the market than the technology itself.
  • Be patient for growth but impatient for profit. Disruptive markets start small but have big potential.

Takeaway​

Incumbents must learn to recognize and proactively pursue disruptive innovations, while disruptive startups should target incumbents' blind spots and find asymmetric motivation. The book provides frameworks and historical examples to illustrate these principles in action.