Business

The Innovator's Dilemma: 8 key ideas

by Clayton Christensen

The core ideas of The Innovator's Dilemma, each in under a minute, written in our own words. Want the full depth? Get the book.

1. IDEA 1 OF 8

   Good management can sink companies

   Christensen argues that successful companies often fail not because they are badly managed, but because they follow good management practices: listening to their best customers and investing in what earns the highest profits.

   This leaves them vulnerable to new technologies.

2. IDEA 2 OF 8

   Two kinds of innovation

   Christensen distinguishes sustaining innovations, which improve existing products for current customers, from disruptive innovations, which start as cheaper, simpler products for new or less demanding customers.

   Established firms excel at the first kind.

3. IDEA 3 OF 8

   Disk drives showed the pattern

   Christensen studied the disk drive industry, where each new, smaller drive size was introduced by new companies.

   Leading firms repeatedly failed to adapt. Christensen shows that the new companies began with small, cheaper drives that older customers did not want at first, and then improved quickly.

4. IDEA 4 OF 8

   Best customers can mislead

   Established companies listen to their best customers, who want better versions of existing products.

   These customers often do not want disruptive products at first. Listening closely to them seems wise, but Christensen argues it can keep a company from noticing a simpler product that will later win over many users.

5. IDEA 5 OF 8

   Small markets seem unimportant

   Disruptive products begin in small markets that do not interest big companies.

   By the time they grow, it is too late. Christensen argues that a large company needs big sales to justify its effort, so a small new market seems not worth the trouble until too late.

6. IDEA 6 OF 8

   Products can overshoot needs

   Christensen argues that established products often become better than customers need.

   Simpler, cheaper products then become attractive. Once ordinary customers get more than they need, they begin to care about price and convenience instead, which helps the simpler rivals.

7. IDEA 7 OF 8

   Separate teams can help

   Christensen suggests that big companies create separate organisations to pursue disruptive technologies.

   These teams can focus on new markets. The idea is that a team of its own does not have to compete for attention and money with the company's main, profitable business.

8. IDEA 8 OF 8

   Value networks shape choices

   Christensen explains that companies operate within value networks of customers and suppliers.

   These networks shape what they consider valuable. A company tends to follow what its own customers and suppliers want, which can blind it to a market outside that network.