The Innovator's Dilemma

Clayton Christensen wrote a book with the same name . . . and it is another interesting read, especially when you may be leading a business that has had leader position in your respective industry. The basic premise is that there is a reluctance for a business to reinvent itself as it would be a risk to its leadership position.

The book provides example after example of companies who once had a leadership position but rested on their laurels and ended up as as nonexistent or a minor competitor.

It is fairly easy to see how this happens. The business is successful with wonderful growth and leadership position, why change? If we keep on doing the same thing, we will continue to have growth and maintain leadership 4EVER, right? WRONG! There are new entrants (i.e., competitors) who will have a different model that could disrupt the business. I have always said, if we don't canabalize ourselves, someone else will . . . You must continue to ask the question, where is our weak spot, how could someone destroy our business? It is an interesting question to ask. Within a corporate environment, it is even harder as there is constant pressure to perform at the highest level for financial success. However, in any business which has huge success, others will see this and invest in ways to "get a piece of the action".

Here are some interesting summaries from the book:
1. Still many new innovations are for future needs not present needs, you cannot depend upon customers to lead us toward innovations they do not now need.
2. Until alternatives that appear to be financially more attractive have disappeared or been eliminated, leaders will find it extraordinarily difficult to keep resources focused on the pursuit of a disruptive technology, i.e., current products that are money makers will continue to get the resources and not the new innovations.
3. Finding a new market will be easier for disruptive technology than an existing one whereby, incremental improvements are easier to make
4. Very often, the new markets enabled by disruptive technologies require very different capabilities (organizationally and individually)
5. The information required to make large and decisive investments in the face of disruptive technology simply does not exist. It needs to be created through fast, inexpensive, and flexible forays into the market and the product.
6. The most powerful protection a small firm has is they they are doing something that it simply does not make sense for the established leaders to do.

Leaders need to make bold decisions sometimes and there are critical moments to do so, otherwise, an incremental improvement will ultimately allow for others to entry with disruptive technology (they you might not even considered that "small firm" to be a competitor, when actually they are . . . )