#98 - Book "Innovator's Dilemma" written by Clayton M. Christensen

I finally read the book "Innovator's dilemma", first published in 1997 and written by the Harvard professor and business consultant Clayton Christensen. This book is extremely well written and succinct. It has become a classic in the business world, particularly with regard to disruptive innovation.

"Innovator's dilemma" starts with a dive deep in the disk drive industry, based in data from the past three decades (from around 1975 to 1994) as well as dozens of interviews carried out by the author. The justification for choosing this particular industry as the basis for his thesis is because of its fast development pace as well as accelerated feedback loop that has seen incremental changes and disruptive innovations. The patterns observed in the disk drive industry are then extended and applied to several other types of industry that are covered in the book with examples and case studies.

In summary, the author argues that whilst established companies tend to focus on sustained innovation and incremental technological improvements, successfully new entrants are focused on disruption. The latter are therefore able to attract not only new customers, but also to eventually penetrate part of the market share that was previously dominated by established companies. 

For instance, initially fourteen-inch disk drives were manufactured by established companies and dedicated to the mainframe computers market. New entrants developed and successfully introduced a smaller product, the eight-inch disk drives, for the minicomputers market. After some time, low-end mainframe computers started adopting the eight-inch disk drives attracted by its benefits such as reduced diameter, reduced vibration and mechanical issues, lower power consumption and cost-effective solution. In other words, here is a practical example when a disruptive innovation has created a new market application (minicomputers) and after some years has penetrated an established market (mainframe computers). 

Why such great and established companies missed the shift at the right time to the new technology? The author carried out a careful analysis to answer this question, and suggests that some of the main reasons are: wrong predictions made from the management team with regard to disruption. In addition, generally the structure of established companies tend to oppose the development of disruptive innovative products because resources are limited and focused on the current successful product. There is also a tendency to prefer investing in more profitable and higher end products. However, this book shows several examples where disruption innovation started in simpler and lower end applications. 

The author suggests some actions that established companies could do to avoid missing disruption technology, although these are not necessarily successful for all the companies. One of them is to create an independent branch inside the company which is focused on the development of the new product. Another idea, is to acquire smaller companies, such as start-ups, that are motivated by smaller financial results and have fast learning curves through iterations over minimal viable products. In fact, established companies have already a successful business model for the current market, with their resource allocations, process and values well-defined towards their core products or services. In addition, they typically have well established process in place, which may have helped them to achieve the repeatability and quality desired, however these same rigid process and standardization could also be a limiting factor and liability for disruptive innovation.

In conclusion, we are recently lived through the COVID-19 that has affected many types of business. Some of them will see the arrival of disruptive innovations in fields such as fintech, edtech, medtech, health-tech. One of the key lessons from this book is to keep an eye into the lower end and simpler applications that could be the disruptive innovations of tomorrow. Over the past years, this has happened in many fields such as collaborative robotics and SCADA software products. Another great tip from the book is to beware of the customer wishes, because they could mislead the company with regard to disruption innovation. As the famous quote says, "If I had asked people what they wanted, they would have said faster horses.". Although there's no official proof Henry Ford actually said these words, but it summarizes this idea quite well.