The Innovator's Dilemma by:Clayton Christensen

ENT 601 Week 2 Book Reflection: The Innovator’s Dilemma Ch.1 How Can Great Firms Fail? Insights from the Hard Disk Drive Industry

I am reading a book called, The Innovator’s Dilemma. This is a reflection on my readings. In the first chapter called “How Can Great Firms Fail? Insights from the Hard Disk Drive Industry,” I find it interesting how Christensen talks about “keeping close to your customers.” He is trying to illustrate the enormous risk companies inherit when they submerge themselves in their customers needs, technology and the constant change that manufacturing encounters when trying to appeal to diverse and different generations. The impact of technological change has shown that a firm would enter the market with a technology change and quickly be replaced by a new firm with more advanced technology. This would continue on, making it appear that you could never get ahead of the curve, but if you did, it would only be for a short time until the next new thing or improvement was made on the current technology. This is considered a “disruptive technology” change. The other type of technology change is referred to as “sustained technology,” which means the industry sustains through the change. Whichever industry is leading, they will continue to lead by changing, adapting and continuing to develop their technologies to better support their customers. Christensen also referred to the disruptive technology as the technology mudslide hypothesis, that when established companies could not keep up with the constant change of technology, over time their businesses would fail. This hypothesis, was actually proved wrong. The technology mudslide does not reflect reality, some companies are not able to fund a project to develop a new business model every time a new technology comes out. Although they wait to see if the new technology is successful and growing, they are stuck with the gamble of investing their time and money to be competitive to the entrant companies and by that time it is usually too late. They typically do not have overhead cash flow or manpower to turn over a new product in time to catch the demand curve before it peaks.

In the Forbes article “Disruption vs. Innovation. Whats the difference?” this quote sums it up by saying, “Think of it this way: Disruptors are innovators, but not all innovators are disruptors”. Christensen explains it in another way by saying “disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.” An example of this in the golf industry is how companies that were strong at one time and not likely to fail are now being bought out by other competitors simply for the fact that they do not have the edge anymore. For instance, ADIDAS acquiring Taylor-Made. Taylor-Made is thought to be a huge company that was firmly integrated into the golf industry, They started to lose the edge and innovation to the other companies that were flooding the market with newer technology and making the product cheaper and faster. ADIDAS saw an opportunity to grow their business with a name that was already ingrained into the public as a well-made product. On the other hand Taylor-Made saw an opportunity to change for the public’s demands so they teamed up with another company.  The article “The Imperative of Disruptive Innovation” that reflects this movement comes from Innosight.com explaining the emergent strategy in which the company makes changes to adapt to the marketplace through feedback of consumers. Other leading companies can fail by not adapting or following the change of market signals. Emergent strategies are flexible and require deviating from the business plan.

In conclusion to this theory of disruptive firms, it proves how once great companies that flourish, can also one day fail. When a successful company enters the market and they have a well received product, if they aren’t flexible and unable to change and adapt with the customers needs then it will fail due to new companies coming in and providing the same product with newer technology. Christensen phrases it in a way that the leading companies were held captivate by there customers while another company was able to come in and attack. It seems that each firm is only the leading firm and the one with the newest product once.

 

 

References:

Christensen, Clayton. “The Innovator’s Dilemma When New Technologies Cause Great Firms to Fail” How Great Companies Fail? Insights from the Hard Disk Drive Industry. Boston, Massachusetts; Harvard Business School Press 1997. 3-28.Print.

Howard, Caroline. “Disruption vs. Innovation: What’s the Difference?” 27 March 2013. Web. 27 January 2016. http://www.forbes.com/sites/carolinehoward/2013/03/27/you-say-innovator-i-say-disruptor-whats-the-difference/#6e87a518bd792

“The Imperative of Disruptive Innovation” 2012. Web. 27 January 2016. http://www.innosight.com/innovation-resources/upload/Disruptive-Innovation-Primer.pdf

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One thought on “ENT 601 Week 2 Book Reflection: The Innovator’s Dilemma Ch.1 How Can Great Firms Fail? Insights from the Hard Disk Drive Industry

  1. Change is the only constant in the world, and it appears to being happening at a rapidly increasing pace in the world of technology. Interesting how some companies will have “disruptive change” while others will have “sustainable change”. Can we predict who will survive and who will not? I imagine it has much to do with the mindset of the company and the environment that the innovators are working in.
    Great post,
    Jennifer

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