Recently, I finished the book “The Innovator’s Dilemma: when new technologies cause great firms to fail”. According to the Economist, this is one of the most important business books ever written.
The author of this book is Clayton Christensen, former professor at Harvard Business School and author of multiple international best sellers. Christensen is widely considered as one of the most influential thinkers of the 21st century.
In “The Innovator’s Dilemma”, Christensen outlines how the most outstanding companies can do everything right, yet still lose market share. Based upon real-life successes and failures, this book offers an insight and a set of rules to capitalize on the concept of ‘disruptive innovation’.
Disruptive Innovation:
With the help of industry examples – mainly from the disk drive industry – Christensen explains why great companies can fail and how to manage disruptive technological change.
According to Christensen, great companies fail mainly because they focus too much on sustaining innovations rather than disruptive innovations.
Sustaining innovations improve existing products for current customers. The motivating factor in sustaining innovation is profit; by improving these products, a business can pursue ever-higher profit margins.
Meanwhile, disruptive innovations initially target niche or low value markets with inferior products and a relatively low profit margin. By doing so, and gradually improving and building market share, the entrant company pushes the existing company upmarket, typically resulting in the eventual overtake of established companies.
(If you want to know more about “why great companies fail” click here.)
When it comes to managing disruptive technological change, Christensen points out the following key elements:
- Establish autonomous teams or divisions isolated from the core organization’s processes and values to develop disruptive technologies
- Match the size of the organization with the size of the market
- Accept that technologies often progresses faster than market demand, which can lead to performance oversupply. (Historically, this oversupply opens the door for simpler less expensive and more convenient technologies to enter.)
“Great companies fail mainly because they focus too much on sustaining innovations rather than disruptive innovations.”
How does this relate to effective leadership?
The insights of this book are very much relevant to how leaders think, act and inspire, in particular when it comes to managing disruptive change. Here are a few lessons I distilled:
- Disrupt yourself before others do: The core message of this book is that clinging to existing business model can be fatal. Leaders must be bold enough to make decisions that protect the future, not just the present.
- Be willing to learn from the margins: One of Christensen’s most profound insights, is that ‘failure often comes from doing everything right’. Effective leaders stay intellectually curious, question dominant narratives and are willing to learn from the margins.
- Normalize change: this book encourages leaders to embed innovation into the organizational culture, both sustaining and disruptive innovation. Effective leaders do this by embedding it in formal processes and interpersonal systems, and by fostering psychological safety where individuals and teams can experiment, fail and iterate.
In a world where technological change is relentless and unpredictability is the norm, The Innovator’s Dilemma offers more than just a theory. Christensen’s work challenges us to rethink what good leadership looks like in the face of disruption: not just strategic brilliance, but the humility to question success, the courage to embrace uncertainty, and the wisdom to empower innovation at every level.
Recently, I finished the book “The Innovator’s Dilemma: when new technologies cause great firms to fail”. According to the Economist, this is one of the most important business books ever written.
The author of this book is Clayton Christensen, former professor at Harvard Business School and author of multiple international best sellers. Christensen is widely considered as one of the most influential thinkers of the 21st century.
In “The Innovator’s Dilemma”, Christensen outlines how the most outstanding companies can do everything right, yet still lose market share. Based upon real-life successes and failures, this book offers an insight and a set of rules to capitalize on the concept of ‘disruptive innovation’.
Disruptive Innovation:
With the help of industry examples – mainly from the disk drive industry – Christensen explains why great companies can fail and how to manage disruptive technological change.
According to Christensen, great companies fail mainly because they focus too much on sustaining innovations rather than disruptive innovations.
Sustaining innovations improve existing products for current customers. The motivating factor in sustaining innovation is profit; by improving these products, a business can pursue ever-higher profit margins.
Meanwhile, disruptive innovations initially target niche or low value markets with inferior products and a relatively low profit margin. By doing so, and gradually improving and building market share, the entrant company pushes the existing company upmarket, typically resulting in the eventual overtake of established companies.
(If you want to know more about “why great companies fail” click here.)
When it comes to managing disruptive technological change, Christensen points out the following key elements:
- Establish autonomous teams or divisions isolated from the core organization’s processes and values to develop disruptive technologies
- Match the size of the organization with the size of the market
- Accept that technologies often progresses faster than market demand, which can lead to performance oversupply. (Historically, this oversupply opens the door for simpler less expensive and more convenient technologies to enter.)
“Great companies fail mainly because they focus too much on sustaining innovations rather than disruptive innovations.”
How does this relate to effective leadership?
The insights of this book are very much relevant to how leaders think, act and inspire, in particular when it comes to managing disruptive change. Here are a few lessons I distilled:
- Disrupt yourself before others do: The core message of this book is that clinging to existing business model can be fatal. Leaders must be bold enough to make decisions that protect the future, not just the present.
- Be willing to learn from the margins: One of Christensen’s most profound insights, is that ‘failure often comes from doing everything right’. Effective leaders stay intellectually curious, question dominant narratives and are willing to learn from the margins.
- Normalize change: this book encourages leaders to embed innovation into the organizational culture, both sustaining and disruptive innovation. Effective leaders do this by embedding it in formal processes and interpersonal systems, and by fostering psychological safety where individuals and teams can experiment, fail and iterate.
In a world where technological change is relentless and unpredictability is the norm, The Innovator’s Dilemma offers more than just a theory. Christensen’s work challenges us to rethink what good leadership looks like in the face of disruption: not just strategic brilliance, but the humility to question success, the courage to embrace uncertainty, and the wisdom to empower innovation at every level.
