The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail

Book Preface

This book takes the radicalposition that great companies can fail precisely because they do everything right.

It demonstrates why outstanding companies that had their competitive antennae up,listened astutely to customers, andinvested aggressively in new technologies still lost their market leadership when confronted with disruptive changes in technology and market structure.

And it tells how to avoid a similar fate. Christensen argues that good business practices—such asfocusing investments and technology on the most profitable products that are currentlyin high demand by the best customers—ultimately can weaken a great firm. Drawing on patterns of innovation in a variety of industries, including computers, retailing, pharmaceuticals, automobiles, and steel, he shows how truly important, break through innovations — or disruptive technologies—are initiallyrejectedby main streamcustomers because theycannot currendy use them. This rejection can lead firms with strong customer focus to allow strategically importantinnovations to languish. An excessive customer focus prevents firms from creating new markets and finding new customers for the products of the future. As they unwittingly bypass opportunities, such firms can clear the way for more nimble,entrepreneurial companies to catch the next great wave of industry growth.

Using the lessons of successes and failures of leadingcompanies, The Innovators Dilemma presents a set of rules for capitalizing on the phenomenon of disruptive innovation.These principleswill help managers determine when it is right notto listen to customers, when to investin developing lower-performance prod ucts that promise lower margins, and when to pursue small markets at the expense of seemingly larger and more lucrative ones. Many companies—whether they are man ufacturers or service providers, high or low tech, or competitors in rapidly changing or Continued on backflap

Although this book lists only one author, in reality the ideas it molds together were contributed and refined by many extraordinarily insightful and selfless colleagues. The work began when Professors Kim Clark, Joseph Bower, Jay Light, and John McArthur took the risk of admitting and financing a middle-aged man’s way into and through the Harvard Business School’s doctoral program in 1989. In addition to these mentors, Professors Richard Rosenbloom, Howard Stevenson, Dorothy Leonard, Richard Walton, Bob Hayes, Steve Wheelwright, and Kent Bowen helped throughout my doctoral research to keep my thinking sharp and my standards for evidence high, and to embed what I was learning within thestreams ofstrong scholarship thathadpreceded whatIwas attempting to research. None of these professors needed to spend so much of their busy lives guiding me as they did, and I will be forever grateful for what they taught me about the substance and process ofscholarship. I am similarly indebted tothe many executives and employees ofcompanies in the disk drive industry who opened their memories and recordsto me as I tried to understand what had driven them in the particular courses they had taken. In particular, James Porter, editor ofDisk/Trend Report, opened his extraordinary archives ofdata, enabling me tomeasure what has happened inthe disk drive industry with a level ofcompleteness and accuracy that could be done in few other settings. The model ofthe industry’s evolution and revolution that these men and women helped me construct has formed the theoretical backbone for this book. I hope they find it to be a useful tool for making sense of their past, and a helpful guide for some of their decisions in the future.

During my tenure on the Harvard Business School faculty, other col leagues havehelpedrefinethis book’sideas evenmore.Professors Rebecca Henderson and James Utterback of MIT, Robert Burgelman of Stanford, and Gary Pisano and Marco lansiti of Harvard Business School have been particularly helpful. Research associates Rebecca Voorheis, Greg Rogers, and Bret Baird; editors Marjorie Williams, Steve Prokesch, and Barbara Feinberg; and assistants Meredith Anderson and Marguerite Dole, have likewise contributed untold amounts of data, advice, insight, and work.
I am grateful to my students, with whom I have discussed and refined the ideas put forward inthis book. On most days Ileave class wondering why I get paid and why my students pay tuition, given that it is I who have learned the most from our interactions. Every year they leave our school with their degrees and scatter around the world, without under standing how much they have taught their teachers. Ilove them and hope that those who come across this book will be able to recognize in it the fruits of their puzzled looks, questions, comments, and criticisms.

I owe the most to my family—my wife Christine and our children Matthew, Ann, Michael, Spencer, and Catherine. With unhesitating faith and support they encouraged me to pursue my lifelong dream to be a teacher, amidst all of the demands of family life. Doing this research on disruptive technologies has indeed been disruptive to them in terms of timeand absence from home, and I am forever grateful for their love and support. Christine, in particular, is the smartest and most patient person I have known. Most of the ideas in this book went home on some night over the past five years in half-baked condition and returned to Harvard the nextmorning having been clarified, shaped, and edited through my conversations with her. She is a great colleague, supporter, and friend. I dedicate this book to her and our children.
Clayton M. Christensen
Harvard Business School
Boston, Massachusetts
April 1997