Innovator’s Dilemma Redux: A Few More Take-Aways

In August 2007 I posted “10 Sweaty Take-Aways” from Clayton Christensen’s The Innovator’s Dilemma. Besides being a great read, Dilemma really re-opened my eyes to the technological threats of “simple” and “cheap”—a kind of wake-up call in a world where we are constantly encouraging our lead customers to accept increasing levels of complexity and sophistication in the products and services we offer them.

The “sweaty” comes from the fact that Christensen reminds us that there are a whole class of competitors with less money, less experience and less technology who can still wreak havoc in our markets. So, strategy must look forward and backward, up and down, and contemplate serving a set of less attractive customers with lower margin products. Or, at the very least, find effective ways to blunt competitors who are doing just that.

Recently, Christensen was featured in a Forbes.com special report, reflecting on lessons learned since his book was published a decade ago.

Here are a few updated and “reminder” take-aways:

1. The theory of disruptive innovation emerged out of my research in the hard disk industry, where I noticed an interesting pattern. Every time an innovation involved making a better hard disk that would be highly valued by a company's current customers, incumbents won. However, when an innovation involved making a hard disk that current customers actually couldn't utilize because it seemingly had too little performance, entrants won the market.

2. Disruptors create growth by redefining performance. They either bring a simple, cheap solution to the low end of an established market or enable "nonconsumers" to solve pressing problems.

3. In retrospect, I made a poor choice when I used "disruption" to describe the phenomena that transformation so frequently stems from simple, cheap solutions. The word can confuse those who mistake my definition with the dictionary definition of "disruption.". . .Disruptions often don't involve big technological breakthroughs. Rather, they involve mastering the intricate art of the simple solution.

4. One of the core findings from my research is that companies innovate faster than people's lives change. This means that in the pursuit of attractive profits, established companies almost always end up "overshooting" progressive market tiers. In essence, they provide products that pack in too much performance for the average person.

5. Generally, the true disruptive power of an innovation lies not in the technology itself but in the business model that surrounds that technology. Successful disruptors have the ability to make money at low price points. Or they have low overheads that allow them to start small and adapt. Or they play in a very different value chain, with new partners, suppliers and channels to market. It is these business model differences, and not technological prowess, that so often throw incumbents off-balance.

6. A successful disruptor masters the art of trade-offs. Their offering isn't better along traditional performance dimensions. In fact, it's typically just good enough along dimensions that historically mattered in a mainstream market. A disruptor redefines the notion of performance by pulling an overlooked innovation lever. Simplicity. Convenience. Accessibility. Affordability. All of these are hallmarks of disruptive innovation.

7. Put simply, our strong belief is that companies seeking to create new growth businesses should focus on disruptive innovation. Mastering the core concepts in disruption are not only vital tools in growth and innovation, but they can also help companies and managers spot and respond to disruptive attackers early.