The_Innovators_Dilemma__Clayton

CHAPTER SIX
Match the Size of the
Organization to the Size
of the Market
Managers who confront disruptive technological change must be leaders, not followers, in
commercializing disruptive technologies. Doing so requires implanting the projects that are to develop
such technologies in commercial organizations that match in size the market they are to address. These
assertions are based on two key findings of this study: that leadership is more crucial in coping with
disruptive technologies than with sustaining ones, and that small, emerging markets cannot solve the
near-term growth and profit requirements of large companies.
The evidence from the disk drive industry shows that creating new markets is significantly less risky
and more rewarding than entering established markets against entrenched competition. But as
companies become larger and more successful, it becomes even more difficult to enter emerging
markets early enough. Because growing companies need to add increasingly large chunks of new
revenue each year just to maintain their desired rate of growth, it becomes less and less possible that
small markets can be viable as vehicles through which to find these chunks of revenue. As we shall see,
the most straightforward way of confronting this difficulty is to implant projects aimed at
commercializing disruptive technologies in organizations small enough to get excited about smallmarket
opportunities, and to do so on a regular basis even while the mainstream company is growing.
ARE THE PIONEERS REALLY THE ONES WITH ARROWS IN THEIR BACKS?
A crucial strategic decision in the management of innovation is whether it is important to be a leader or
acceptable to be a follower. Volumes have been written on first-mover advantages, and an offsetting
amount on the wisdom of waiting until the innovation’s major risks have been resolved by the
pioneering firms. “You can always tell who the pioneers were,” an old management adage goes.
“They’re the ones with the arrows in their backs.” As with most disagreements in management theory,
neither position is always right. Indeed, some findings from the study of the disk drive industry give
some insight into when leadership is critical and when followership makes better sense.
Leadership in Sustaining Technologies May Not Be Essential
One of the watershed technologies affecting the pace at which disk drive makers have increased the
recording density of their drives was the thin-film read/write head. We saw in chapter 1 that despite the
radically different, competence-destroying character of the technology, the $100 million and five-to-
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