The_Innovators_Dilemma__Clayton

structured. For Compaq, Hewlett-Packard, and IBM, however, marketing direct to customers over the
Internet would have a powerfully disruptive impact. The same is true in stock brokerage. For discount
brokers such as Ameritrade and Charles Schwab, which accepted most of their orders by telephone,
trading securities on-line simply helped them discount more cost-effectively—and even offer enhanced
service relative to their former capabilities. For full-service firms with commissioned brokers such as
Merrill Lynch, however, on-line trading represents a powerful disruptive threat.
SUMMARY
Managers whose organizations are confronting change must first determine that they have the resources
required to succeed. They then need to ask a separate question: does the organization have the
processes and values to succeed? Asking this second question is not as instinctive for most managers
because the processes by which work is done and the values by which employees make their decisions
have served them well. What I hope this framework adds to managers’ thinking, however, is that the
very capabilities of their organizations also define their disabilities. A little time spent soul-searching
for honest answers to this issue will pay off handsomely. Are the processes by which work habitually
gets done in the organization appropriate for this new problem? And will the values of the organization
cause this initiative to get high priority, or to languish?
If the answer to these questions is no, it’s okay. Understanding problems is the most crucial step in
solving them. Wishful thinking about this issue can set teams charged with developing and
implementing an innovation on a course fraught with roadblocks, second-guessing, and frustration. The
reasons why innovation often seems to be so difficult for established firms is that they employ highly
capable people, and then set them to work within processes and values that weren’t designed to
facilitate success with the task at hand. Ensuring that capable people are ensconced in capable
organizations is a major management responsibility in an age such as ours, when the ability to cope
with accelerating change has become so critical.
NOTES
1. See C. K. Prahalad, and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business
Review, 1990.
2. Many of these ideas emerged from wonderful, stimulating discussions with doctoral students in the
Business Policy seminar at the Harvard Business School between 1993 and 1999. I wish to thank all of
those students, but in particular Don Sull, Tom Eisenmann, Tomoyoshi Noda, Michael Raynor,
Michael Roberto, Deborah Sole, Clark Gilbert, and Michael Overdorf for their contributions to these
ideas.
3. The most logical, comprehensive characterization of processes that we have seen is in David Garvin,
“The Processes of Organization and Management,” Sloan Management Review, Summer, 1998. When
we use the term “processes,” we mean for it to include all of the types of processes that Garvin has
defined.
4. See Dorothy Leonard-Barton, “Core Capabilities and Core Rigidities: A Paradox in Managing New
Product Development,” Strategic Management Journal (13), 1992, 111–125. Professor Leonardi’s
work on this topic, in my opinion, constitutes the fundamental paradigm upon which much subsequent
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