The_Innovators_Dilemma__Clayton

Figures 2.5 and 2.6 illustrate clearly the innovator’s dilemma that precipitates the failure of leading
firms. In disk drives (and in the other industries covered later in this book), prescriptions such as
increased investments in R&D; longer investment and planning horizons; technology scanning,
forecasting, and mapping; as well as research consortia and joint ventures are all relevant to the
challenges posed by the sustaining innovations whose ideal pattern is depicted in Figure 2.5. Indeed,
the evidence suggests that many of the best established firms have applied these remedies and that they
can work when managed well in treating sustaining technologies. But none of these solutions addresses
the situation in Figure 2.6, because it represents a threat of a fundamentally different nature.
Figure 2.6 Disruptive Technology S-Curve
Source: Clayton M. Christensen, “Exploring the Limits of the Technology S-Curve. Part I: Component
Technologies,” Production and Operations Management 1, no. 4 (Fall 1992): 361. Reprinted by
permission.
MANAGERIAL DECISION MAKING AND DISRUPTIVE TECHNOLOGICAL CHANGE
Competition within the value networks in which companies are embedded defines in many ways how
the firms can earn their money. The network defines the customers’ problems to be addressed by the
firm’s products and services and how much can be paid for solving them. Competition and customer
demands in the value network in many ways shape the firms’ cost structure, the firm size required to
remain competitive, and the necessary rate of growth. Thus, managerial decisions that make sense for
companies outside a value network may make no sense at all for those within it, and vice versa.
We saw, in chapter 1, a stunningly consistent pattern of successful implementation of sustaining
innovations by established firms and their failure to deal with disruptive ones. The pattern was
consistent because the managerial decisions that led to those outcomes made sense. Good managers do
what makes sense, and what makes sense is primarily shaped by their value network.
This decision-making pattern, outlined in the six steps below, emerged from my interviews with more
than eighty managers who played key roles in the disk drive industry’s leading firms, both incumbents
and entrants, at times when disruptive technologies had emerged. In these interviews I tried to
reconstruct, as accurately and from as many points of view as possible, the forces that influenced these
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