The_Innovators_Dilemma__Clayton

Bucyrus Erie was the only maker of cable-actuated shovels known to have launched a hydraulic
excavator between 1948 and 1961: All of the other manufacturers continued serving their established
customers, well and prosperously. 12 In fact, the largest makers of cable-actuated excavators, Bucyrus
Erie and Northwest Engineering, logged record profits until 1966—the point at which the disruptive
hydraulics technology had squarely intersected with customers’ needs in the sewer and piping segment.
This is typical of industries facing a disruptive technology: The leading firms in the established
technology remain financially strong until the disruptive technology is, in fact, in the midst of their
mainstream market.
Between 1947 and 1965, twenty-three companies entered the mechanical excavation market with
hydraulic products. Figure 3.6, which measures the total number of active entrants and established
firms offering hydraulic excavators (net of the companies that had exited), shows how completely the
entrants dominated the hydraulic excavator market.
In the 1960s, some of the strongest cable shovel makers introduced shovels with hydraulics. Almost all
of these models were hybrids, however, like Bucyrus Erie’s Hydrohoe, generally employing a
hydraulic cylinder to articulate or curl the bucket and using cables to extend the bucket out and to lift
the boom. When used in this way in the 1960s, hydraulics had a sustaining impact on the established
manufacturers’ products, improving their performance in the mainstream value networks. Some of the
methods that engineers found to use hydraulics on the cable excavators were truly ingenious. All of this
innovative energy, however, was targeted at existing customers.
The strategies employed by the excavator manufacturers during this period highlight an important
choice that confronts companies encountering disruptive technological change. In general, the
successful entrants accepted the capabilities of hydraulics technology in the 1940s and 1950s as a given
and cultivated new market applications in which the technology, as it existed, could create value. And
as a general rule, the established firms saw the situation the other way around: They took the market’s
needs as the given. They consequently sought to adapt or improve the technology in ways that would
allow them to market the new technology to their existing customers as a sustaining improvement. The
established firms steadfastly focused their innovative investments on their customers. Subsequent
chapters will show that this strategic choice is present in most instances of disruptive innovation.
Consistently, established firms attempt to push the technology into their established markets, while the
successful entrants find a new market that values the technology.
Figure 3.6 Manufacturers of Hydraulic Excavators, 1948-1965
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