This was a short book on how and why dominant companies consistently get undercut by disruptive technologies. It uses the disk drive industry as a case study to illustrate the decisions that get made by market leaders which make sense in context, but inevitably lead to obsolescence. I thought the second half of the book, exploring how to cultivate disruptive innovation, was more interesting, in its ideas of how to construct a company and its culture that would be open to new ideas. Sounded like the kind of place I would like to work at.
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If I could pick something from the book to capture the point of the book, I would choose the following paragraph:
pp.85—86 n11
11. Makers of early hybrid ocean transports, which were steam powered but still outfitted with sails, used the same rationale for their design as did the Bucyrus Erie engineers: Steam power still was not reliable enough for the transoceanic market, so steam power plants had to be backed up by conventional technology. The advent of steam-powered ships and their substitution for wind-powered ships in the transoceanic business is itself a classic study of disruptive technology. When Robert Fulton sailed the first steamship up the Hudson River in 1819, it underperformed transoceanic sailing ships on nearly every dimension of performance: It cost more per mile to operate; it was slower; and it was prone to frequent breakdowns. Hence, it could not be used in the transoceanic value network and could only be applied in a different value network, inland waterways, in which product performance was measured very differently. In rivers and lakes, the ability to move against the wind or in the absence of a wind was the attribute most highly valued by ship captains, and along that dimension, steam outperformed sail. Some scholar (see, for example, Richard Foster, in Innovation: The Attacker’s Advantage [New York: Summit Books, 1986]) have marveled at how myopic were the makers of sailing ships, who stayed with their aging technology until the bitter end, in the early 1900s, completely ignoring steam power. Indeed, not a single maker of sailing ships survived the industry’s transition to steam power. The value network framework offers a perspective on this problem that these scholars seem to have ignored, however. It was not a problem of KNOWING about steam power or having access to technology. The problem was that the customers of the sailing ship manufacturers, who were transoceanic shippers, could not use steam-powered ships until the turn of the century. To cultivate a position in steamship building, the makers of sailing ships would have had to engineer a major strategic reorientation into the inland waterway market, because that was the only value network where steam-powered vessels were valued throughout most of the 1880s. Hence, it was these firms’ reluctance or inability to change strategy, rather than their inability to change technology, that lay at the root of their failure in the face of steam-powered vessels.
(Innovator’s dilemma, by Clayton M. Christensen, copyright © 1997, 2000, 658.4 Christen, pp.85-86 n11)