An organization’s capabilities reside in two places. The first is in its processes—the methods by which people have learned to transform inputs of labor, energy, materials, information, cash, and technology into outputs of higher value. The second is in the organization’s values, which are the criteria that managers and employees in the

a process that defines a capability in executing a certain task concurrently defines disabilities in executing other tasks.

that companies’ organizational structures typically facilitate component-level innovations, because most product development organizations consist of subgroups that correspond to a product’s components. Such systems work very well as long as the product’s fundamental architecture does not require change. But, say the authors, when architectural

Hence, it is not just the customers of an established firm that hold it captive to their needs. Established firms are also captive to the financial structure and organizational culture inherent in the value network in which they compete—a captivity that can block any rationale for timely investment in the next wave

If history is any guide, companies that keep disruptive technologies bottled up in their labs, working to improve them until they suit mainstream markets, will not be nearly as successful as firms that find markets that embrace the attributes of disruptive technologies as they initially stand.

Generally disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches.

There are times at which it is right not to listen to customers, right to invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial, markets.

there is something about the way decisions get made in successful organizations that sows the seeds of eventual failure.

Guessing the right strategy at the outset isn’t nearly as important to success as conserving enough resources (or having the relationships with trusting backers or investors) so that new business initiatives get a second or third stab at getting it right.