while managers may think they control the flow of resources in their firms, in the end it is really customers and investors who dictate how money will be spent because companies with investment patterns that don’t satisfy their customers and investors don’t survive.

When a threatening disruptive technology requires a different cost structure in order to be profitable and competitive, or when the current size of the opportunity is insignificant relative to the growth needs of the mainstream organization, then—and only then—is a spin-out organization a required part of the solution.

The truth is, every time managers take an action or make a plan, they do it with the belief that if they take the actions they envision, they’ll get the results they need.

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. Those that run out of resources or credibility before they can iterate toward a viable strateg

Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheap

I defined established firms to be those that had been established in the industry prior to the advent of the technology in question, practicing the prior technology. I defined entrant firms as those that were new to the industry at that point of technology change. Hence, a given firm would be considered an entrant at one specific point in the indus

This observation supports a somewhat controversial theory called resource dependence, propounded by a minority of management scholars, 1 which posits that companies’ freedom of action is limited to satisfying the needs of those entities outside the firm (customers and investors, primarily) that give it the resources it needs to survive.

The highest-performing companies, in fact, are those that are the best at this, that is, they have well-developed systems for killing ideas that their customers don’t want.

A key metric of good management, in fact, is whether such clear and consistent values have permeated the organization. 6