The Innovator's Dilemma

Consider the computer industry. IBM dominated the mainframe market but missed by years the emergence of minicomputers, which were technologically much simpler than mainframes.

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.

Discovering markets for emerging technologies inherently involves failure, and most individual decision makers find it very difficult to risk backing a project that might fail because the market is not there.

In reality, spinning out is an appropriate step only when confronting disruptive innovation. The evidence is very strong that large, mainstream organizations can be extremely creative in developing and implementing sustaining innovations.

the location of the most powerful factors that define the capabilities and disabilities of organizations migrates over time —from resources toward visible, conscious processes and values, and then toward culture.

Simply put, when the best firms succeeded, they did so because they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers’ next-generation needs.

much of what the best executives in successful companies have learned about managing innovation is not relevant to disruptive technologies.

Companies stumble for many reasons, of course, among them bureaucracy, arrogance, tired executive blood, poor planning, short-term investment horizons, inadequate skills and resources, and just plain bad luck.

Unfortunately, processes are very hard to change—for two reasons. The first is that organizational boundaries are often drawn to facilitate the operation of present processes. Those boundaries can impede the creation of new processes that cut across those boundaries.