Tuesday, February 12, 2013

Clayton Christensen Wants to Transform Capitalism

Sixteen years ago a book by Clayton Christensen changed business thinking forever. The Innovator’s Dilemma looked at industries ranging from disk drives to steel to mechanical excavators and exposed a surprising phenomenon: When big companies fail, it’s often not because they do something wrong but because they do everything right. Successful businesses, Christensen explained, are trained to focus on what he calls sustaining innovations—innovations at the profitable, high end of the market, making things incrementally bigger, more powerful, and more efficient. The problem is that this leaves companies vulnerable to the disruptive innovations that emerge in the murky, low-margin bottom of the market. And this is where the true revolutions occur, creating new markets and wreaking havoc within industries. Think: the PC, the MP3, the transistor radio.