In his book, The Innovator’s Dilemma, American academic and business consultant Clayton Christensen developed the theory of “disruptive innovation,” which has had a profound impact on companies around the world. The dilemma is that businesses ignore “disruptive technologies” because initially they have lower profit margins and, when first introduced, are inferior by a large margin to existing products or services. If viable, and many innovative products fail, the new tech improves with time and eventually displaces the existing technology.
The irony is that what initially made the businesses successful—risk-taking on innovative ideas—generated such high profits that company executives became risk-averse and unwilling to gamble on new high-risk products. This makes room for new Davids to slay old Goliaths—think Microsoft and IBM, Tesla and GM, or SpaceX and NASA. Companies that don’t catch the next wave of innovation go under—think Kodak, Blockbuster, and Blackberry.
Christensen’s recommended solutions included creating separate, nimble organizations to pursue disruptive innovations, improving existing products to retain high-end market share, and looking for niche markets with upside potential.
What this insightful but one-sided book doesn’t factor into the equation is the SOURCE of innovation—the innovator.