Book Summary 21 — Innovator’s Dilemma

The Innovator’s Dilemma describes how companies become successful and how exactly that breeds a culture which is a deterrent to innovation.

It does it based on the Hard Disk Industry and Hydraulic industry, as in both industries most of the incumbents failed to innovate and got replaced.

Incumbents are great at listening to the customer and do small innovations to make their products better and better.

For ground breaking innovations though there are times when you should not listen to customers, invest in a lower performance product, with lower margins and pursue a rather small market — which is all counterintuitive to large organisations.

Why incumbents struggle?

- Move upmarket for higher margins and focus on those customers
- Resource allocation towards more customers and higher margins
- Risk averseness — safer to go with existing tech and market
- Current customers demand performance, new tech is yet inferior

How to do it right?

Match product to customers (who need less performance but prefer other beneficial features of innovation)
- Create small teams (ideally outside of org) to get excited about small wins
- Plan to fail early and inexpensively
- Utilise resources, but give freedom and dedicated resources to innovation
- Split out the new innovation company / keep is separated