Innovator's Dilemma Part 1: Why listening to your customers is a bad idea.

Hey there!

Today we're starting with Clayton Christensen's, The Innovator's Dilemma. This book is often cited, but I don't think many understand it. One person that did read it and implemented it is Steve Jobs. But we are going to save that story for another day.

First, let's talk about the man himself. Clayton Christensen was a Harvard Business School professor and an all-around awesome guy. He is most famous for this book, but “How Will You Measure Your Life?” is my favorite. He passed away in 2020. His two most well-known theories are, the jobs-to-be-done theory, and the theory of disruptive innovation. Let's get started.

The Innovator's Dilemma focuses on how established companies can get blindsided by smaller, up-and-coming companies that introduce cheaper, simpler products that disrupt the market. It's like getting tackled by a toddler.

And this theory is not just some academic mumbo jumbo. It has real-world consequences. Christensen takes us on a journey through the rise and fall of some of the biggest companies in history. We're talking about companies like Apple, Sears, Xerox, Kodak, Nucor, Honda, and the entire computer market.

In Chapter 1, Christensen introduces the theory of disruptive innovation and lays the foundation for what's to come. He explains that companies that are successful at sustaining innovation (i.e., improving existing products) can actually be hindered by it because they get too comfortable and fail to see the potential for disruption. It's like when you get so good at doing something one way that you forget there are other ways to do it.

The book's case studies illustrate this point perfectly. Take the decline of the American steel industry and the rise of mini mills, for example. The big steel companies were so focused on their existing technology that they missed the opportunity to adopt a new, more efficient process. And as a result, mini mills started to pop up and took over the market.

The same thing happened with digital photography and Kodak's failure to adapt(Not to mention they invented the digital camera in 1975). Kodak was so focused on film technology that it failed to see the potential of digital photography. And by the time it did, it was too late. Kodak became a cautionary tale of a once-dominant company that failed to innovate and got left behind.

But here's the thing: innovation is a fickle beast, my friends. One minute you're on top of the world, the next minute you're out of business. And that's exactly what happened to a lot of tech companies in the disk drive industry.

This is the Innovator's Dilemma in action, folks. The theory goes that when a company becomes so focused on improving their existing products, they fail to notice new, disruptive technologies that could knock them off their pedestal.

It's like they're so busy staring at their own reflection, admiring how good they look, that they forget to check their blind spots. And then, bam! A startup comes out of nowhere and steals their thunder.

Take the 8-inch floppy disk, for example. It was all the rage back in the day. But then a bunch of plucky upstarts came along and started making 5.25-inch disks. And the big companies were like, "Pfft, that's cute. But who needs smaller disks with less storage space?"

Turns out, a lot of people did. Those smaller disks were perfect for personal computers, and the big guys missed the boat. And the same thing happened when 3.5-inch disks came along. The big companies were too busy patting themselves on the back for making bigger and better disks that they didn't see the value in going smaller.

But then something interesting happened. The little guys started taking over the market. And before you knew it, the established companies were scrambling to catch up.

So, what's the bottom line? The Innovator's Dilemma is a wake-up call for all companies to not get too comfortable and always be on the lookout for new opportunities. And as Clayton Christensen says, "The only way to avoid the traps caused by success is to understand the reasons behind them." So go forth and innovate, my friends, but always keep the Innovator's Dilemma in mind.