Disruptive Technologies: Catching the Wave

Disruptive Technologies: Catching the Wave

Joseph L.Bower, Clayton M.Christensen · 1995 (View Paper)

One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change…. Although most managers like to think they are in control, customers wield extraordinary power in directing a company’s investments.

This paper summarises the key points from the ‘The Innovator’s Dilemma’ book by the same author.

• Leading companies often fail to maintain their dominance when new technologies or markets emerge, despite investing heavily in technologies for their current customers.
• Established companies tend to focus on existing customers' needs, which can cause them to overlook or underinvest in emerging technologies that do not initially meet these needs.
• Disruptive technologies initially offer lower performance in key areas valued by mainstream customers but often improve rapidly, eventually meeting or surpassing market needs.
• To successfully capitalise on disruptive technologies, companies must protect them from internal processes focused on existing markets. This often requires creating separate, independent organisations.
• Different types of innovations impact product performance differently. Sustaining technologies improve performance in established markets, while disruptive technologies introduce new performance attributes that eventually appeal to mainstream markets.
• Managers should identify and assess disruptive technologies by considering their potential future performance and the emergence of new markets, rather than focusing solely on immediate profitability.
• Established companies often struggle to allocate resources to disruptive technologies because they appear financially unattractive compared to sustaining technologies.
• Companies should manage disruptive technologies in independent units to avoid conflicts with the mainstream business, allowing the new technology to develop fully.
• For a corporation to thrive, it must be willing to allow older business units to decline as new ones rise, even if that means disrupting its own market.