The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail

“What often causes this lagging behind are two principles of good management taught in business schools: that you should always listen to and respond to the needs of your best customers, and that you should focus investments on those innovations that promise the highest returns. But these two principles, in practice, actually sow the seeds of every successful company’s ultimate demise. That’s why we call it the innovator’s dilemma: doing the right thing is the wrong thing.”

This passage outlines the general proposition of Clayton M. Christensen’s book. Whereas most conventional business practices have led management thinkers to write and teach widely on their effectiveness, Christensen cautions that these practices have directly resulted in failure across a large number of industries. The title of the book thus raises a compelling quandary, asking how managers can overcome a unique business challenge that overwhelmingly results in failure.

“But theories are statements of cause and effect—which actions yield results, and why. As such, a good theory is consummately practical.”

Christensen makes an argument for the value of business theory, which he asserts is often shrugged off by managers who view theory as impractical. While this rings true given that management is a field that is rooted in executive actions, Christensen refutes the assumption that theory cannot help managers. To support his argument, he stresses that by studying past patterns, managers can more wisely chart a course in their present and future.

“What this implies at a deeper level is that many of what are now widely accepted principles of good management are, in fact, only situationally appropriate. There are times when it is right not to listen to customers, right to invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial, markets.”

With this bold statement, Christensen suggests working counterintuitively to conventional business wisdom. The provocative nature of his suggestion is designed to invite engagement and criticism, for the author implicitly challenges his readers to engage their critical faculties and test his theories at every stage. Moreover, his observation that certain principles are only appropriate in context hints at