Wednesday, January 11, 2012

Innovators Dilemma

One of my favorite books in the last year has been "The Innovators Dilemma" by Clayton Christensen. A wonderful in depth look at why innovation is so difficult in large companies and how it affects business decisions and choices. The book gives many insightful examples and the concept can be summarized as follows. 

"a technology comes along that is inferior to the incumbent, but is cheaper and has something key the incumbent doesn't have. The newcomer takes the low end of the market. And, over time, the new, cheaper technology gets better and better, and as it does it starts to eat the rest of the market." - Business Insider

The principle is easy to follow, that often large companies have existing client and technology that need to be supported and leads to tailored version improvements for those clients, therefore a new disruptive technology is not easily adopted without moving resources away from the current business. Therefore, smaller "startup" companies can innovate and build on the new technology quicker and more efficiently. As the technology becomes more valuable and adopted, then the small company gains momentum and grows. Eventually the large companies can invest in the new technology as it is more demanded by their clients and the markets, but usually it is too late to be a market leader, because their infrastructures are to fixed on the old models.

Anyhow, enjoyable read and a book that taught me as a designer a lot more about business issues and processes of innovation.

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