Clayton M. Christensen, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail

During the 90s, we all know famous companies that ruled the decade. However, when the new millennium arrived, they slowly faded away. That's because most of them failed to innovate and led to bankruptcy. Take Yahoo as an example. In 2005, Yahoo was one of the leading players in the online advertising market. But Yahoo undervalued the importance of search; hence, the company decided to become a media giant. Through the years, they missed the chance of buying Google and Facebook because they refused the deal. If only the company took a few risks, maybe we would all be yahooing right now instead of googling.

The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton Christensen

Clayton Christensen is a prolific writer and author and has helped co-found multiple organizations implement his theories and positively impact businesses and organizations worldwide. He is a Professor of Business Administration at the Harvard Business School. Merited one of the world’s top experts on innovation and growth, and his ideas influenced industries and organizations globally. In 2011, Forbes featured Clayton on a cover story and was named “the most influential business thinker.” His first book, The Innovator’s Dilemma, received the Global Business Book Award as the best business book (1997). In 2011, The Economist named it one of the six most important books about business ever written. He held five honorary doctorates and an honorary chaired professorship at the Tsinghua University in Taiwan.

According to Clayton Christensen, outstanding companies can do everything right and still lose their market leadership, or worse, disappear entirely. In his book, “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997),” he not only proves his claims, but he also tells others how to avoid a similarly unfortunate fate. Ultimately, it’s not because the CEO poorly managed the company, but because the actual management processes that lead to the company’s success are the same processes that hinder their ability to pivot and try something completely new. The book demonstrates that successful companies with good products and excellent management may fail because of disruptive technologies.

Disruptive technology is an innovation that strikingly alters the way consumers, industries, or businesses operate. Clayton shows why most companies miss out on the “new waves of innovation.”

The most important takeaways that capture the phenomenon of the Innovator's Dilemma:

Disruptive technology is not alluding to the mainstream customer because it is not an incremental improvement. It will only be successful at the beginning with a niche market that values the new technology.

Big companies fail to adapt, not because of a lack of resources, but because their processes and values get in the way of developing small margin opportunities.

Successful companies focus on activities that address customers' needs, which promise higher profits that are technologically feasible and help them play in substantial markets.

A Founder's Favorite

Nate Bolt was fascinated by the personal, social, and cultural roles of technology; and how research and design can convert them. After pioneering and directing the user experience department at Clear Ink in 1999. Includes the construction of natural environment and remote observation laboratories; Nate co-founded Bolt | Peters. He serves as president and CEO, overseeing hundreds of user (UX) research studies for Hallmark, Oracle, Time Warner, Levi's, Restoration Hardware, and many others. In 2003, he created the first moderated remote user research software, Ethnio, which recruits live participants for research on websites and applications globally.

Ethnio is a research participant management platform; launched as a side project in 2006. Their niche specializes in UX research, a process of discovering the behaviors, motivations, and needs of customers through observation, task analysis, and other types of user feedback. Ethnio acts as a live survey for companies to utilize user feedback responses.

Nate Bolt, Founder/CEO of Ethnio

After leaving Facebook in 2014, he committed full-time and bootstrapped Ethnio with a team of six in remote locations. The monthly recurring revenue is about $125,000 a month, serving about 150 customers paying an average of $10,000 per year. Bolt is the spitting image of The Innovator’s Dilemma’s success story.

Nate filled the gap in customer research with innovation. With his passion for research and technology, he dedicated his work to help organizations evaluate the genuine user experience. He achieved disruptive technology by avoiding the mainstream and set Ethnio as a long-running company.

One of the substantial growth of their services is paying research participants globally. Cosmopolitan clients had difficulty in international transactions. Bolt seized the opportunity to address the issue as a side offering that mushroomed over time. Countless well-established companies fail to adapt due to small margin opportunities, but Nate surpassed and prospered.
The most successful companies always listen and adapt to their audience’s feedback. Ethnio is precisely a listening platform for research purposes and his benefit. At Ethnio’s site, they gathered positive reviews, constructive criticism, issues, and recommendations. Nate and his team not only listen but act accordingly as well.

This book by Clayton Christensen brings forth credible ideas of industries that have suffered disruptive changes, with lessons for each that provide leaders insights into what to look for within your background. Disruptive technology can be a game-changer, but the book discusses that possibly it’s not the disruption itself, but it’s how leadership anticipates and responds.

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