A Complex, Counter-Intuitive Theory
First published in 1997, the Innovator’s Dilemma has become one of the most influential business books of the early 21st Century
The Sole Focus On Margins Can Kill You
One particular principle that these managers are taught is to go after margins first. When new entrants start by attacking the least profitable products in the market, incumbents are happy to leave that segment.
All the more since overall margins increase as a result (mix effect).
“First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits.
Second, disruptive technologies typically are first commercialized in emerging or insignificant markets.
And third, leading firms’ most profitable customers generally don’t want, and indeed initially can’t use, products based on disruptive technologies.”
Learn More About Disruptive Innovation
Watch Christensen brilliantly explain, in this lecture given at the Saïd Business School, University of Oxford in 2013, one of the predictions his theory allows to make: if a new entrant comes at the bottom of the market, with a product that is “good enough” and cheaper than current alternatives, the leaders are more likely to flee than to fight.