Definition
Understanding the Innovator’s Dilemma
The Innovator’s Dilemma is a concept introduced by Harvard Business School professor Clayton M. Christensen in his 1997 book ‘The Innovator’s Dilemma’. It describes the paradox where companies that have enjoyed success by focusing on continuous improvements in their products or services, often fail when confronted with disruptive technologies or market changes.
Why the Dilemma Exists
Successful companies often become too focused on satisfying the needs of their most profitable customers, which leads them to overlook the needs of other segments. This leaves room for disruptive innovations, which initially may not meet the needs of those profitable customers, but eventually improve and start to take market share.
Overcoming the Innovator’s Dilemma
Christensen suggests that companies can overcome the Innovator’s Dilemma by setting up autonomous organizations that focus on emerging markets. These organizations are free to explore new ideas without the constraints of existing business models.
Usage Examples
1. Blockbuster’s failure to adapt to the digital age is a classic example of the Innovator’s Dilemma. Despite their success in the video rental market, they were unable to pivot when streaming services like Netflix emerged.
2. Kodak, once a leader in the photography industry, experienced the Innovator’s Dilemma when they stuck with film photography despite the advent of digital photography.
Historical Context
The term ‘Innovator’s Dilemma’ was first introduced by Clayton M. Christensen in his 1997 book ‘The Innovator’s Dilemma’. It has since become a fundamental concept in business strategy and innovation, influencing the way companies approach product development and market strategy.
Misconceptions
- The Innovator’s Dilemma does not suggest that companies should abandon their profitable customers or products. Instead, it highlights the need for companies to remain vigilant and responsive to market changes.
- The Innovator’s Dilemma is not only about technology disruption. It can occur in any industry where market preferences shift or new business models emerge.
Comparisons
- Innovator’s Dilemma vs. Disruptive Innovation: While the Innovator’s Dilemma describes the challenge faced by companies in choosing between maintaining their current success or pursuing new innovations, disruptive innovation refers to the actual innovations that disrupt existing markets and value networks.
- Innovator’s Dilemma vs. Sustaining Innovation: Sustaining innovation refers to incremental improvements made to existing products or services to meet the needs of the most demanding customers. This contrasts with the Innovator’s Dilemma, which involves a choice between sustaining innovations and disruptive innovations.
Related Concepts
- Disruptive Innovation
- Business Model Innovation
- Organizational Agility
- Change Management
