Professional Documents
Culture Documents
byClaytonM.Christensen
LoganBuchanan
October6,2005
Thesis
Wellmanagedcompaniesoftenfailbecause
becausetheverymanagementpracticesthat
haveallowedthemtobecomeindustry
leadersalsomakeitextremelydifficultfor
themtodevelopthedisruptivetechnologies
thatultimatelystealawaytheirmarkets.
p.265
Overview
Characteristicsofgoodscompanies
Whytheyfailanyway
Casestudies
Howtosucceed
RelatedKMIssues
Whatdogoodcompaniesdo
well?
Listenresponsivelytotheircustomers
Investaggressivelyinthetechnology,
products,andmanufacturingcapabilities
thatsatisfiedtheircustomersfutureneeds
Seekhighermargins
Targetlargermarketsratherthansmaller
ones
Whydogoodcompaniesfail?
Goodmanagement
TheDilemma:Thelogical,competent
decisionsofmanagementthatarecriticalto
thesuccessoftheircompaniesarealsothe
reasonswhytheylosetheirpositionsof
leadership.
Whygoodmanagementcanlead
tofailure
1. Differencebetweensustainingand
disruptivetechnologies
2. Thepaceoftechnologicalprogressoften
outstripstheneedsofthemarket.
3. Customersandfinancialstructuresof
successfulcompaniesheavilyinfluence
thetypesofinvestmentsthatappear
attractive.
TwoTypesofInnovations
Sustaining
Improveperformanceof
establishedproducts
Meetdemandsof
mainstreamcustomersin
majormarkets
Varyindifficulty,cost,
time,etc.
Establishedfirms
Disruptive
Generallyunderperform
establishedproductsin
mainstreammarkets
Havenewfeaturesthat
fringe/newcustomers
value
Cheaper,simpler,smaller,
moreconvenienttouse
Entrantfirms
Whygoodmanagementcanlead
tofailure
1. Differencebetweensustainingand
disruptivetechnologies
2. Thepaceoftechnologicalprogressoften
outstripstheneedsofthemarket.
3. Customersandfinancialstructuresof
successfulcompaniesheavilyinfluence
thetypesofinvestmentsthatappear
attractive.
MarketNeedv.Technology
Improvement
Technologiescanprogressfasterthan
demand
Suppliersgivecustomersmorethanthey
needorarewillingtopay
Allowsroomforunderperforming
disruptivetechnologies
Whygoodmanagementcanlead
tofailure
1. Differencebetweensustainingand
disruptivetechnologies
2. Thepaceoftechnologicalprogressoften
outstripstheneedsofthemarket.
3. Customersandfinancialstructuresof
successfulcompaniesheavilyinfluence
thetypesofinvestmentsthatappear
attractive.
DisruptiveTechnologiesv.
RationalInvestments
Disruptiveproductsaresimplerand
cheaper,andpromiselowermargins
Disruptivetechnologiesarefirst
commercializedinemergingorinsignificant
markets
Mostprofitablecurrentcustomersarenot
interestedintheproduct
CaseStudies
Primarytakesexamplesfromthediskdrive
industry.Equatesthistostudyingfruit
flies
Steelminimills
Mechanical excavator industry
Motorcycles
Insulin
Department and discount stores
Principlesofdisruptive
innovation
1. Companiesdependoncustomersandinvestors
forresources
2. Smallmarketsdontsolvethegrowthneedsof
largecompanies
3. Marketsthatdonotexistcannotbeanalyzed
4. Anorganizationscapabilitiesdefineits
disabilities
5. Technologysupplymaynotequalmarket
demand
RelatedKMIssues
Values&Beliefs
Valuesandbeliefsareintegraltoknowledge,
determininginlargepartwhattheknowersees,absorbs,
andconcludesfromhisobservations[]Thepowerof
knowledgetoorganize,select,learn,andjudgecomes
fromvaluesandbeliefsasmuchas,andprobablymore
than,frominformationandlogic. DavenportandPrusak,p12
Lostinnovation
SteveJobs,XeroxPARC&thegraphicalinterface
computerDavenportandPrusak,p59
MoreKMSIssues
Knowledgeistheprincipleadvantage,technology
eventuallyevensout.(Butcanknowledgeand
organizationalexperiencealsobeahindrance?)
Autonomousgroups
Managementsupportisessential,creativityshould
beencouraged
Organizationsizelargev.small
Spaceandtimearelessofaconstraintforsharing