This book takes the radical position that great companies can fail precisely because they do everything right. It demonstrates why outstanding companies that had their competitive antennae up, listened astutely to customers, and invested aggressively in new technologies still lost their market leadership when confronted with disruptive changes in technology and market structure. And it tells how to avoid a similar fate. Christensen argues that good business practices-such as focusing investments and technology on the most profitable products that are currently in high demand by the best customers-ultimately can weaken a great firm. Drawing on patterns of innovation in a variety of industries, including computers, retailing, pharmaceuticals, automobiles, and steel, he shows how truly important, break-through innovations-or disruptive technologies-are initially rejected by mainstream customers because they cannot currently use them. This rejection can lead firms with strong customer focus to allow strategically important innovations to languish. An excessive customer focus prevents firms from creating new markets and finding new customers for the products of the future. As they unwittingly bypass opportunities, such firms can clear the way for more nimble, entrepreneurial companies to catch the next great wave of industry growth. Using the lessons of successes and failures of leading companies, "The Innovator's Dilemma" presents a set of rules for capitalizing on the phenomenon of disruptive innovation. These principles will help managers determine when it is right not to listen to customers, when to invest in developing lower-performance products that promise lower margins, and when to pursue small markets at the expense of seemingly larger and more lucrative ones. Many companies-whether they are manufacturers or service providers, high or low tech, or competitors in rapidly changing or slowly evolving business environments-now face the innovator's dilemma. Keeping close to customers is critical for current success, but long-term growth and profit often depend upon a very different managerial formula. This book will help managers see the changes that may be coming their way and will show them how to respond for success.

Part oneWhy great companies can fail. How can great firms fail? Insights from the hard disk drive -- Value networks and the impetus to innovate -- Disruptive technological change in the mechanical excavator industry -- What goes up, can't go down -- Part two Managing disruptive technological change. Give responsibility for disruptive technologies to organizations whose customers need them -- Match the size of the organization to the size of the market -- Discovering new and emerging markets -- How to appraise your organization's capabilities and disabilities -- Performance provided, market demand, and the product life cycle -- Managing disruptive technological change: a case study -- The dilemmas of innovation: a summary