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The inspiration for Clayton M. Christensen's seminal theory on disruptive technology came from watching the Digital Equipment Corporation's fall in 1988. How could the management team that had been rightfully lauded for its brilliance by every popular business publication have stumbled so badly? As Digital's star fell, the business press blamed the ineptitude of Digital's management. But Dr. Chris... More

The inspiration for Clayton M. Christensen's seminal theory on disruptive technology came from watching the Digital Equipment Corporation's fall in 1988. How could the management team that had been rightfully lauded for its brilliance by every popular business publication have stumbled so badly? As Digital's star fell, the business press blamed the ineptitude of Digital's management. But Dr. Christensen observed that every other minicomputer company collapsed at the same time. Since no one colludes to fail, something more was at work. He concluded that the ultimate reason for the implosion of the minicomputer industry was not just the rise of the personal computer, but what the PC represented: a disruptive technology to which the minicomputer companies could not respond. His theory of disruptive technology became the basis of The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997). Named the best business book of that year by the Financial Times/Booz Allen Hamilton Global Business Book Awards, its impact was all the more potent because it prescribed no new management rules or standardized solutions, but instead confronted companies with Dr. Christensen's chilling vision of how the world works. A company can do all the right things - listen to its customers, invest in research and development, compete aggressively - and yet fall victim to a new technology or business model that seemed, at first, almost irrelevant. Leading companies declined and sometimes died not from competitors' advances, but from new players with lower-quality solutions. Conventional wisdom holds that as companies get big and successful, they become risk averse and avoid innovation. Dr. Christensen found that this was not the case. Large companies successfully embrace innovations that are what he calls sustaining technologies, which are often responsible for performance breakthroughs. He defines a sustaining technology as any innovation that enables an industry's leaders to do something better for their existing best customers. A disruptive technology, on the other hand, is a product or service that your best customers can't use and that has substantially lower profit margins than your business can support. Companies ignore disruptive technology innovations for perfectly rational reasons, but to their ultimate peril.

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