Innovator's Dilemma
The paradox where successful companies fail by doing what made them successful.
Also known as: Christensen's dilemma, Disruption dilemma, Success paradox
Category: Concepts
Tags: innovations, strategies, disruption, businesses, competitions
Explanation
The Innovator's Dilemma, from Clayton Christensen's seminal book, describes why successful, well-managed companies can fail precisely by doing what made them successful. The dilemma: serving current customers well requires ignoring disruptive innovations that initially seem inferior. Rational decisions (pursuing larger margins, listening to customers) lead to vulnerability. The dilemma occurs because: disruptive innovations start in small markets incumbents disdain, they underperform on metrics current customers value, and organizational resources/processes are optimized for sustaining innovation. By the time disruption threatens core business, it's often too late to respond effectively. Solutions include: creating separate organizations for disruptive innovation, acquiring disruptors, and building organizational ambidexterity. For knowledge workers, the innovator's dilemma explains: why industry leaders fail, why startups beat incumbents, and why personal success can create blind spots to new approaches.
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