Book Critique (1)

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A BOOK CRITIQUE ON THE INNOVATOR’S DILEMMA WHEN NEW TECHNOLOGIES CAUSE GREAT FIRMS TO FAIL Submitted By Navneet Kaur

The Innovator’s Dilemma offer critical insights regarding the reasons behind the failure of companies that are well-managed, invest aggressively in their customers, and has technical astuteness, and still, lose their supremacy in the market. The book validates that sound leadership and good business practices can essentially disseminate the seeds of failure and the subsequent demise of the firm. However, the dilemma is that propagating the right things in the organizational culture such as fulfilling the customer’s desires and directing organizational resources on activities that promise exceptional returns can plausibly lead to market failure when confronted with disruptive technology. Although, the firms would inevitably resist Christensen’s stance based on the underlying business theory that endorses that all business decisions should be made keeping in view the need of the customers since the customer is the “king” of the market. Nevertheless, while gauging on a deeper level, Christensen refutes this assumption by pointing out that customers often are unaware of their inherent needs and exhibit an unclear tendency towards their wants and needs. The companies thus must drive the advancement of disruptive technologies that have the potential to fulfill their needs in the near future. This argument could be further defended by recognizing the tactically significant distinction between sustaining and disruptive technologies, both of which bears a substantial effect on a firm’s performance. A sustaining technology is one that organizations develop to enhance product performance. These technologies are fundamentally the tools to increase the capabilities of the existing products that the major customers in the conventional markets value. Nonetheless, the significance of sustaining technologies cannot be undermined considering that they increase profitability and boosts the loyalty of the customers towards the organization. However, while trying to create a niche based on sustaining technologies, the firms often fail to recognize that the basic purpose of new technology is to carve out new opportunities and not just restricted to enhance the performance of existing products and services. This is where the role of disruptive technology comes into existence. Particularly, disruptive technology is often less valued by existing companies as these technologies could seldom be employed in established markets initially. Disruptive technologies usually offer a whole set of different attributes valued only in new markets. Consequently, disruptive technologies are unlikely to be embraced initially by organizations emphasizing high returns and maximizing value to their customers. Generally, such technologies are accepted initially by the least lucrative customer. These technologies are characterized by the worst performance in the short run, but convey enormous market value in the long term. Thus, an essential argument put forth by Christensen is that the more the incentive to better align with the needs of the existing customers by enhancing the performance trajectory of the existing technology, the more possible that the established organization would be blindsided to a market for fresh technology formed by the emerging firm (Dew et al., 2008).

Therefore, the crucial point is that the emphasis on short-term goals as compared to the more tactical long-term goals, in turn, results in organizations losing their strategic dominance over competitors. While simple in approach, the motivation to follow long-term goals for attaining a competitive edge is relatively difficult to implement since it entails a great degree of uncertainty. The notion of a value network offers further elaboration in this regard. In particular, the scope of the activities that a firm can pursue is strongly defined by its value network. Thus, a value network greatly affects the organizational strategy and governs its acumen in discerning the monetary value of sustaining and disruptive innovations. Consequently, established firms are more likely to pursue innovations that fulfill their requirements within the purview of their value network, irrespective of the inherent difficulty or technical attribute. Contrary, established organizations are expected to lag in disruptive technology despite being inherently simple since its application is only directed toward meeting customer demands in the low-end emerging segment. Another significant argument put forth by Christensen about the underlying process of disruptive technology is that organizations that lead the existing product market are usually not the same that thrive with disruptive technology. I believe this assertion goes beyond the notion of resource dependence, which posits that an organization’s actions are confined to gratifying the desires of the external stakeholders (i.e., investors and customers) as they provide the essential resources for the survival of the organization. Certainly, customers exert an enormous influence in channelizing an organization’s investment. Consequently, organizations will invest more resources in accomplishing the underlying desires of their most demanding customers through improvements in sustaining technologies. A diversity of reasons could be accounted for the exhibition of this tendency and the ultimate failure of the “best-managed” organizations (Alles, 2002; Dew et al., 2008). First, the potential competencies of the products manufactured as a result of disruptive technology are usually not in congruence with the anticipations of the majority of the existing customers. Thus, if organizations depend on their existing customers to direct them about their future products, it is more likely that the majority of the customers would fail to discern the enormous value of disruptive technology. Moreover, if the majority of customers show less predisposition toward the phenomenon of disruptive technology, it would be difficult for organizations to defend their investment in disruptive technology especially if it entails withdrawing resources from activities that improve sustaining innovations that are dedicated to the conventional customers. Second, the small returns generated by the disruptive technology in the beginning also induce the organizations to perceive it as inconsequential, and pre-emptively surrender the market for disruptive technology to the entrants. However, what organizations lack is the vision to forecast that the investment in disruptive technology could ultimately disrupt their market space. Hence, a disruptive technology may not yield the profitability that an organization enjoys with the prevailing market initially, however, the arrival of disruptive technology warrants that those returns are not maintainable in the future either. One could also argue that the greater the size of the firm, the bigger the opportunity should be to emerge on the organization’s “radar screens”. As put forth by Christensen, a $ 4 billion firm would assess the opportunity to potentially gain $ 8 million from the market in a

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different way compared to the management of the $ 40 million firm. Thus, the entrants are more likely to immerse in disruptive technology initially than an incumbent organization (Alles, 2002). Now, the question arises considering these challenges, how can organizations succeed in uncovering the importance of capitalizing on disruptive technologies? In this regard, Christensen has suggested important strategies that firms can utilize to successfully pursue the path of disruptive technology:  A sub-organization can be established especially when the firm’s inherent values make it difficult to emphasize disruptive technology. In my view, this is significant since big firms cannot distribute freely the resources required to develop a competitive position in emerging markets. Thus, a spin-out organization is a desirable option when a different type of cost structure is needed for making disruptive technology more profitable. A small organization will also be feasible in cases where the size of the prospective opportunity is small in comparison to the long-term strategic plans of the mainstream firm. Thus, these small organizations should be provided with the requisite autonomy to plunge into disruptive technologies instead of directing mainstream organizations to invest and exert all their efforts on disruptive technology.  Firms looking for a market for disruptive technology should prepare to fail quickly and inexpensively with an objective that they can attempt again without losing their credibility.  Instead of trying to fit a disruptive technology into the market for sustaining technologies, companies should hunt for new markets to adopt the disruptive technology. Though one could possibly argue that the information needed to make informed decisions are not readily available in the case of disruptive technology. Thus, it has to be developed through flexible, fast, and inexpensive forays into the product market. Consequently, the uncertainty is extremely high and any specific conception about the attribute or product application might not prove to be feasible. Hence, the quest for success with disruptive technology is intrinsically linked to failure and iterative learning. Organizations that abstain from expending their entire resources have a scope to learn from their mistakes and try again and can succeed in gaining the knowledge necessary for commercializing disruptive innovations. For instance; Honda’s initial strategy for entering the North American market was inaccurate. However, the company refrained from exhausting its entire resources on the big-bike policy and it subsequently emerged successful after identifying the right strategy. In particular, disruptive innovations' potential market uses are not only unknown at the time of their development, but they are also incomprehensible. The tactics and approaches that the managers at the upper echelons develop for approaching any change related to disruptive technology, thus, should be strategies for knowledge and learning instead of plans of implementation. Understanding this is crucial because organizations who think they know the dynamics of the market will plan and invest substantially differently from those who are aware of the inherent uncertainties in a growing market. In the case of sustaining innovations, a planned approach for developing products is not only critical but is also possible as the customer’s desires are known. However, it is difficult to estimate with precision the applications or the size of

the markets of disruptive innovations. As a consequence, the initial approaches for targeting the markets for disruptive technology will be incorrect as these innovations are unpredictable. Individual managers, however, rarely have the luxury of persevering through a series of failures in search of the winning plan. Whether they are correct or not, most managers have the mistaken belief that they cannot fail because if they support a project that fails, it would reflect poorly on their record and prevent them from moving up the organization. This, in turn, acts as a limiting factor for established firms to continue the pursuit of disruptive innovations (Rothwell, 2000; Books, 2016). In this book, the most influential tool rendered by Christensen was the diagrammatic portrayal that represents jointly the trajectories of (a). performance requirements for various segments of markets and (b) performance provided by various technologies. According to Christensen’s paradigm, disruption happens when the performance trajectory offered by the disruptive innovation crosses the performance trajectory required in the conventional market. However, it should be noted that Christensen has only relied on one or two aspects of performance that govern the consumer’s choice. To demonstrate, capacity and size were the focal aspects that dominate the choice of the customers in the disk drive industry. Nevertheless, the underlying dimensions of performance could be much higher in some cases, and the consumers usually evaluate each and every dimension against each other, thus creating a complicated collection of variables. For example, in the case of cars, the critical performance aspects are reliability, fuel efficiency, range, operating costs, speed, etc. Thus, the usage of performance trajectories may be difficult due to a large number of pertinent performance characteristics and their intricate interactions (Danneels, 2004). Further, an important highlight is an elaboration on the underlying characteristics of disruptive technology. Christensen noted that disruptive innovations are characteristically simpler, more convenient, and inexpensive as compared to sustaining innovations. However, these attributes may be typical but not essential attributes to constitute disruptive innovations. For example, Do conventional consumers in general never value disruptive innovations at first? Do disruptive innovations always begin in the lower market segments? While Amazon.com began in the conventional market, Mini-mills began in the lower-end segment. The underlying concern is if an innovation fails to fulfill these ancillary attributes, will it not constitute a disruptive technology? In this regard, Christensen argued that some of these attributes are necessary for an innovation to be disruptive. It is suggested that crucial to the process of disruption is that these innovations emerge in the lower-end markets and subsequently enhance their performance to accomplish the customers’ desires in the upper-end market. When this happens, incumbents are disrupted. The book also contains suggestions for entering emerging markets. An attempt has been made to integrate the conflicting perspectives of conventional wisdom: (a) Organizations should enter the market quickly; (b) it is advisable to delay until the innovators solve the key risks. In this regard, Christensen highlighted that firms can afford to wait with sustaining innovations. However, in the case of disruptive innovations, the benefits associated with the first-mover advantage are enormous. Firms that penetrated into the new value chains made

possible by disruptive innovations of disk drives in the first two years after the advent of disk drives had a sixfold greater chance of success than later. Conclusion To conclude, the sustaining-disruptive theory postulated by Christensen is powerful. Christensen proactively suggested that while assessing the strategies for exploiting the dynamics of disruptive innovation, it is advisable that the managers act beyond the conventional model of emphasizing large markets, listening to customers’ demands, and relying solely on the high-end market. Though often the customers of incumbent organizations wield an exceptional influence on organizational resources and keep them away from implementing disruptive innovations (Rothwell, 2000). Another key disabling variable that inflicts incumbent organizations as they strive to sustain their growth momentum is that the bigger and the more profitable, they become, the more complicated it will be to justify the rationale for capitalizing on disruptive innovation by entering new markets. This inevitably highlights that the organization should shift its focus to more tactical and long-term goals instead of running the business with an exclusive short-term vision. However, the accomplishment of this depends entirely on the vision of the top management. I view the framework propagated by Christensen as suitable for catching the wave of disruptive technology. The key point in effectively executing this framework is implementing buy-in for the vision across various management levels. Christensen strongly suggested that the leading firms can succeed in disruptive technology by setting up a small sub-organization that operates on resources and values required to develop disruptive technology for the new low-end markets. References: Alles, M. G. (2002). A critical analysis of the" innovators dilemma": Why should new technologies cause great firms to fail? International Journal of Digital Accounting Research , 2 (4), 235–266 Books, W. (2016). Summary and Analysis of The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail: Based on the Book by Clayton Christensen . Open Road Media. Danneels, E. (2004). Disruptive technology reconsidered: A critique and research agenda. Journal of Product Innovation Management , 21 (4), 246-258. Dew, N., Sarasvathy, S. D., Read, S., & Wiltbank, R. (2008). Immortal firms in mortal markets? An entrepreneurial perspective on the “innovator's dilemma”. European Journal of Innovation Management , 11 (3), 313–329. Rothwell, J (2000). Jed Rothwell’s review of: The innovator's dilemma: when new technologies cause great firms to fail. Available at: http:// faculty.citadel.edu/sobel/Technology%20Class%20Readings/Innovators %20Dilemma%20Book%20Review%202.pdf (accessed on 10 November 2022).

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Self-Assessment of Performance Major Written Assignment Narrative Self-Assessment: Comment on your effort overall and if the work you produced is useful – The Innovator’s Dilemma offer critical insights regarding the reasons behind the failure of companies that are well-managed, invest aggressively in their customers, and has technical astuteness, and still, lose their supremacy in the market. The book was designed to make the reader know about disruptive/sustaining innovations and how they yield an enormous influence on a firm’s revenues. I believe I have tried to understand the intricacies and the various theories propounded by Christensen in his work titled “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”. Although the details of the book are inherently technical in nature as it elaborates on the technical attributes of various industries such as hard disk and their resulting encounters with disruptive technology. But I have tried to understand exhaustively the underlying concepts and the associated theories. The resulting critical analysis of the book hence incorporates all the essential elements. Not only this, but I have also tried to substantiate each and every point with detailed logic and underlying theory. While assessing my work, the readers will clearly be able to gauge the reasons behind the failure of well-managed firms. My work follows a clear progression and concludes with a thorough conclusion. The work exhibited thus incorporates a critical evaluation of the important aspects covered in the book. For instance, I have tried to critically evaluate the essential and the ancillary attributes of disruptive innovation, so as to make the reader aware of when a technology can essentially be called a disruptive technology. Accordingly, I endorse that the work produced by me is of high quality and useful for discerning the dynamics of disruptive innovations. To what degree did you challenge yourself to think and how creative was your output? Be specific and discuss how you measure your effort – While completing my assignment, I definitely view that I have gone over and above in assimilating and reflecting on the main ideas. Although the work is inherently based on Christensen’s book, however, I have also tried to utilize additional sources to make my work more engaging and enriching. Not only I have tried to utilize the relevant literature from academic journals but I also tried to read newspaper articles to grasp each and every aspect in detail. This approach has inevitably assisted me in contributing in meaningful ways. For instance, the work produced by Dew et al. (2008) has essentially helped me in relating the core concepts with the underlying theories. Further, the assertions of Alles (2002) facilitated me in delving deeper and gaining more insights regarding the critical assumptions and how the traditional models of management cannot fully explain the process of disruptive innovations and their consequent effect on the market. Thus, the exploration of additional sources has helped me in putting forth my ideas with more precision and clarity. The practice to

support the assertions with supplementary literature has aided in the development of more comprehensive and logical explanations. How well do you communicate your ideas? How would others judge the quality and usefulness of your effort? - To the best of my efforts, I believe the various ideas endorsed in my assignment are expressed clearly. I made it a point that the resulting assessment should not be haphazard. Every aspect is supported clearly with associated theory and reasoning. Further, the various aspects are also corroborated with relevant examples to demonstrate the concept in a clearer way. I have essentially tried to assimilate all the suggested guidelines while completing this assignment. The preface section apparently clearly describes the purpose of the study. Every detail on its own is self-sufficient and supplemented with additional sources. While doing this assignment, I have tried to reflect deeply on the concepts of resource dependence and value networks and their consequential effects on firms’ efforts in capitalizing on disruptive innovations. I have also reflected critically on the various performance dimensions suggested by Christensen and how they govern the consumer’s choice. For example, as suggested by Christensen, size and capacity are the key aspects that dominated the consumer’s choice in the disk drive industry. However, I also tried to bring forth a point that the underlying dimensions of performance could be much higher in some cases, such as cars. Consequently, a complicated collection of variables would emerge since the consumers usually evaluate each and every dimension against each other. Thus, in my view, this has definitely resulted in reflecting critically on the usage of performance trajectories and their intricate interactions with the performance dimensions. Did you complete your work with a clear and relatable purpose? Is your perspective apparent and obvious? – Before I began working on this assignment, the apparent purpose was to discern in detail the various intricacies of sustaining and disruptive innovations. Although, Christensen has suggested in detail how good leadership itself can disseminate the seeds of failure. However, the dilemma is how the inculcation of the right things such as listening attentively to customers and investing organizational resources in activities that promise exceptional returns can possibly lead to failure when confronted with disruptive technology. Thus, my entire focus was to identify the various aspects and the reasons that lead to the failure of well-managed firms. This is clearly reflected in my assignment while I was trying to gain more insights and further explanations. I consider that the underlying work by Christensen has helped me in refining my understanding and perceptions regarding the phenomenon of disruptive innovations. Further, the exploration of additional literature has assisted me in discerning the concepts in more detail. This is evidently reflected in my efforts.

For the Rubrics that follow change the type to RED to indicate which attribute best reflects your work – Capstone Level 4 is not commonly selected. THINK AND CREATE: Use multiple thinking strategies to explore creative avenues of expression, solve problems, and make consequential decisions. Capstone 4 Milestones 3 2 Benchmark 1 Define Problem While doing this assignment, I have apparently constructed the objectives and the problem statement in a logical and clear way. An effort has been made to gauge all the important variables before formulating the problem statement. Identify Strategies Yes, I have utilized various approaches and concepts for discerning the reasons behind the failure of well-managed firms. These concepts can essentially be applied within the framework of the present study. Evidence Selecting and using information to investigate a point of view or conclusion I have relied on additional sources to give the viewpoints in a comprehensive way. The viewpoints endorsed by the various experts were analyzed critically and the conclusions were drawn accordingly. Evaluate Potential Solutions The analysis of the various solutions is adequate and is rendered with detailed explanations. Various alternative strategies, such as prior literature,

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and the background of the problem, have been considered. The reasoning included is logical and the feasibility of the solution was reflected in detail. Innovative Thinking Novelty or uniqueness (of idea, claim, question, form, etc.) Since I have corroborated my findings with additional sources, I was able to extend a novel idea that essentially develops a piece of new knowledge. COMMUNICATE: Acquire, articulate, create and convey intended meaning Capstone 4 Milestones 3 2 Benchmark 1 Sources and Evidence to Accomplish a Specific Purpose The assignment relied on additional sources to provide further support to the underlying ideas. Further, all the relevant sources utilized are well-suited within the context of the study and facilitated in accomplishing the intended objective. Central Message The main idea is apparently clear. It is consistent and strongly supported by underlying theories and concepts. Integrated Communication The format and the structure of the assignment are appropriate in a way that improves the meaning. The underlying expressions and thoughts are clearly expressed. The style of the language is lucid. The various expressions are communicated in such a way that they express an integrative message. Business Communication Best Practices 1. Don’t sugarcoat your message – tell the truth! 2. Communicate complex situations in a simple way. 3. Don’t share messages, enhance dialogues! 4. Don’t guess, get to know your audiences 5. Don’t inform, inspire your audiences 6. Don’t make your employee and external audiences wait. Get ready to answer their questions. Anytime! 7. Remember the power of storytelling. 8. Make life easier for your audience in the era of information overload. 9. Align your message with your medium – you have to be consistent consistently. 10. Measure the success of your communication – ask for and seek out feedback! Your ‘gut’ just might be

wrong! CLARIFY PURPOSE AND PERSPECTIVE: Explore one’s life purpose and meaning through an understanding of self, relationships, and diverse global perspectives. Capstone 4 Milestones 3 2 Benchmark 1 Reflection I have relied on the integrative utilization of experiences acquired in the past to reflect deeply on the various critical concepts. The interactions and discussion within the preview of the classroom have also helped in developing deeper reflections about educational and life decisions. This has certainly enhanced my knowledge and has provided a base for seeking more maturity and growth in the future. Attitudes Openness, tolerance and respect The disruptive technology and innovation course consist of individuals from various disciplines and ethnicities. As an individual, I have always recognized the importance of initiating and developing conversations with people who belong to different cultures. The idea is to assimilate the experiences gained from such interactions into an enriching experience. However, this also entails that there should be an absence of judgment while valuing such interactions. As an individual, I have consistently endorsed this opinion. Connections to Experience Connects relevant experience and academic knowledge I endeavor to effectively integrate the experiences gained in life and the work domain to broaden my understanding and the viewpoints of others. For instance, I have always tried to draw from the experience gained during my doctoral study to reflect deeply and in a meaningful way during classroom discussions. The experiences I have acquired during my graduate assistantship have also facilitated me to contribute significantly and enhance classroom discussions in an effective way.

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Book Critique (1)

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