I just wrapped up The Innovator’s Dilemma by...

I just wrapped up The Innovator’s Dilemma by Clayton Christensen. If you’re interested in business or startups, this book is mandatory reading. It will change the way you think. No hyperbole, no exaggeration - this book will literally force you to think about business differently. It’s absolutely brilliant.

The book focuses on disruptive innovation and what companies, both new and old, can do to stay in business and ahead of the curve. Here’s a brief rundown of disruptive innovation:

Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors.

An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics.

Because companies tend to innovate faster than their customers’ lives change, most organizations eventually end up producing products or services that are too good, too expensive, and too inconvenient for many customers. By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations”.

It’s a bit to wrap your head around, but Clayton makes it all crystal clear and uses historical examples to prove his point. The book reads like a series of B-School case studies filled with numerous charts and graphs. It takes some serious concentration (and a lot of rereading) to get through, but it’s well worth it. (If you’re not a case study fan, don’t worry, most of them are skippable. Clayton summarizes all the main points at the beginning and end of every chapter.)

Along with disruptive innovation, Clayton espouses the notion that businesses need to act like startups in order to stay relevant and sustain relevant product development. The best way to do this, he claims, is for incumbents to create a small autonomous unit dedicated to pursuing new and iterative products in new markets. Essentially, incumbents need to create startups, as startups are the drivers behind disruptive innovation.

I can’t get too detailed here because this book says a lot. It’s truly enlightening. Go read it if you plan on doing anything business or technology-related in your life.