The Opportunity and Threat of Disruptive Technologies
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MATERIAL MATTERS
The Opportunity and Threat of Disruptive Technologies Clayton M. Christensen The following article is an edited transcript of the plenary presentation given by Clayton M. Christensen (Harvard Business School) at the 2001 Materials Research Society Fall Meeting on November 26 in Boston. I am honored to be with you today. I will give context for where the puzzles developed that have led to the research that I summarized in the book The Innovator’s Dilemma. Companies that at one point were very successful and widely admired, fell from their leadership position within 5 to 10 years. This was very poignant for minicomputer companies, for example, which collapsed after their peak in the world economy during the 1970s and 1980s. While the companies were thriving, the business press attributed their successes to the abilities of their management teams. However, when these companies began to quickly unravel around 1988, the business press attributed their failures to the ineptitude of the very same management teams that had been in place during the years of success. I wondered how good managers could get that bad that fast. I was also suspicious because the minicomputer companies fell in unison. It was not just Digital, but also Data General, Prime, Wang, and Nixdorf. While the companies could have colluded on price, they would never have colluded to collapse together. Something more fundamental had to be happening. Oddly, I found that the reason these companies failed, not just in the computer industry, but over and over again in a variety of industries, is that they were well managed.
The Disruptive Technology Model Certain paradigms of good management that we teach in business schools sow the seeds of a company’s eventual failure. Figure 1 presents a model that consists of three elements. The performance of a product or service is plotted over time. The first element of the model, represented by the dotted line, shows a 278
trajectory of improvement that customers can absorb or utilize over time. This line represents the median in every market. At the high end of every market, customers are very demanding and will never be satisfied with the best products available. At the low end are customers who can be satisfied by very little. The steeply sloping lines of the figure represent a distinctly different trajectory of improvement in the market. They represent the improvement that innovators make available as, generation after generation, they introduce new and improved products. This trajectory of technological progress almost invariably outstrips the ability of customers to utilize those improvements; companies can almost always innovate faster than people’s lives can change to fully utilize those innovations. In pursuing more profitable customers who will pay higher prices for bet-
Disruption in Action Computer Industry: From Disk Drives to Intel I initiated my study of what was driving the failure of some groups of firms with the disk drive industry. In five of six product generations in the industr
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