Book Review The innovator’s dilemma, By Noorulhadi noorulhadi99@yahoo.com(0092-3219091220)

1. Book Review: The Innovator’s Dilemma
Submitted to:
Dr. Qadir Baluch
Presented By:
Noorulhadi Qureshi
PhD Scholar
Islamia College University Peshawar.
noorulhadi99@yahoo.com
0092-321-9091220

2. The Innovator’s Dilemma
When Technologies
Cause Great firms to fail.
(CLAYTON M. CHRISTENSEN)
April 1997
PhD Scholar at
Islamia College University Peshawar,
Pakistan.
Noorulhadi Qureshi
Book Review By:
Submitted to:
Dr. Qadir Bakhsh Baluch.

3. About the Author
Clayton Christensen is professor at
Harvard Business School.
At the Age of 40 with 5 kids he started PhD.
With his Study he was chairman for students affair at Boston
Consultant firm.
Introduced Hedge fund since 2002 with Return of 45% return
invested in disruptive company.
Top official for congregation in church in US and Canada.
Also wrote on Religion.

4. DilemmaDilemma
Clayton Christensen writes aboutClayton Christensen writes about
failure of companies to stay/failure of companies to stay/
sustain a top when confronting bysustain a top when confronting by
technological change, it is abouttechnological change, it is about
the well managed companies whothe well managed companies who
are involved in innovation process,are involved in innovation process,
investment and change but yet failinvestment and change but yet fail
because of technological change.because of technological change.

5. Book Summary and Discussion
Book is divided in to two parts.
• Part one of this book depicts why the
great firm fail? focused on hard disk drive
industry, value network and impetus to
innovation, three industries with disruptive
innovation and at the end of first part
explained how companies overcome
the leader companies.
• Part two is about managing disruptive
technological change

6. Causes of Failure of Well
Managed Firm
1. Sustaining technology and
Disruptive Technology.
2. The Pace of Technological Progress
3. Customer and Financial Structure

7. Sustaining Technology
Sustaining technology poster the
improvement in established
product performance,
•Incremental Sustaining
•Radical Sustaining

8. Disruptive Technology
Disruptive technologies bring to a market a very different
value attributes/proposition than had been available
previously, and value to new customers, or un-demanded
market.
Disruptive Technologies are
• Cheaper
•Simpler
•Smaller
•Frequently
•And more convenient to use.

9. Summary of the Ideas and Concept
Basic Model of Disruption:
 Red Line and Blue Line in Model
 Red Model:
High Demand Customer in High Market with
High Profit
 Blue Model:
Simple Demand Customer with low margin.

10. Performance
demanded at the high
end market.
Performance
demanded at the low
end market.
Performance due to
Sustaining Technology
Performance due to
Disruptive Technology

11. Model explanation
 Technological improvement is faster than the
customer demand.
 Incremental improvement in product
performance.
 Innovation help companies in red trajectories
line for high performance, high profit and
growth.
Example the transistors, change from digital to
analog and analog to optical,

12. What innovation for in Model.
 Innovation bring dramatic change in telecom
and constituted dramatic breakthrough and
still the leaders.
 This innovation help the leader to give
 Better Product
 Better customers
 Better profit
 And be the leader in
industry by sustainability.

13. Finding from Model
 Disruption start from the bottom market.
 Disruption technology’s product in not used
for breakthrough improvement instead of
sustaining,
 A product that was not as good as leader
provide but affordable, simple and easy to
use.
 Entrance by cheap product and than
improved to kill the leader.

14. Case Studies
In 1980’s Microsoft
and IBM introduced
their products at low
price at bottom
market than went up
up and up and
become the leaders
of the IT technology.

15. Case Study of Disk Drive:
1956: IBM ships the first hard
drive in the RAMAC 305
system. The drive holds 5MB
of data at $10,000 a
megabyte. The system is as
big as two refrigerators and
uses 50 24-inch platters.

18. A Western Digital 3.5 inch
250 GB SATA-HDD; this
specific model features both
SATA and Molex power
inputs San Jose Research
Laboratory.
Disk Drive

19.  1956 – IBM 350, first commercial disk drive, 5 million
characters
 1961 – IBM 1301 Disk Storage Unit introduced with one
head per surface and aerodynamic flying heads, 28
million characters per module
 1962 – IBM 1311 introduced removable disk packs
containing 6 disks, storing 2 million characters per pack
 1964 – IBM 2311 with 7.25 megabytes per disk pack
 1964 – IBM 2310 removable cartridge disk drive with
1.02 MB on one disk
 1965 – IBM 2314 with 11 disks and 29 MB per disk
pack
 1968 – Memorex is first to ship an IBM-plug-compatible
disk drive
 1970 – IBM 3330 Merlin, introduced error correction,
100 MB per disk pack
 1973 – IBM 3340 Winchester introduced removable
sealed disk packs that included head and arm assembly,
35 or 70 MB per pack

20.  1973 – CDC SMD announced and shipped, 40 MB disk pack
 1976 - 1976 IBM 3350 "Madrid"—317.5 Megabytes, eight 14"
disks, Re-introduction of disk drive with fixed disk media
 1979 – IBM 3370 introduced thin film heads, 571 MB, non-
removable
 1979 - 1979 IBM 62PC "Piccolo" – 64.5 Megabytes, six 8"
disks, First 8-inch HDD
 1980 – The world's first gigabyte-capacity disk drive, the IBM
3380, was the size of a refrigerator, weighed 550 pounds
(about 250 kg), and had a price tag of
$40,000( $111 thousand in present day terms ), 2.52 GB
 1980 – ST-506 first 5¼ inch drive released with capacity of 5
megabytes, cost $1500
 1983 - RO351/RO352 first 3½ inch drive released with
capacity of 10 megabytes
 1986 – Standardization of SCSI
 1988 - PrairieTek 220 – 20 Megabytes, two 2.5" disks, First
2.5 inch HDD.
 1989 – Jimmy Zhu and H. Neal Bertram from UCSD proposed
exchange decoupled granular microstructure for thin film disk
storage media, still used today.

21.  1990 – 1990 IBM 0681 "Redwing" – 857 Megabytes, twelve 5.25"
disks. First HDD with PRML Technology (Digital Read Channel with
'Partial Response Maximum Likelihood' algorithm)
 1991 - IBM 0663 "Corsair" – 1,004 Megabytes, eight 3.5" disks;
first HDD using magnetoresistive heads
 1991 - Integral Peripherals 1820 "Mustang" – 21.4 Megabytes, one
1.8" disk, first 1.8 inch HDD[16]
 1992 – HP Kittyhawk first 1.3-inch hard-disk drive –
 1993 – IBM 3390 model 9, the last Single Large Expensive Disk
drive announced by IBM
 1994 – IBM introduces Laser Textured Landing Zones (LZT)
 1997 – IBM Deskstar 16GP "Titan" – 16,800 Megabytes, five 3.5"
disks; first (Giant Magnetoresistance) heads
 1997 – Seagate introduces the first hard drive with fluid bearings
[17]
 1998 – UltraDMA/33 and ATAPI standardized
 1999 – IBM releases the Microdrive in 170 MB and 340 MB
capacities
 2002 – 137 GB addressing space barrier broken
 2003 – Serial ATA introduced
 2003 – IBM sells disk drive division to Hitachi
 2004 – MK2001MTN first 0.85 inch drive released by IBM with
capacity of 2 gigabytes[16]
 2005 – First 500 GB hard drive shipping (Hitachi GST)

22.  2005 – Serial ATA 3Gbit/s standardized
 2005 – Seagate introduces Tunnel MagnetoResistive Read Sensor
(TMR) and Thermal Spacing Control
 2005 – Introduction of faster SAS (Serial Attached SCSI)
 2005 – First Perpendicular recording HDD shipped: Toshiba 1.8-inch
40/80 GB
 2006 – First 750 GB hard drive (Seagate)
 2006 – First 200 GB 2.5" hard drive utilizing Perpendicular
recording (Toshiba)
 2006 – Fujitsu develops heat-assisted magnetic recording (HAMR) that
could one day achieve one terabit per square inch densities.
 2007 – First 1 terabyte hard drive (Hitachi GST)
 2008 – First 1.5 terabyte hard drive (Seagate)
 2009 – First 2.0 terabyte hard drive (Western Digital)
 2010 – First 3.0 terabyte hard drive (Seagate, Western Digital)
 2010 – First Hard Drive Manufactured by using the Advanced Format of
4,096 bytes a block ("4K") instead of 512 bytes a block
 2011 – First 4.0 terabyte hard drive (Seagate)
 2012 - Western Digital announces the first 2.5-inch, 5mm thick drive,
and the first 2.5-inch, 7mm thick drive with two platters. (Western
Digital)
 2012 - HGST announces helium-filled hard disk drives, promising
cooler operation and the ability to increase the maximum number of
platters from five to seven in the 3.5" form factor.(Hitachi GST)
 2012 - TDK demonstrates 2TB on a single 3.5-inch platter.

23.
• Before 1960 only integrated Steel Mills
were involve in manufacturing of steel
using natural resources for raw materials
with 6% profit margin.
• Disruptive technology got entry in 1960 by
MiniMills, using scrape material, 20% lower
cost with 12% profit.
Four rang of Steel.
From crummy range to high quality product
Case Study of Steel-Mill:

24.
Integrated Mill (8 Billion US$)Integrated Mill (8 Billion US$)
An integrated steel mill has all the functions forAn integrated steel mill has all the functions for
primary steel production:primary steel production:
iron making (conversion of ore to liquid iron),iron making (conversion of ore to liquid iron),
steelmaking (conversion of pig iron to liquid steel),steelmaking (conversion of pig iron to liquid steel),
casting (solidification of the liquid steel),casting (solidification of the liquid steel),
roughing rolling/billet rolling (reducing size of blocks)roughing rolling/billet rolling (reducing size of blocks)
product rolling (finished shapes).product rolling (finished shapes).
The principal raw materials for an integrated mill areThe principal raw materials for an integrated mill are

25. Mini Mill
A steel mini mill is a
facility which produces
steel products from
recycled scrap metal.
Unlike integrated steel
mills, which make new
steel from iron ore in a
blast furnace, mini mills
melt and refine scrap
steel using electric arc
furnace (EAF)
technology.

26. Minimill vs Integrated Steel Mill

27. MiniMills vs Integrated Mills
Rang 1: 1960-1979
Started from crummy
product with in 10 years
capture the whole market
this range and expand
market,
Rang 2: 1979 to 1984
On demand of customer
with low cost strategy
started production of Bar
steel and improved
market.
Rang 1:
Postpone the production
and show high profit
because this production
badly effect the profit
margin.,
Rang 2:
Its sales were reduced
and also left the
production of this range

28. Minimill vs integrated mill

29. MiniMills vs Integrated Mills
Rang 3: 1985-1990
Started the production of
angle bar steel with 18%
profit margin that attract
investors, creditors and
customers
Rang 4: 1990 and 1996
Started the highest rang of
production, 1996 captured
whole market.
Rang 3:
Its market collapsed and
out of the market in three
range and difficult for them
to survive by one range of
production
Rang 4:
Bankrupt, Clayton want to
call them stupid managers
to allow minimill in
entrance.

30. Minimill vs Integrated Mill

31.  Toyota did not start from laxus, Toyota, too,
does not have a long automotive lineage like
some car makers, having brought its first
vehicle to the U.S. in 1957.
 Hit the bottom market of North America by
Introducing passenger car and fleeing up up
and up to the big vehicles.
 Now Toyota strategy to cope competitors to
compete with them by high product and killed
them from bottom market.
Case Study of Toyota vs General Motor and Ford

32. 1957 - Crown becomes first
passenger car made in
Japan to be exported to the
United States.
The first generation Corona,
introduced in May 1957,
The Land Cruiser FJ25 was
introduced to the U.S. in
1958 as a two-door utility
vehicle

34. The Corolla E70 was the fourth
generation of cars sold by Toyota
1980

35. Lexus 1983

36. The 1990 Celica was officially
unveiled in September 1989

37. By Disruptive Technology
• Toyota become the leaders competitors
among General Motor and Ford in USA.

38. Case Study: Shovel Industry
Hydraulics Eruption was
innovation introduced the
Hydro Shavel with better
performance but not suit for
field, customers don’t need it
and neither knew the use of it.

39. Case Study:
Vacuumed tube vs Transistor

40. Vacuumed tube vs Transistor
1950’s Blue space technology .
1955 Sonny introduced Transistor Radio,
(could carry in pocket) disruptive
technology.
1959 Sonny introduced compatible tv and
dominated others
1966 all companies got license of transistor
and vacuumed tube technology collapse.

41. Part two of this book explain how to
• MANAGING DISRUPTIVE TECHNOLOGICAL
CHANGE,
• Give Responsibility for Disruptive Technologies to
Organizations Whose Customers Need Them
• Match the Size of the Organization to the Size of
the Market
• Discovering New and Emerging Markets
• How to Appraise Your Organization’s Capabilities
and Disabilities
• Performance Provided, Market Demand, and the
Product Life Cycle
• Managing Disruptive Technological Change

42. Findings
• Managers of the companies must
keep the track record in
understanding customers’ future
needs, identifying which technology
could best address those needs, and
in investing to develop and implement
them.

43. Findings
• Good management play game in good
decision when change in process,
resources and product, do these
thing carefully. Flying strategy may
not effect the fundamental
tendencies.

44. Findings
• Good management play game in good
decision when change in process,
resources and product, do these
thing carefully.
• Flying strategy
may not effect
the fundamental
tendencies.

45. Findings
• Customers not the managers
essentially control the investment
pattern of the company.
• Good Resource allocation weed-out
proposal that customers don’t want.
DEC, IBM and the Personal computer.

46. Findings
• Survival by Suicide:
Hewlett-Packard’s kill the dot matrix
technology by Ink Jet and than by
incremental improvement of Laser
Jet.
Ink-Jet(costly,heating,time) Vs
LaserJet.

47. Findings
• Leading in sustaining Technology may not
be essential. (can gain no competitive
advantage. IBM and Fujitsu at 15th
.
• Leadership in disruptive technology
creates enormous value. 83 companies
enter in disk drive 20% successful, IBM
with leading in disruptive earn 62% market
share between 1976 to 1980.

48. Findings
• Mostly innovation occurred in small
organizations.
• Identify the new customer and market and
new need to discovering new and emerging
market.
• Capabilities and disabilities are appraised
and three factors allow organization to do
or not do that are process, resources and
value, creating and Migrating capabilites.

49. Findings
• Provide that what customers demand.
• Commodity not the product, product
become commodity when the
repeated changes in the basis of
competitors.

50. • How to know disruptive technology.
– By Trajectories of performance
improvement demand in the market vs
performance improvement supply by the
technology.
– What customer do, how they use the
product.
– Demographic and economic consideration.
– If not sustaining innovation is symptom of
disruption.
– Doing market research.
• Continuous business plan and strategy.

51. The Dilemmas of Innovation:
Managing better, working harder, and not
making so many dumb mistakes is not the
answer to the innovator’s Dilemma but the
Disruptive Technology.
For Profit and Growth successful
companies, using the best managerial
techniques, have led their firms toward
failure.

52. The Dilemmas of Innovation:
First, the pace of progress that markets
demand or can absorb may be different from
the progress offered by technology.
Second, managing innovation mirrors the
resource allocation process.
Third, just as there is a resource allocation
side to every innovation problem, matching the
market to the technology is another.

53. Fourth, Organizations have capabilities to
take certain new technologies into
certain markets. They have disabilities in
taking technology to market in other
ways. Organizations have the capability
to tolerate Failure.
Fifth, in many instances, the information
required to make large and decisive
investments in the face of disruptive
technology simply does not exist.
Dilemma of Innovation

54. Sixth, it is not wise to adopt a blanket
technology strategy to be always a
leader or always a follower. Companies
need to take distinctly different
postures.
Seventh, and last, the research
summarized in this book suggests that
there are powerful barriers to
entry and mobility
Dilemma of Innovation