The Innovator's Dilemma

Clayton Christensen asked one of the most important questions in business history: why do great companies fail? Not poorly managed companies — great ones. Companies that listen to their customers, invest in R&D, and do everything the textbooks say. His answer — disruptive innovation — changed how every executive thinks about competitive threats.

The dilemma is elegant and terrifying. Established companies focus on their best customers and most profitable products. Disruptive technologies start by serving customers the incumbents do not care about, with products that are initially inferior. By the time the disruptive technology improves enough to compete for mainstream customers, it is too late for the incumbents to respond. They did everything right and still lost.

Steve Jobs called this one of the most important business books ever written. Jeff Bezos required his senior team to read it. Andy Grove credited it with helping him navigate Intel's transition from memory chips to microprocessors. If you run a business or invest in one, you need to understand why doing everything right can still lead to failure.