ENTR Section B
The reading deals with a concept called the Innovators dilemma, a paradox of sorts which goes as
Successful companies that dominate their industries tend to fail in the face of disruptive innovation.
The reading states that innovations are of two types as follows:
1. Sustaining Innovations
Sustaining innovations believe in the theory that “The customer is always right”. Sustaining
Innovation is practiced by improving upon an existing product based on feedback received from
customers. As mentioned in the reading, within each hard drive size, the larger companies
(generally leaders of the industry) brought about incremental updates to the hard drives as time
passed by. This process is similar to how mobile phone manufacturers ...view middle of the document...
More times than not, a disruptive
innovation doesn’t even compete with the existing product. Instead, it aims at creating a whole new
market that will potential bloom in the near future. It capitalises on ﬁrst mover advantage. In the
article, each size reduction in hard drive is termed as a disruptive innovation because it offered
less in terms of speed and storage, but created whole new markets in mini computers, desktops,
notebooks and so on. This concept is similar to what Uber has done as a cab aggregator. If you
were told what Uber does before Uber went big, it would appear as though it wasn’t a threat to
current call taxi services. But Uber created a whole new business model, and in a sense, a whole
new market that is today far more effective than the business model followed by call taxi services.
The key difference between these two is that a sustaining innovation satisﬁes the customers
current needs, but a disruptive innovation forecasts future needs and satisﬁes them today.
The reading says that large, established companies ﬁnd it difﬁcult to channel resources to what
appears to be a small and unappealing market, a market that new entrants don’t mind aiming for
since it gives them time to hone their technologies before the market becomes sizeable. But this is
what leads to new entrants out performing the large companies once the new technology gets
proven ex. The title of an electric car is now associated with Tesla Motors. Others mays ﬁnd it
difﬁcult to out pace Tesla, a new entrant, from this position.
The reading offers the following learnings:
1. While large ﬁrms practice broad market sustaining strategies, they should also invest in next
generation niche, disruptive technologies.
2. Considering that large ﬁrms focus on broad market strategies, smaller ﬁrms should focus on
introducing disruptive innovations that catch them off guard.