by Clayton M. Christensen

isbn: 0875845851
subject: Nonfiction, Economics
finished: 2/9/2000

Did you ever wonder why large, well-run companies sometimes turn into large, well-run failures within a few years? Christensen has found a theme that unifies and explains the failures of a number of companies. The core of his thesis rests on the distinction between sustaining technologies and disruptive technologies. A sustaining technology increases the performance of an existing product; more powerful engines, faster computers, and stronger bookshelves are all created by sustaining technologies. Disruptive technologies, on the other hand, offer worse performance but at a cheaper cost; microprocessors, hydraulic earth movers, and dirt bikes were all initially disruptive technologies. The interesting part, Christensen tell us, is that large companies generally ignore disruptive technologies, even though it is well within their power to manufacture and sell products based on them. They do this because customers tell them that they want better-performing products, and because the initial market for a disruptive technology is beneath a large company's notice. So, a small company that is more suited to the size of the market begins selling the disruptive technology, which improves in performance. Sooner or later, the disruptive technology begins to be competitive with the sustaining technology. Of course, at this point the large companies become interested but it's too late -- they have high overhead and they don't have the technical expertise to make the product -- they quickly go out of business. Christensen has found a number of compelling examples of this general scenario: the book's most fascinating chapters discuss the industries associated with hard drives, steel mills, and mechanical excavators. Later chapters provide some advice for dealing with disruptive changes; I found them to be a bit repetitive. Overall I enjoyed this book and learned a lot about how high-tech markets work, and how well run companies can end up dropping the ball even as they appear to be doing well. Recommended.