Disruptive Technologies: Catching the Wave
by Joseph L. Bower and Clayton M. Christensen
ne of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change. Goodyear and Firestone entered the radial-tire market quite late. Xerox let Canon create the smallcopier market.Bucyrus-Erie allowed Caterpillar and Deere to take over the mechanical excavator market. Sears gave way to Wal-Mart. The pattern of failure has heen especially striking in the computer industry. IBM dominated the mainframe market hut missed hy years the emergence of minicomputers, which were technologically much simpler than mainframes. Digital Equipment dominated the minicomputer market withinnovations like its VAX architecture hut missed the personal-computer market almost completely. Apple Computer led the world of personal computing and established the standard for userfriendly computing but lagged five years behind the leaders in bringing its portable computer to market. Why is it that companies like these invest aggressively-and successfully-in the technologies necessary to retain theircurrent customers but then fail
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to make certain other technological investments that customers of the future will demand* Undoubtedly, bureaucracy, arrogance, tired executive blood, poor planning, and short-term investment horizons have all played a role. But a more fundamental reason lies at the heart of the paradox: leading companies succumb to one of the mostpopular, and valuable, management dogmas. They stay close to their customers. Although most managers like to think they are in control, customers wield extraordinary power in directing a company's investments. Before managers decide to launch a technology, develop a product, build a plant, or establish new channels of distribution, they must look to their customers first: Do their customers want it?How big will the market be? Will tbe investment be profitable? The more astutely managers ask and answer these questions, loseph L Bower is the Donald Kirk David Professor of Business Administration at the Harvard Business School in Boston. Massachusetts. Clayton M. Christensen. an assistant professor at the Harvard Business Schcx}!. speciahzes in managing the commercialization of advancedtechnology.
DISRUPTIVE TECHNOLOGIES the more completely their investments will be aligned with the needs of their customers. This is the way a well-managed eompany should operate. Right? But what happens when customers reject a new technology, product concept, or way of doing business hecause it does not address their needs as effectively as a company's current approach? The large photocopyingcenters that represented the core of Xerox's customer hase at first had no use for small, slow tahletop copiers. The excavation contractors that had relied on Bucyrus-Erie's big-bucket steam- and diesel-powered cable shovels didn't want hydraulic excavators because initially they were small and weak. IBM's large commercial, government, and industrial customers saw no immediate use for minicomputers.In each instance, companies listened to their customers, gave them the product performance they were looking for, and, in the end, were hurt by the very technologies their customers led them to ignore. We bave seen tbis pattern repeatedly in an ongoing study of leading companies in a variety of industries that have confronted technological change. The research shows that most weil-managed,established companies are consistently ahead of their industries in developing and commercializing new technologies-from incremental improvements to radically new ;ipproachcs - as long as tbose tech-
Managers must beware of ignoring new technologies that d^n't initially meet the needs of their mainstream i
nologies address the next-generation performance needs of their customers. However, tbese...