Incumbents underestimate the potential of disruptors from "summary" of The Innovator's Dilemma by Clayton M. Christensen
In numerous industries, incumbents have consistently found themselves blindsided by upstart competitors that seem to come out of nowhere. These disruptors enter the market with innovations that initially appeal to only a small segment of customers. Incumbents, who have long been focused on serving their existing customers and improving their products, often dismiss these disruptors as insignificant players, not worth their attention. They fail to recognize the disruptive potential that these newcomers possess.
Disruptors typically introduce products or services that are simpler, more convenient, and more affordable than what the incumbents offer. While these offerings may not initially meet the needs of the incumbents' mainstream customers, they are attractive to a different set of customers, often those who are underserved or nonconsumers. Over time, disruptors improve their products and expand their market reach, gradually moving upmarket and encroaching on the incumbents' territory.
Incumbents, entrenched in their existing business models and focused on sustaining their current success, struggle to respond effectively to these disruptors. They are often hindered by their own success, as their existing processes, structures, and resources are optimized for their current customer base and market demands. This makes it difficult for them to pivot and adapt to the changing landscape brought about by disruptive innovation.
Moreover, incumbents are often reluctant to cannibalize their existing products or services by investing in disruptive technologies or business models. They fear that embracing disruption will erode their current profitability and alienate their loyal customers. This short-term focus on maximizing profits and serving existing customers blinds them to the long-term threat posed by disruptors, who may eventually render their traditional business obsolete.
In order to survive and thrive in the face of disruption, incumbents must learn to recognize the potential of disruptors early on and adapt their strategies accordingly. This may involve creating separate business units or divisions focused on exploring and exploiting disruptive opportunities, or acquiring or partnering with disruptors to leverage their innovations. By embracing disruption rather than resisting it, incumbents can position themselves to remain competitive and relevant in an ever-changing market landscape.
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