Market leaders struggle with disruptive competition from "summary" of The Innovator's Dilemma by Clayton M. Christensen
Market leaders often find themselves in a precarious position when faced with disruptive competition. These disruptive competitors enter the market with a different value proposition, targeting a different set of customers than the established players. Initially, market leaders dismiss these new entrants as insignificant or serving only niche markets. However, over time, these disruptive competitors improve their products or services, gradually encroaching on the market leader's customer base.
The dilemma for market leaders lies in their focus on sustaining innovation to meet the needs of their existing customers. This focus on improving existing products or services, catering to the demands of the most profitable customers, can blind them to the potential of disruptive technologies. Market leaders often fail to see the threat posed by disruptive competitors until it is too late, and they have already lost significant market share.
Moreover, the very processes and structures that made market leaders successful can hinder their ability to respond effectively to disruptive competition. These organizations are optimized for efficiency and scale, with well-defined hierarchies and processes in place. In contrast, disruptive competitors are often more agile and able to quickly adapt to changing market conditions.
In attempting to respond to disruptive competition, market leaders face the challenge of disrupting their own business model. This can be a daunting prospect, as it may involve cannibalizing their existing revenue streams or alienating their most profitable customers. However, failing to disrupt their own business model leaves market leaders vulnerable to being disrupted by others.
To navigate this dilemma, market leaders must be willing to embrace a dual strategy of both sustaining and disruptive innovation. This requires them to allocate resources not only to improving their existing products or services but also to exploring new technologies and business models that may disrupt their own market. By recognizing the threat posed by disruptive competition and taking proactive steps to address it, market leaders can position themselves for long-term success in an ever-changing marketplace.
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