The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail

For academics and practitioners alike, The Innovator’s Dilemma is considered a cornerstone text in business management and strategy. Its key contribution to the critical discourse of management is the popularization of disruptive innovation as a business concept, though the first edition of the book used the term “disruptive technology.”

The theory of disruptive innovation has drawn comparisons to Austrian economist Joseph Schumpeter’s theory of creative destruction. In his preface, Clayton M. Christensen even acknowledges that a relationship between the two concepts exists. However, the association of these concepts has been a cause for debate, with some readers conflating the ideas without noting the crucial distinctions between the two writers’ approaches. According to Schumpeter, creative destruction entails the wholesale replacement of one set of innovations for another. By contrast, disruptive innovation describes the ways in which companies use simple applications of new technologies to move upmarket, shifting the prevailing market positions in the process. As Christensen states, “disruptive technology is probably the cause behind the ‘creative destruction’ […] observed to be the primary engine of economic progress” (x). Whereas Christensen’s ideas focus on market dynamics, Schumpeter’s concept observes wider economic conditions that result from those interactions.