Quotes About Strategy

The trap many people fall into is to allocate their time to whoever screams loudest, and their talent to whatever offers them the fastest reward. That's a dangerous way to build a strategy.

There had, therefore, to be a reason why good managers consistently made wrong decisions when faced with disruptive technological change.

understand and harness the principles of disruptive innovation.

the innovator's dilemma: Should we invest to protect the least profitable end of our business, so that we can retain our least loyal, most price-sensitive customers? Or should we invest to strengthen our position in the most profitable tiers of our business, with customers who reward us with premium prices for better products?

railroads fell into the trap of letting the product define the market they were in, rather than the job customers were hiring them to do. They

In the early stage, managers are puzzle solvers, not number crunchers. Passive

Adopting new technologies can improve the way we solve Jobs to Be Done. But what's important is that you focus on understanding the underlying job, not falling in love with your solution for it.

Clayton M. Christensen

Clayton M. Christensen

When disruptive change appears on the horizon, managers need to assemble the capabilities to confront the change before it has affected the mainstream business. In other words, they need an organization that is geared toward the new challenge before the old one, whose processes are tuned to the existing business model, has reached a crisis that demands fundamental change.

business. One particularly common one is RONA, or Return on Net Assets. In manufacturing businesses, this is calculated by dividing a company's income by its net assets. Hence, a company can be judged as being more profitable either by adding income to the numerator, or by reducing the assets in the denominator. Driving the numerator up is harder, because it entails selling more products. Driving the denominator down is often easier—because you can just opt to outsource.

Managers whose organizations are confronting change must first determine that they have the resources required to succeed. They then need to ask a separate question: does the organization have the processes and values to succeed?

Much of the ability to create and maintain valuable brands, as a consequence, has migrated away from the product and to the channel because, for the present, it is the channel that addresses the piece of added value that is not yet good enough.

As such, while senior managers may think they're making the resource allocation decisions, many of the really critical resource allocation decisions have actually been made long before senior management gets involved: Middle managers have made their decisions about which projects they'll back and carry to senior management—and which they will allow to languish.

managers may think they control the flow of resources in their firms, in the end it is really customers and investors who dictate how money will be spent because companies with investment patterns that don't satisfy their customers and investors don't survive.

Experts' forecasts will always be wrong. It is simply impossible to predict with any useful degree of precision how disruptive products will be used or how large their markets will be. An important corollary is that, because markets for disruptive technologies are unpredictable, companies' initial strategies for entering these markets will generally be wrong.

anticipated opportunities—the opportunities that you can see and choose to pursue. In Honda's case, it was the big-bike market in the United States. When you put in place a plan focused on these anticipated opportunities, you are pursuing a deliberate strategy.

The leading firms in the established technology remain financially strong until the disruptive technology is, in fact, in the midst of their mainstream market.

The second source of options is unanticipated—usually a cocktail of problems and opportunities that emerges while you are trying to implement the deliberate plan or strategy that you have decided upon. At Honda, what was unanticipated were the problems with the big bikes, the costs associated with fixing them, and the opportunity to sell the little Super Cub motorbikes.

In fact, the prospects for growth and improved profitability in upmarket value networks often appear to be so much more attractive than the prospect of staying within the current value network, that it is not unusual to see well-managed companies leaving (or becoming uncompetitive with) their original customers as they search for customers at higher price points.

If history is any guide, companies that keep disruptive technologies bottled up in their labs, working to improve them until they suit mainstream markets, will not be nearly as successful as firms that find markets that embrace the attributes of disruptive technologies as they initially stand.

Discovery-driven planning

They are always motivated to go up-market, and almost never motivated to defend the new or low-end markets that the disruptors find attractive. We call this phenomenon asymmetric motivation. It is the core of the innovator's dilemma, and the beginning of the innovator's solution.

innovator's dilemma: Should we invest to protect the least profitable end of our business, so that we can retain our least loyal, most price-sensitive customers? Or should we invest to strengthen our position in the most profitable tiers of our business, with customers who reward us with premium prices for better products?