Clayton Christensen, in his book The Innovators Dilemma, created The Failure Framework as a mental model to explain why established companies typically fail to respond successfully to disruptive technologies.
‘The failure framework is built upon three findings from this study.’
- The strategically important distinction between sustaining technologies and disruptive technologies.
- The capacity of technological progress to outpace market demand.
- The financial structures and corresponding incentives of established companies and their customers.
Sustaining v Disruptive Technologies
Sustaining technologies are those that improve existing products or services in ways that customers in established markets expect. On the other hand, disruptive technologies are those with the potential to reshape industries but typically gain initial traction by targeting niche markets.
Outpacing Market Demand
This concept highlights the dynamic relationship between technological advancements and market demands, suggesting that rapid technological progress can sometimes exceed or diverge from what the market currently requires. As a result, the relevance and competitiveness of various technological approaches may shift over time in response to changing market needs and preferences.
Financial Structures of Established Companies
The focus on serving current customers and maintaining financial stability can sometimes hinder companies from embracing disruptive innovations that may not align with their current business models. This reluctance to invest in disruptive technologies can ultimately put successful companies at risk of being outpaced by more agile competitors who are willing to explore and capitalize on new market opportunities created by disruptive innovation