Clayton Christensen's Innovator's Dilemma: Kodak, Floppy Disks and Uber

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The first cars were expensive, unreliable toys for the rich, and the horse and buggy only became obsolete once the affordable Ford Model T arrived. That gap is the subject of disruptive innovation, a theory popularized in 1995 by Clayton Christensen, who split innovation into sustaining improvements for existing customers and disruptive products that start at the bottom of a market or create a new one. The episode rejects the technology mudslide idea that incumbents fall because they cannot keep up. Christensen's culprit was the value network of investors, margins and loyal customers that makes a cheap, low-margin product look irrational to pursue. Listening to the best customers is what leaves the back door open, the innovator's dilemma. Disk drives show the pattern: 14-inch mainframe drives gave way to 8-inch, 5.25-inch and 3.5-inch disks, then optical discs and flash memory.

Christensen later stressed that the business model, not the technology, causes disruption, and Milan Zeleny's technology support net extends this to the whole surrounding system, as electric cars threaten gas stations, mechanics and fuel taxes. Uber challenged the theory: its original black car service was, by Christensen's criteria, a sustaining innovation, while UberSelect fit the model better. The episode tours the casualties: Western Union turning down Alexander Graham Bell's telephone patent for $100,000, Kodak inventing a digital camera in 1975 and filing for bankruptcy in 2012, Blockbuster dismissing Netflix in 2000, and Wikipedia toppling the 244-year-old Encyclopaedia Britannica. Critics include W. Chan Kim and Renée Mauborgne on the human cost and historian Jill Lepore on overuse and survivorship bias.

• Low-end disruption targets customers overserved by products that improve faster than they need, like a washing machine with 50 settings.
• New-market disruption reaches people who previously lacked the money or skill to buy at all.
• Blockbuster could not copy Netflix's subscription model because much of its revenue came from late fees.
• Lepore notes that early case-study victims such as U.S. Steel and Seagate Technology survived and stayed dominant.
• A study in Nature of millions of papers and patents found science and technology becoming less disruptive over time.