Innovation often carries within it the seeds of its own disruption, and this paradox sits at the heart of The Innovator’s Dilemma, the seminal work by Clayton M. Christensen. Christensen argues that companies fail not because they make bad decisions, but because they make good decisions that are perfectly aligned with existing customers, established processes, and proven business models. The very practices that once guaranteed success gradually blind organizations to emerging technologies whose early performance seems inferior, yet whose trajectories eventually redefine entire industries.
Christensen illustrates how established firms become deeply invested in sustaining innovations—incremental improvements that keep current customers satisfied—while ignoring disruptive innovations that initially appear unattractive or marginal. These early-stage technologies often take root in overlooked markets, gaining momentum until they mature enough to compete directly with mainstream offerings. By the time incumbents recognize the threat, the disruptive technology has already reshaped customer expectations.
A clear real-world example is the downfall of Blockbuster in the face of Netflix. Blockbuster excelled at a business model built on physical stores, late fees, and rental inventory optimization. All of its incentives pointed toward maximizing revenue from its existing customer base, which led executives to dismiss Netflix’s early mail-order and subscription model as niche and unprofitable. From Blockbuster’s perspective, the emerging online rental service catered to a small segment of customers who were willing to wait several days for DVDs to arrive—hardly a competitive threat to the convenience of thousands of retail stores.
What Blockbuster failed to see was how Netflix’s model, though inferior by traditional measures, aligned with a different kind of value: frictionless access, no due dates, no late fees, and eventually digital streaming. As technology advanced and broadband internet became widespread, the initially “inferior” approach became the dominant one. Netflix had the time and freedom to refine its model, while Blockbuster remained committed to a system optimized for an era that was quietly but rapidly fading.
The story exemplifies Christensen’s central insight: disruption rarely begins as a head-on attack. It emerges at the edges, nourished by customers whose needs incumbents overlook. The challenge for established firms is not simply to predict the next disruptive technology, but to cultivate the organizational willingness to explore unfamiliar markets and business models—even when doing so threatens the logic that has sustained them for years.
Understanding the innovator’s dilemma thus requires accepting a counterintuitive truth: success can become the biggest obstacle to future success unless companies develop the capacity to disrupt themselves before others do.
