There is no single right answer or path forward, but there is one right way to frame the problem.
Clayton M. ChristensenRead
When an entrant competitor attacks the low end of any market, the rational reaction of the incumbent firms is to abandon rather than defend it - because the low end is the least profitable of their possible investments.
Interpretation
What this quote means
Incumbent firms often choose to exit less profitable market segments when faced with competition at the lower end.
In the context of competitive markets, this quote by Clayton M. Christensen reflects the strategic behavior of incumbent companies when a new competitor targets the low end of the market. Instead of defending their stake in this less profitable segment, which may drain resources without significant return, these firms tend to withdraw, allowing the new entrant to gain a foothold. This highlights a critical aspect of competitive dynamics and market strategy.
Themes
CompetitionMarketStrategyBusinessProfitability
In practice
Example use cases
In a discussion about market strategies during a business seminar.
More from Clayton M. Christensen
All quotes →Understanding motivation is one of the most important things we can do in our lives, because it has such a bearing on why we do the things we do and whether we enjoy them or not.
Clayton M. ChristensenRead
Companies, in fact, are specifically organized to under-invest in disruptive innovations! This is one reason why we often suggest that companies set up separate teams or groups to commercialize disruptive innovations. When disruptive innovations have to fight with other innovations for resources, they tend to lose out.
Clayton M. ChristensenRead
There is no evidence that success in business will make us happy people or allow us to have happy families.
Clayton M. ChristensenRead
By definition, big data cannot yield complicated descriptions of causality. Especially in healthcare. Almost all of our diseases occur in the intersections of systems in the body.
Clayton M. ChristensenRead
The breakthrough innovations come when the tension is greatest and the resources are most limited. That's when people are actually a lot more open to rethinking the fundamental way they do business.
Clayton M. ChristensenRead
Similar quotes
You go to any MBA program, and you will be taught the theory of the firm, that the purpose of the firm is the maximization of return on invested capital. I always thought this was a kind of lunacy.
Peter SengeRead
Customer satisfaction is worthless. Customer loyalty is priceless.
Jeffrey GitomerRead
Part of company culture is path-dependent - it's the lessons you learn along the way.
Jeff BezosRead
A company shouldn't get addicted to being shiny, because shiny doesn't last.
Jeff BezosRead
I think that business practices would improve immeasurably if they were guided by "feminine" pinciples, qualities like love, care, and intuition.
Anita RoddickRead
Market leaders inevitably slip into decline when they tell the people what they want instead of giving the people what they want.
Alan SugarRead