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Smart companies fail because they do everything right. They cater to high-profit-margin customers and ignore the low end of the market, where disruptive innovations emerge from.
Clayton M. Christensen
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Interpretation

What this quote means

Successful companies can falter by focusing too narrowly on high-profit customers, potentially missing disruptive innovations in lower markets.

Clayton M. Christensen highlights a critical oversight in business strategy where successful companies may become complacent by prioritizing high-margin clients while neglecting the lower-end market. This can blind them to emerging disruptive innovations that often arise from these overlooked segments, ultimately leading to their downfall. It serves as a cautionary tale that emphasizes the importance of vigilance and adaptability in business practices.

Themes

BusinessInnovationStrategyDisruptionCustomers

In practice

Example use cases

In a business seminar discussing market strategy and innovation.

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There is no single right answer or path forward, but there is one right way to frame the problem.
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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.
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There is no evidence that success in business will make us happy people or allow us to have happy families.
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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.
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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.
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