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When successful and well-managed firms fail, we call this disruption. In the almost two decades since Clay Christensen’s famous treatise mapping this phenomenon, such failure has continued, with companies such as Encyclopedia Britannica, Blockbuster, Nokia, and RIM all falling hard from positions of seemingly unassailable dominance. In each case, they either did not or could not respond to disruptive events that allowed new entrants to capture their markets. At the same time, however, other major firms have had sustained success, shielded from what could have been dominance-ending disruptive events. This book takes the experience of both the fallen and the resilient and identifies Disruption’s Shield, the principles and actions that can ensure great firms’ continued success. The headline theory of disruption is now known to all, but that has not alleviated the risks faced by major firms nor the litany of failures. This is because a good defense has to guard against all disruptive events. Up until now, only one set of disruptive forces – those coming from the demand-side – have been fully understood and driven into manager’s mindsets. But this single-minded focus has led many firms to neglect equally important supply-side forces. This type of disruption can occur when firms, focussing on developing new products based on current technologies quickly, find themselves inflexible and unresponsive when their greatest competitive threats come not from seemingly niche entrants but from technologies that re-write organizational rulebooks. Only by understanding both types of disruptive risk can business leaders understand, evaluate and deploy the full range of options to avoid disruption and continue to thrive. The Disruption Dilemma is the first book that puts all of these elements together. It identifies the system of choices that have allowed great firms to balance competitiveness and resilience.

Over the course of a little less than twenty years, inventor Frank J. Sprague (1857–1934) achieved an astonishing series of technological breakthroughs—from pioneering work in self-governing motors to developing the first full-scale operational electric railway system—all while commercializing his inventions and promoting them (and himself as their inventor) to financial backers and the public. This book tells his story, setting it against the backdrop of one of the most dynamic periods in the history of technology. In a burst of innovation during these years, Sprague and his contemporaries—Thomas Edison, Nicolas Tesla, Elmer Sperry, George Westinghouse, and others—transformed the technologies of electricity and reshaped modern life. After working briefly for Edison, Sprague started the Sprague Electric Railway and Motor Company; designed and built an electric railroad system for Richmond, Virginia; sold his company to Edison and went into the field of electric elevators; almost accidentally discovered a multiple-control system that could equip electric train systems for mass transit; started a third company to commercialize this; then sold this company to Edison and retired (temporarily). Throughout his career, the author tells us, Sprague framed technology as invention, cast himself as hero, and staged his technologies as dramas. He toiled against the odds, scraped together resources to found companies, bet those companies on technical feats—and pulled it off, multiple times. The idea of the “heroic inventor” is not, of course, the only way to frame the history of technology.

This book integrates new theory and research findings into the framework of a “free innovation paradigm.” Free innovation, as the book defines it, involves innovations developed by consumers who are self-rewarded for their efforts, and who give their designs away “for free.” It is an inherently simple grassroots innovation process, unencumbered by compensated transactions and intellectual property rights. Free innovation is already widespread in national economies and is steadily increasing in both scale and scope. Today, tens of millions of consumers are collectively spending tens of billions of dollars annually on innovation development. However, because free innovations are developed during consumers' unpaid, discretionary time and are given away rather than sold, their collective impact and value have until very recently been hidden from view. This has caused researchers, governments, and firms to focus too much on the Schumpeterian idea of innovation as a producer-dominated activity. Free innovation has both advantages and drawbacks. Because free innovators are self-rewarded by such factors as personal utility, learning, and fun, they often pioneer new areas before producers see commercial potential. At the same time, because they give away their innovations, free innovators generally have very little incentive to invest in diffusing what they create, which reduces the social value of their efforts. The best solution, this book argues, is a division of labor between free innovators and producers, enabling each to do what they do best. The result will be both increased producer profits and increased social welfare—a gain for all.

Society celebrates innovation after the fact. It is a revisionist exercise, and little is said about how to innovate. Aspiring innovators are told to get a big idea and a team and build a show-and-tell for potential investors. But that conflates innovation, entrepreneurship, publicizing an idea, and fundraising; it does not clue aspiring innovators on how to begin. Innovating shows how actually to get started and innovate for impact and scale—a skill you can practice and master through learning. It is a doer’s approach for the explorers of our time, developed over a decade at MIT and internationally in workshops, classes, and companies. It shows innovating does not require an earth-shattering idea; indeed, no thing is new at the outset of what we only later celebrate as innovation. It takes only a hunch, and anyone can do it. By prototyping a problem and learning by being wrong, innovating can be scaled up to make an impact. The process is empirical, experimental, nonlinear, and incremental: give a hunch the structure of a problem; use anything as a part; accrue other people’s knowledge and skills in the course of innovating; systematize what is learned; advocate, communicate, scale up, manage innovating continuously, and document. Questions outlined in the book help innovators think in new ways. It is even possible to create a kit for innovating.

Given links between innovation and production, how does an innovation economy maintain manufacturing? The authors in this volume use hundreds of interviews with firms in the US and abroad, a nationally representative survey of manufacturers, and analyses of start-up firms, business practices, and new manufacturing technologies to answer this question. Because today’s firms have turned away from vertical integration, many manufacturing capabilities rest in external “ecosystems” of suppliers, competitors, and labor market intermediaries. This volume argues that the development of institutions addressing gaps in production ecosystems can bolster manufacturing and, ultimately, innovative capacity. Chapters include analyses of new and mature firms’ experiences in the US and China, employer hiring practices, and production and the energy industry, as well as a conceptualization of product variety as a form of innovation and a forecast of new manufacturing technologies on the horizon.

Why do some companies have better corporate reputations than others? And why do some companies that are not seen as particularly socially responsible have a good reputation? This book explains why both these phenomenon occur. In essence, the companies that win the reputation game are those that are seen by their key stakeholders as being ‘best at something’ and/or ‘best for somebody’. Being best at something means that they offer better quality and value than their competitors. Being best for somebody means that they serve the needs of their stakeholders better than competitors. The book also examines why the advice of scholars is often not implemented by companies.