Courtesy: MIT
Sustaining technologies are technologies that improve product performance (technologies that help improve a product that has a well established market). Most companies are familiar with this. Companies have problems with Disruptive Technologies.
Disruptive technologies are "innovations that result in worse product performance, at least in the near term." They are generally "cheaper, simpler, smaller, and, frequently, more convenient to use." Disruptive technologies occur less frequently, but when they do, they can cause the failure of highly successful companies who are only prepared for sustaining technologies.
As the above graph shows, disruptive technologies cause problems because they do not initially satisfy the demands of even the high end of the market. Because of that, large companies choose to overlook disruptive technologies until they become more attractive profit-wise. Disruptive technologies, however, eventually surpass sustaining technologies in satisfying market demand with lower costs. When this happens, large companies who did not invest in the disruptive technology sooner are left behind. This, according to Christensen, is the "Innovator's Dilemma."
Large companies have certain barriers to innovation which make it difficult to invest in disruptive technologies early on. Being industry veterans means that they have set ways in approaching new technologies. Baggage from precedents (such as equipment, training, procedures) hinder a quick response to disruptive technologies. Large companies also have an established customer base whom they must be accountable to. These customers often ask for better versions of current products rather than completely new technologies. Customers are a substantial barrier to innovation. Finally, companies make decisions according to their place in the value network--or, to put it simply, companies make decisions according to where they are in the market.
