Lead and Disrupt
How to Solve the Innovator's Dilemma
Charles A. O’Reilly III and Michael L. Tushman


Preface and Acknowledgments

This book represents our attempt to solve a mystery that has fascinated us for almost two decades. As researchers and sometimes as consultants, we have had the opportunity to interact with quite a few organizations, their managers, and their leaders. Most of these organizations had a strategic vision. They possessed immense financial capital. And they were filled with smart, hard-working people. Yet as we watched these firms over time, they often struggled in the face of innovation and change. For many, their inability to adapt as industries shifted was disastrous. As we reflected on these trials, it was clear to us that most of the problems these firms faced were not from a lack of insight or resources. The question that kept coming up was, “Why do successful firms find it so difficult to adapt in the face of change—to innovate?” The answer, we concluded, does not hinge on strategy or technology or even luck—as important as these factors may be. Rather, it has everything to do with leadership—and how leaders act in the face of change.

In the past ten years, the importance of this question has increased as more industries and firms confront disruptive change. Fifty years ago, the average life expectancy of a firm in the Standard and Poor’s 500 was fifty years. Today it is closer to twelve. This dramatic increase in the rate of corporate failure reflects the increasing rate at which disruptive change is occurring. That change is putting immense pressure on leaders to react more quickly than ever before to this type of threat. You have only to look at what has happened in industries as diverse as music, newspapers, health care, retail, and high technology to appreciate the threat that innovation poses for established firms. Fifty years ago, or even twenty, managers had the luxury of time. If they were slow to react to change, they could recover. This is no longer the case. In today’s world, firms that miss a transition or fail to respond to a disruptive innovation quickly find themselves out of business. Think about the plight of taxis confronted with ride-sharing firms, or traditional banks confronted by online banking, or department stores facing competition from Amazon, or universities facing low-cost distance learning portals. How should leaders think about these threats? What can they do to avoid being disrupted? How can they respond?

We believe that we have, if not an answer, then at least clear practical insights that can help leaders and managers as they confront disruptive change in their industries and organizations. These insights reflect the hard-learned lessons of leaders across a variety of industries and geographies. We’ve been fortunate to spend the last decade working with many of them to confront the issues of innovation and change. To illustrate their lessons learned, we tell the stories of many, both victors and those who were less fortunate, less successful.

As you turn the pages ahead, you will see that what looks to be conceptually simple is often extraordinarily complex in execution. It requires that leaders have an understanding of both what to do and how to do it. It requires them to design organizations that can succeed in mature businesses where success comes from incremental improvement, close attention to customers, and rigorous execution and to simultaneously compete in emerging businesses where success requires speed, flexibility, and a tolerance for mistakes. We refer to this capability as ambidexterity—the ability to do both. If leaders are the linchpin to success, then ambidexterity is the weapon with which they must do battle. Many others have claimed to have the solution to the innovator’s dilemma. But we believe ambidexterity is the real key. How they work and why is the story we tell here.

exhausting) citations to this body of research, this book reflects that empirical scholarship. In particular, we have drawn on the research and comments of Clay Christensen at the Harvard Business School, David Teece at the University of California, Berkeley, Justin Jansen at Erasmus University in Amsterdam, Julian Birkinshaw at the London Business School, Mark Ventresca at the Said Business School, University of Oxford, and David Caldwell at Santa Clara University. These and other colleagues like Wendy Smith at the University of Delaware and Mary Benner at the University of Minnesota have been coauthors and commenters on our work.

Finally, we are very thankful for several colleagues with whom we have worked as consultants in applying the ideas contained in this book. They have taken our concepts and helped organizations make them real. Andy Binns, managing principal of Change Logic, and his colleagues have been using, shaping, and refining the tools that readers will discover here. His experience and expertise have been central in developing our understanding for how leaders can be ambidextrous. Peter Finkelstein, founder and managing principal in UpstartLogic, has been an invaluable friend, colleague, and champion of these ideas for twenty years. His contributions, both intellectual and emotional, are an integral part of the story we tell.

All books, and this one in particular, are really collaborations among a large set of people whose contributions shape the authors’ views. We can say with certainty that the argument contained in this book comes from the many people who have helped us as we have tried to understand why it is that successful firms often fail in the face of disruptive change. We hope that we have done justice to their ideas. And we hope that this book serves as a corrective to the troubling trend that sent us on this journey.

Stanford, California, and Cambridge, Massachusetts

October 2015