Christensen has observed that companies regularly stumble when they follow the well-established management practices of planning and listening to customers. To succeed, companies should not only cater to customers and continue improving their existing products, he argues. Instead, they should set up separate business units to capitalize on new technologies, even though these may be poor-quality, low-margin products.
Digital Equipment, for example, grew rapidly in the late 1980s by selling mini-computers, which were a simpler, lower-cost option to mainframes, he said. But when another PCs began to take hold, the company didn't pursue that market for economic reasons: PCs offered substantially lower profit margins and didn't meet the technical needs of existing mini-computer customers.
"Advice to Microsoft: Learn to love Linux"
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