There are three types of innovations. The first are "empowering" innovations. These transform complicated, costly products that previously had been available only to a few people, into simpler, cheaper products available to many. The Ford Model T was an empowering innovation, as was the Sony transistor radio.
Empowering innovations create jobs for people who build, distribute, sell and service these products.
The third type are "efficiency" innovations. These reduce the cost of making and distributing existing products and services
The second type are "sustaining" innovations. These replace old products with new.
The third type are "efficiency" innovations. These reduce the cost of making and distributing existing products and services Efficiency innovations also emancipate capital for other uses. Without them, much of an economy's capital is held captive on balance sheets, tied up in inventory, working capital, and balance sheet reserves.
Industries typically transition through these types of innovations. The early IBM mainframe computers were so expensive that only big companies could own them. But PCs were an empowering innovation that allowed many more people to own computers.
Companies like I.B.M. and Hewlett-Packard had to hire hundreds of thousands of people to make and sell PC’s. These companies then designed and made better computers — sustaining innovations — that inspired us to keep buying newer and better products. Finally, companies like Dell made the industry much more efficient. This reduced net employment within the industry, but freed capital that had been used in the supply chain.

Key Strategies for Addressing Market Insurgents
Christensen offered three pieces of advice to companies in dealing with market disruption: 1. Create separate units to deal with insurgents 2. Frame the problem correctly 3. Understand the job your product was hired to do
Separate business units. This advice is in his book, but it still makes sense. Essentially, the best way to handle disruptive technologies is to tackle them in a separate division outside the main corporate focus. Keys to this division: * Separate sales force * Leverage new technologies for cost-advantage, performance benefits * Be willing to cannibalize existing sales
Most companies do not do this. In the computer industry, Christensen cited IBM as the only company to successfully navigate disruptive technologies: Mainframe -> Mini computers -> PCs. Of course, they’ve jettisoned the PC business. I wonder if the next wave will be the mobile platforms emerging, like the iPhone.
Frame the problem correctly. Christensen believes the root cause for the inability to innovate is not framing the problem correctly. Companies do not understand what is happening with their customers as they use new technologies:
Expensive failure always results when disruption is framed as technological rather than business model terms.
There’s a tendency to view market competition through a technology lens, not a business one. A company will see a new technology, and note its obvious inferiority to what current leaders offer. It then becomes easy to dismiss it.
That’s the mistake.
Companies should think in terms of the business context for