The Innovator's Dilemma is a classic book that describes how dominant players in particular industries fail and lose their positions to innovating startups despite having orders of magnitude more resources and a much better market position to compete.

While the general reaction seems to be view those fallen dominant players as lacking vision or having bad management, my reaction and perspective from reading the book is quite different. In the book, the author laid out a case for big companies to fail even assuming competent management and perfectly rational decision making. This is the part that I found the most interesting – I certainly wouldn't hope for a company to be run irrationally in the name of some vision (that would be more like a cult), so while there is an urge to conclude that there must be something wrong with the management's perspective that brought about the companies' demise, there is a bigger sense I felt that the Innovator's Dilemma is unavoidable.

For every market, there are bound to be many emerging technologies that may pose a threat to the company's position. Assuming competent management and proper due diligence on market research, the company is aware of all of those threats. Now the company must make an estimate on the likelihood for the threat to materialize and in what form. In the easy case, handling the threat requires incremental investment into the company's R&D, and those investments are promptly being made. In the harder case, handling the threat requires a large investment and completely pivoting the company, but it also has a high chance of being a viable threat. In this case the deciding factor is on the execution – as long as the leadership remains competent in rallying resources from across the company, most companies will successfully weather this threat.

The true innovator's dilemma is when something requires a large investment while having a low probability of succeeding. That is when the rational decision is to ignore or downplay the threat, and continue on the company's own course until the emerging technology hits its inevitable demise. In fact, the alternative to respond to the threat will probably bring about the company's demise earlier than any of the threats itself, and it would be called an overreaction by business case studies. Even with the vast resources and market position of the dominant players, there is only so many time they can afford to overreact. If the company keeps on reacting to every threat, or maybe just slightly too many threat, they will start to be remembered as the company that cried wolf, and lose confidence from investors and users alike.

But on the other hand, if the company starts ignoring the threats, Murphy's law requires that one of those high-cost, low probability threats will eventually succeed and bring about the demise of the dominant player.

So my biggest takeaway from the book is that businesses cannot rely on playing defense forever, especially in fields where innovations are a constant reality. Instead, captializing on the innovative talents and continue to diversify into more areas, pouring resources into making sure that some of those areas succeed will ensure the company's long term health. After all, the dinosaurs survived not because it evolved the most terrifying jaws, but because it evolved into all sorts of weird forms, with some capable of flight.