Christensen came up with a new theory that certain companies will fail, not just because the managers are dumb but because the system does not allow them to succeed .These managers make good decisions within the organizational framework of their employers but its the organization itself that is wrong. Executives at successful companies are on the fall, says Christensen. They notice important developments in other industry innovations which the author calls disruptive technologies .Even though they recognize the threat, they are incapable of doing anything about it. In their seal of please shareholders, successful companies tend to do what is best for them in the short run, even though it could ruin them in the long run.Every managers primary goal is to maximize profit margins because that is what makes stock market price go up.This leads to the failure of a company.
eriodically technology comes along that shakes up the business world.The innovation is so significant that it changes the face of an industry .Eventually the change causes established companies to die and new ones to be born.Ever wonder why the makers of horse-drawn carriages did not simply transform into automobile makers?Conventional wisdom has it that the managers of the deceased companies did not know what hit them .They were dumb,they failed to forsake the change and suffered as a result.In 1997 a book by Harvard Business School professor Clayton Christensen,The Innovators Dilemma ,challenged this notion .Christensen was skeptical of the conventional wisdom that executive in failed companies run into trouble because of their own stupidity .His circle of acquaintances included several managers in this category and he knew them to be smart and capable.
