Welcome to our monthly series where we review books that offer the best advice for those new to the world of VC and startups! Our co-founder and managing partner, John Vrionis, is book-obsessed; if you visit our offices, you’ll find plenty of reading material to take home with you.

‍

We are a mission-driven team, and for plenty of us, this is our first foray into venture capital. We often look for advice from business experts, experienced founders, and startup operators to help us learn about building great companies. We’re eager to learn from the best and are enthusiastic about passing on this knowledge to others!

‍

This month, we’re reviewing The Innovator’s Dilemma by Clayton M. Christensen, originally published in 1997.

‍

At first glance, The Innovator’s Dilemma doesn’t seem like a book about building startups. In fact, in the introduction, Christensen explains that it’s about why established companies struggle to stay “atop their industries when they are confronted with certain types of markets and technological change.”

‍

Throughout the book, he reveals how the very decisions that once made these companies successful ultimately led to their downfall. They failed because “these firms listened to their customers, invested aggressively in new technologies that would provide their customers more and better products of the sort they wanted, and because they carefully studied market trends…” This sentence alone is jarring, especially since customer-centricity is a fundamental principle of the Unusual Startup Field Guide. However, as Christensen clarifies, the problem isn’t listening to customers — it’s the unwavering focus on “sustaining technologies” rather than disruptive innovations that redefine industries.

‍

Startups, by contrast, are built to drive disruptive change. While the book primarily addresses mature organizations, it offers many lessons for emerging companies and entrepreneurs. Below are three key takeaways for founders looking to challenge incumbents and reshape markets.
‍

1. Startups can unlock new applications and markets

‍

One of the primary reasons why companies fail is their focus on expanding existing markets rather than pioneering new ones. Large enterprises, driven by revenue goals, prioritize their current customer base rather than exploring emerging, low-margin markets where disruption often begins.  

‍

Startups, however, are discovering their ideal customers and zeroing in on the right “who” through early customer discovery conversations. By building the right “disruptive” solution for the right audiences, startups can secure new customers and eventually move upmarket, taking share from incumbents that remained focused on sustaining technologies. This is why startups can topple industry giants.
‍

2. Startups can disrupt existing technologies and behaviors 

‍

Established companies, tied to their existing customer base, tend to make incremental product improvements — enhancements that refine workflows but don’t fundamentally change them. This approach doesn’t lead to disruptive breakthroughs. 

‍

Startups, on the other hand, can be true disruptors. They have the freedom to inflect new patterns into an existing system and transform the way we work entirely. While larger companies are focused on sustaining technologies, they often ignore potential innovations and markets that are poised for transformation. By partnering with visionary early adopters and design partners, startups can iterate and experiment their way to innovations that incumbents have overlooked because they were “captive to the needs of their existing customers.”

‍

3. Startups can commit to rapid iteration and experimentation

‍

Established companies have well-defined product development processes designed for efficiency. Over time, however, these processes can become rigid, limiting their ability to adapt quickly.

‍

On the other hand, startups are inherently agile. Without entrenched workflows or rigid roles, they can rapidly gather customer feedback and iterate on their products. This flexibility allows startups to cater to emerging markets much faster than incumbents, who are often slowed down by bureaucratic decision-making and established routines. 

‍

Ultimately, Christensen argues that traditional management principles, which prioritize efficiency and predictability, often hinder disruptive innovations. Startups have a distinct advantage over resource-rich incumbents — not despite their constraints, but because of them.

‍

‍If you want to read The Innovator’s Dilemma in full, we encourage you to do so! And make sure you’re subscribed to our newsletter to ensure you don’t miss next month’s book review and plenty of other content from our team.