The Innovator's Dilemma

by Clayton M. Christensen
(Harvard Business School Press)

The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail demonstrates why outstanding companies that focus on competitiveness, listen closely to customers, and invest aggressively in new technologies may still lose market dominance.

Drawing on observations from a variety of industries, HBS associate professor Clayton Christensen argues that otherwise sound business practices - such as concentrating investments and technology on the most profitable products, on satisfying the sources of highest demand, and on pleasing the best customers - can ultimately weaken a strong firm.

In The Innovator's Dilemma, Christensen shows how significant breakthroughs in products and services are often initially rejected by mainstream customers unready to use them. Consequently, a firm with a strong customer orientation may allow important innovations to languish, leaving a void that more entrepreneurial companies in the same field may successfully fill. While keeping close to customers may be critical for short-term success, Christensen says, long-term growth and profit depend upon a different managerial formula. His book is designed to help managers understand that distinction and show them how to adapt and respond accordingly.

The Service Profit Chain

by James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger
(Free Press)

Few managers can fully explain why certain service firms continue to outperform equally service-conscious competitors year after year. But in The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value, HBS professors James Heskett, Earl Sasser, and Leonard Schlesinger show how managers in top-rank service firms use a quantifiable set of relationships that directly links profit and growth not only to customer loyalty and satisfaction but to employee loyalty, satisfaction, and productivity. The authors emphasize that mutually reinforcing relationships (e.g., customer satisfaction as a factor affecting employee satisfaction, and vice versa) constitute a service profit chain that can form the foundation for strategic service vision and help guide managers in their operations and marketing.

The authors explain how any service industry firm can measure service profit chain relations across operating units, evaluate and stimulate continual improvements in performance, and convey best practice information throughout the organization.

Matsushita Leadership

by John P. Kotter
(Free Press)

Born to poverty, Konosuke Matsushita founded and presided over the phenomenal growth of Matsushita Electric, a company whose revenues would eventually exceed the combined sales of Bethlehem Steel, Colgate-Palmolive, Gillette, B.F. Goodrich, Kellogg, Olivetti, Scott Paper, and Whirlpool.

In his new book, Matsushita Leadership: Lessons from the 20th Century's Most Remarkable Entrepreneur, HBS professor John Kotter describes how Matsushita helped lead Japan's economic growth after World War II, inventing business practices that were adopted fifty years later by many of the world's great corporations. An exemplar of leadership and entrepreneurship, Matsushita used his wealth to revivify Japanese society and government, wrote books of philosophy, founded a school of leadership, and created Japan's version of the Nobel Prize.

Matsushita's ability and willingness to learn, adapt, and grow throughout his lifetime, concludes Kotter, are characteristics that will be the mark of outstanding business leaders in the 21st century.

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