The Innovator's Solution: Creating and Sustaining Successful Growth

CHAPTER SIX

HOW TO AVOID COMMODITIZATION

What causes commoditization? Is it the inevitable end-state of all companies in competitive markets? Can companies take action at any point in their development that can arrest its onset? Once the tide of commoditization has swept through an industry, can the flow reverse back toward proprietary, differentiated, profitable products? How can I respond to this?

Many executives have resigned themselves to the belief that, no matter how miraculous their innovations, their inevitable fate is to be “commoditized.” These fears are grounded in painful experience. Here’s a frightening example: The first one-gigabyte 3.5-inch disk drives were introduced to the world in 1992 at prices that enabled their manufacturers ...