The dilemma of the company that's doing well

A network of clinical laboratories in Brazil, 600 people, 28 locations — a mid-size Brazilian company (figures in Brazilian reais). The operation is doing well: 9% growth for the year, stable margin, an experienced team. Two years ago, someone proposed changing how sample collection, logistics and results are coordinated — today handled with a legacy system, a central spreadsheet and phone calls. The proposal gets pushed back at every budget meeting, with correct arguments.

The arguments: the current customer isn't complaining, the team knows the process by heart, the return is hard to project, and there are other initiatives with clearer returns in line. Each of these points is true. Added together, they produce a decision that looks prudent and is, over three years, the most expensive decision the company makes.

01The idea: good management is part of the problem #

Clayton Christensen published The Innovator's Dilemma in 1997. The finding that gives the book its name is counterintuitive: leading companies are not overtaken by incompetence, but by doing exactly what good management dictates — listening to their best customers, investing where margins are highest, and allocating resources according to projected return.

Christensen distinguishes sustaining innovation, which improves the product for current customers, from disruptive innovation, which starts out worse on the attributes the mainstream customer values, initially serves a less demanding segment or non-consumers, and improves until it becomes good enough for the mainstream market. The established company sees the second kind as irrelevant, and it is — until it stops being so.

The mechanism is one of internal process, not of vision. The investment committee compares a proposal with uncertain return and low margin against proposals with clear return and high margin. It chooses correctly, every time. The sum of correct choices produces the wrong outcome.

02The criticism the theory received #

Recording the criticism is part of using the idea honestly. In 2014, historian Jill Lepore published a sharp rebuttal in The New Yorker: re-examining the book's cases, she argued that several of the companies described as defeated kept existing or failed for other reasons, and that the theory had been applied retroactively, picking the examples that confirmed it.

In 2015, Andrew King and Baljir Baatartogtokh published a more systematic test in the MIT Sloan Management Review: they consulted experts on 77 cases cited as disruption and found that only a small share satisfied every element of the theory. Christensen, Michael Raynor and Rory McDonald responded that same year in the Harvard Business Review, arguing that the term had come to be used for any market change and that the theory has a defined scope, with conditions most popular examples don't meet.

The practical takeaway for someone running a mid-size company: disruption as a market prophecy is weak and often misapplied; the resource-allocation mechanism Christensen described is solid and observable inside any company that's doing well. Use the second one, be wary of the first.

03The cost of postponing out of prudence #

Stated assumptions, at the scale of the 28 locations — rework them with your own numbers:

Want to see how this looks inside a real operation? Explore the platform.

The second line comes from adding three components measured later, reluctantly: hours of manual reconciliation (28 locations × 11 days × 8 hours × R$ 95, about R$ 234 thousand a year), sample-collection rework from mismatched information, and the cost of two corporate contracts lost over turnaround time on results. None of this showed up in the decision spreadsheet, because the spreadsheet compared the proposed investment against zero — and the cost of staying as-is was never calculated.

04How this shows up in the decision to change how you operate #

1. The current customer isn't asking for it. They don't know an alternative exists and complain about the symptom, not the cause. Listening only to them keeps the company in the same place.
2. The return is uncertain. Changing how you operate has diffuse gains, and diffuse gains lose to concrete gains in any committee.
3. Whoever understands the current process best is who loses the most from the change. The resistance is competent, not political.
4. The comparison is against zero. Without measuring the cost of continuing, every investment looks expensive by definition.
5. Capacity is tied up. The good team is on the fronts that pay off today, and whoever has the least context is left for the change.

Christensen's recommendation for the hardest part — protecting the initiative from the main business's resource logic — translates, in a 600-person company, into something modest: give the change an owner with protected time, a pilot unit and its own success criteria, instead of putting it through the same approval funnel as short-term initiatives. Without that design, it dies in the middle, as described in why process change dies halfway through.

05What management with data answers #

The defense of the current way usually wins by information asymmetry: the cost of the new thing is budgeted precisely, and the cost of the old thing is invisible because it's diluted across the hours of people already on payroll. As long as that asymmetry exists, the prudent decision will always be to postpone.

Logging the work where it happens corrects exactly that. How many hours a month go to reconciliation, how many incidents come from mismatched information, how long a request waits between areas: with those numbers, the comparison finally has two sides. And the 90-day pilot stops depending on perception to be evaluated — the same logic of measuring in time to still change course from what the balanced scorecard still teaches.

At Relevanti, the processes, operations and intelligence modules make that cost visible from the first month — see the platform, the breakdown by area in solutions, or bring the decision you've been postponing to a conversation.

Doing well is the best reason not to change, and that's exactly why the decision is hard. The antidote isn't courage: it's putting the cost of continuing on the same spreadsheet as the cost of changing.