Innovator's Dilemma is doing everything right by current customers can kill you. It sits in the Cognition dimension (COG) of the Human Behavior Taxonomy™ as element HBT-COG-0407, within the Markets family. The core principle: doing everything right by current customers can kill you. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
Scientific Definition
Doing everything right by current customers can kill you.
Plain-English Definition
Doing everything right by current customers can kill you.
Feynman Explanation
The smartest companies fail by being smart at the wrong game.
Core Principle
Doing everything right by current customers can kill you.
Mechanisms
Pending editorial review.
Doing everything right by current customers can kill you.
Pending editorial review.
Pending editorial review.
Pending editorial review.
Pending editorial review.
Designing internal counter-incumbents.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
The smartest companies fail by being smart at the wrong game.
Examples
- Kodak, Blockbuster, Nokia.
- Designing internal counter-incumbents.
Pending editorial review.
Original analysis from The Incentives Lab — how this element behaves inside real payoff structures.
Why this element matters to incentive design
This is one of the elements leaders describe as a values gap. It is a payoff gap. The mechanism underneath it is straightforward: doing everything right by current customers can kill you. You can recognize it in the field by its signature: the smartest companies fail by being smart at the wrong game. Every element in the Cognition dimension changes the perceived payoff of an action before the action happens, which is exactly where incentive design has leverage.
How it gets exploited
Left undesigned, designing internal counter-incumbents. It is amplified whenever designing internal counter-incumbents. Inside organizations that shows up as designing internal counter-incumbents. The pattern is the same one Goodhart's Law describes: the measurable proxy attracts the effort, and the purpose behind it quietly loses funding.
How the Lab designs around it
The redesign move is to spin up internal disruption teams with their own P&L. Watch for it at the boundaries: handoffs, promotions, incident reviews, and budget cycles are where this element gets its power.
Famous Experiments
Pending editorial review.
Design Principles
- Spin up internal disruption teams with their own P&L.
Measurement Approaches
Pending editorial review.
Evidence
Pending editorial review.
Pending editorial review.
The Perverse Incentive Lens™
How this behavior is exploited — and how to redesign around it.
- Spin up internal disruption teams with their own P&L.
Pending editorial review.
Pending editorial review.
Interactive Mini Network
Click any neighbor to re-center the graph and follow the threads of connection.
Knowledge Graph Neighbors
Auto-linked to the rest of the Human Behavior Taxonomy by family, domain, dimension, and shared keywords.
The rate at which customers (or employees) leave over a period.
The gap between early adopters and the early majority kills most products.
Innovators → early adopters → early majority → late majority → laggards.
Low-end or new-market entrants overtake established incumbents.
Prices driven far above intrinsic value by feedback loops of belief and behavior.
Asset prices fully reflect available information; you can't reliably beat the market.
Customers hire products to do a job in their life.
Aggregating many niche markets equals or exceeds the mainstream.
Beliefs about reality shape the reality.
Technologies grow slowly, then explode, then plateau.
Presenting two options as the only possibilities when more exist.
How will I feel about this in 10 minutes / 10 months / 10 years?
Where Innovator's Dilemma is cited in the corpus
Essays, field guides, and diagnostics from The Incentives Lab that apply this element.
- EssayGoodhart's Law in the Real World
How measurable proxies capture judgment.
- EssayThe Perverse Incentives Hiding in Your KPIs
Cognitive shortcuts turned into scorecards.
- EssayAI Agents Inherit Your Incentives
How this element propagates into automated systems.
- CourseIncentives 101
The free ten-part primer on reading a payoff structure.
- ReferenceThe Periodic Table of Human Behavior
The full 1,267-element map this page belongs to.
Questions about Innovator's Dilemma
- What is Innovator's Dilemma?
- Innovator's Dilemma is doing everything right by current customers can kill you. It sits in the Cognition dimension (COG) of the Human Behavior Taxonomy™ as element HBT-COG-0407, within the Markets family. The core principle: doing everything right by current customers can kill you. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
- What is an example of Innovator's Dilemma?
- Designing internal counter-incumbents. The Incentives Lab catalogs everyday, organizational, and historical instances of this element on its Human Behavior Taxonomy™ page (HBT-COG-0407).
- How is Innovator's Dilemma exploited?
- Designing internal counter-incumbents.
- How do you design around Innovator's Dilemma?
- Spin up internal disruption teams with their own P&L.
- Which behavioral dimension does Innovator's Dilemma belong to?
- Innovator's Dilemma is classified in the Cognition dimension (COG) of the Human Behavior Taxonomy™, family "Markets", class "Mental Model". Its permanent identifier is HBT-COG-0407 and its evidence grade is B.