Generally, the technology that enables disruption is developed in the companies that are the practitioners of the original technology. That's where the understanding of the technology first comes together. They usually can't commercialize the technology because they have to couple it with the business model innovation, and because they tend to try to take all of their technologies to market through their original business model, somebody else just picks up the technology and changes the world through the business model innovation.

Year after year after year, people write books about managing innovation or about leadership, for example, without ever going through the pain of saying, "This kind of leadership will cause this result in these circumstances and a very different result in those circumstances." This is academic malpractice of the worst kind.

An innovation will get traction only if it helps people get something that they're already doing in their lives done better.

How could Digital's collapse be so precipitous? It's because, in many ways, financial performance data is misleading. As you move up to the top of the market, you're getting rid of the less profitable products at the low end and adding business with more attractive margins at the high end. The rate of unit volume growth might be tapering off as you pursue these smaller markets, but your margins actually look better. So Wall Street rewards your stock price until you hit the ceiling.

It's like in biological evolution: The population will evolve, even though individuals can't. The same thing happens in the corporate world: The population of business units within corporations evolves, even though individual business units can't. That's because the capabilities of business units reside in their processes and their values, and by their very nature, processes and values are inflexible and meant not to change.

Steve Jobs and Apple taught us that profit is not the ultimate goal, but rather a consequence of something greater.

People still cling to this belief that innovation is just random and unpredictable. But if you look closely, there are some real patterns. The companies that recognize and take advantage of those patterns have the real opportunity to create competitive advantage.