I don't think Bill Gates ever understood a book like Innovator's Dilemma. Not really.
Bill's taking advantage of IBM's focus on their mainframe customers and under cutting them with Windows pcs seems almost the classic example of the things the Innovator's Dilemma is on about and probably the biggest one in history in dollar value terms. I suspect he understands that stuff.
When he was CEO some of the more innovative products not part of their core business included smart watches, internet TV (MSN TV), the XBox, and many others. Granted some were way ahead of their time, and I would agree to saying Ballmer didn't understand, but I wouldn't say Gates didn't.
It explains why most of the profit (ability to charge your costs plus a premium) was dominated in the 90's by OS's, and not by the now notorious disk-drive companies.
Gates probably understood this (how to position yourself not be disrupted) and it's why we're all reading his favorite book - which is great by the way.
http://www.businessweek.com/articles/2014-06-20/clayton-chri...
Disruptive innovation is a theory of history. Given any historical event with winners and losers, it reframes it as a contest between innovator and non-innovator with a preordained outcome. Microsoft succeeded and Xerox failed because PCs were the inevitable future, which Microsoft embraced and Xerox denied. Xerox should have seen that the PC was inevitable and planned accordingly, the theory says.
However, there is a problem when trying to apply the theory in real time, as Lepore points out: "Disruptive innovation can reliably be seen only after the fact." She explains the theory's circularity: "Christensen has compared the theory of disruptive innovation to a theory of nature: the theory of evolution. But... advocates of disruption have an affinity for circular arguments. If an established company doesn’t disrupt, it will fail, and if it fails it must be because it didn’t disrupt. When a startup fails, that’s a success, since epidemic failure is a hallmark of disruptive innovation. ... When an established company succeeds, that’s only because it hasn’t yet failed. And, when any of these things happen, all of them are only further evidence of disruption." It works well only in retrospect, and it can't be disproven. Like all theories of history, it only explains things that have already happened.
http://techcrunch.com/2014/06/30/christensen-vs-lepore-a-mat...