The Big Debate: Disruptive Innovation, Devastating Innovation….

At a towering 6′ 8”, Prof Clay Christensen stands truly tall in the world of management…He is easily the most cited contemporary academic…He represents the zeitgeist of modern or post-modern work on business innovation.

This post is triggered by the first ever public criticism (I know of) about the ‘gospel’ called Disruptive Innovation. Courtesy: The New Yorker article by Jill Lepore – A Prof of history at Harvard and a colleague of Prof Clay Christensen.

I have always been fascinated by Christensen’s theory of Disruptive Innovation…When I first read his book The Innovator’s Dilemma (several years back when I was more of a technical guy than a manager!), I did not its nuances but I was certainly fascinated by the theory. In its simple (simplistic) form, what I understood from that book was that if you keep doing the right thing (what your customers ask for), you are screwed. Later I read about how Prof Christensen helped Intel’s CEO help himself. Overall, I was enamoured by the concept of disruption (though I did not understand it fully). I viewed the Prof’ body of research almost as a work of philosophy i.e. If you keep doing the right things (i.e. what your customer asks!), you will end up being disrupted/dislocated ….almost an anti-thesis of the Hindu ‘Dharma’ which says you must always do the ‘right’ things!

You can read this Businessweek article where Prof Christen briefly responds to Jill Lepore.

I have been a big fan of another Christensen’s book – “How do you Measure your life” where he applies some of his business philosophies to the business of living life….I have admired this man’s simple-yet-elegant writing in general and of course I am awed by his theories. I admire this man’s courage to come back to academics during his 30’s (after entrepreneurship stint) and voila – his phd thesis is about disruptive innovation at Harvard…

I have not fully understood/analysed Jill Lepore’ criticisms yet. Christensen himself admits that his theory is still a work in progress and that her sharp remarks have been solely based on his first book.

I am going to re-read the above articles and chew on things a bit. Everybody I respect likes/approves Prof Christensen….The smart guy that Mark Suster is – he seems to be a big fan of this body of work…..

I now feel kind of directionless and lost:-)…a vacuum engulfs me…..I feel like a lone traveler who has just lost his map and compass..In this disruptive world, will the theory itself be disrupted? Are there no long-lasting ‘right’ things in this world? Is everything ephemeral? Isn’t anything sanctum-sanctorum? Ain’t there no log to hold on to in these rough seas:-)??

Hybrid Innovation…Conservative Innovation

Apropos my last post on disruptive & sustaining innovation, another form of innovation that is lately being talked about is the hybrid innovation. Professor Clay Christensen and his team of researchers have been expanding on this concept in the field of online+classroom learning.

What is hybrid innovation? It is a clever combination of the new disruptive technology with the old to provide additional value. An obvious example is the hybrid car Toyota Prius that reduces emissions. While the automobile industry has been pushing the boundaries towards hydrogen-fuel/electric cars, Toyota did a smart thing by combining gasoline and electric. The gasoline kicks in only when the car reaches a speed of ~15 mph powered by the electric. And once it starts, it operates in a narrow band thus improving efficiencies.

4 characteristics of hybrids:

–      Hybrid innovations include both the old and new technology

–      Hybrid innovations target existing customers

–      Hybrid innovations try to do the job of the incumbent technology

–      Hybrid innovations tend to be less fool-proof than disruptive innovations (i.e. customers may need more money/expertise to use hybrids)

Blended Learning is a combination of online delivery of content and the traditional brick-mortar classroom setup. In US, most children have access to some form of schooling. So online learning is probably not going to ‘disrupt’ the B&M…But in developing and under-developed countries, this may not really hold true. But the challenge of course is to make online programs available (that explains initiatives like OLPC – one laptop per child). While hybrid innovations will typically be ‘sustaining innovations’, they can also be ‘disruptive’ in some cases. B&M retailers opening online stores may not be too innovative anymore but India’s amazon i.e. flipkart.com is mulling B&M stores!! Now that is surely a case of hybrid innovation!

Interestingly, Nicholas Carr talks about a concept called conservative innovation. He says “Conservative innovators neither pioneer a new technology nor copy it. Rather, they combine it with an older technology to create a different sort of product altogether. And, often, it’s exactly the product that today’s customers actually need, want, and are willing to pay for”….That sounds very much like hybrid innovation to me.

He quotes a few interesting examples to substantiate his theory:

1. Usage of pigeons by Reuters between Brussels and Aachen in Germany during the telegraph innovation ~1850.
2. The phenomenon of Netflix using snail mails and DVDs (and now Netflix moving on to streaming videos!)

Read about these nice examples here

Disruptive vs Sustaining Innovations

It was always a foregone conclusion. It was a just a matter of when. Anyone writing about technology has to seek the blessings at the altar of innovation. Naturally, I am a big fan of the theory of ‘disruptive innovation’ by Clay Christensen – possibly the most respected management thinker of our times.  His books – innovator’s dilemma, Innovator’s solutions etc are acclaimed classics. In fact, seminal. The idea that organizations (can) work themselves in to a dead-end by meticulously taking care of their ‘gold’ customers had shaken me up when I had read it years back. There was almost something philosophical about it….You do all the right things and still end up on the wrong side. You listen to your parents. Study hard, get yourselves some fancy degrees, land up in decent workplaces and so on only to realize that you can almost never get ‘rich’ (in terms of autonomy, family time, money etc) by doing all these bookish things. And that drop-out kid (whom you had scorned) is the toast of the town (Sample this!) Well, not exactly, but you know what I mean…(Note to self:  its ok, life goes onJ)

But like many others I did not fully comprehend what he was saying. For example, I had thought that disruptive innovation was the holy grail. And that incremental or sustaining innovation was the ugly duckling….I had also assumed that disruptive was always about new or breakthrough technology. Far from it.

Sustaining innovations are important when organizations try to serve their cash cows better. They bring about the phase of steady growth and catapult a successful start-up to the big boys league.  Disruptive innovations are completely different. They bring newer products that compete on totally different parameters. They are tangential. Outside the box. Game-changing. How?

Typically, such products are buggy, less expensive and appeal to !(cash cows) i.e. customers who are not currently served or niche segments or customer with shallow pockets. Naturally, any self-respecting organization will shy away from such customers. Except these darned disruptive innovators (typically start-ups!) who don’t have a choice but to serve such customers and the resulting revenue/profits further improve the product. Over a period of time, a new normal arises where the quality increases to such an extent that even the mainstream customers come knocking. Mission Accomplished….Another aspect to note is that where disruptive innovation happens, the incumbent product has much more features than what its customers normally use i.e. the product has become much more complex (through a series of sustaining innovations?)

Clay Christensen had based his original theory on his study of the disk drive industry and the excavator industry. Another key aspect is that disruptive innovation need not be about new/break through technology. It can actually be a business model disruption. In fact many disruptive innovations are incremental but novel combinations of existing technologies.

Summary:

Disruptive	Sustaining
Newer markets	Current markets
Typically starts at the lower end of the customer segment	Primarily for milking the cash cows, so to speak!
Transformational business model	Sustaining current business model
technology may be disruptive or incremental	technology may be disruptive or incremental
Buggy products to begin with	High quality
Incumbent products have way more features than what the average user needs	NA
Steve Jobs	Tim Cook (as of this date!)

Once in a blue moon…

once in a while…once in a blue moon…you hit upon some writing that you relate with in a visceral manner…Several years back Clay Christensen made a huge impact on me(innovator’s dilemma etc)….Mark suster (his blog: both sides of the table) was another…

Today I hit upon:

The Gervais Principle, Or The Office According to “The Office”

I shut down my laptop…The case is rested.