Disruptive Innovation: What We Owe to Clayton Christensen

layton Christensen, who initiated seminal work on the notion of disruption, died from cancer at the age of 67. As a prominent theorist in management, along with giants such as Peter Drucker or Michael Porter, his work is more relevant than ever as big corporations continue to find it hard to address multiple disruptions in their environment. The following is a synthesis of his work as an attempt to demonstrate how it is still very much useful.

The notion of disruption

Disruption is a profound change in an environment redefining the rules of the game. The emergence of low cost in air travel, that of digital in photography or the invention of Internet typically illustrate what disruption is. Disruption is not just technological: the increasing general level of education is a disruption, the decreasing birth rate or the change in the standards of society (like same-sex marriage) all prove that disruption can be more than just technological, with strong knock-off effects.

Christensen underlined significantly the fact that disruption is a process, not an event. Low cost flights emerged as early as the 70s, and took about 15 years to have a significant impact on traditional airlines. The impact continues to this day. This long time lapse between the onset of a disruption and the first impacting repercussions, explains why it is generally underestimated by the incumbents. Besides, the very essence of a disruption lies in the fact that it draws its first customers among what we call the “non-consumers”: thus, the first low cost customers were not existing airline customers, but rather bus users. For almost 15 years, low cost airlines did not attract any customer from traditional airlines, which as a result, did not perceive it as a threat. However, little by little, low cost business began spreading; generations of students turned adults, continued to resort to it: low cost started competing on traditional segments but it was most probably too late for incumbents to react.

Another important notion is the relative aspect of disruption: what may be disruptive for one incumbent, may not necessarily be for another. For instance, digitization was a disruption for Kodak, as it rendered its rolls of films useless, but it was not for Nikon, which continued to sell cameras, but digital ones this time.

A giant (source: Wikipedia)

A mental model

Disruption is also a challenge for incumbents as it represents a genuinely new mental model in contradiction with its own model. Mental models are ways to see the world. When Apple launched its iPhone in 2007, it was technically inferior to Nokia’s cell phones (it was not even 3G compatible) and the ease of use was not considered as important at the time. In the end, it was the Apple product that won. The very essence of disruptive innovation is that it does invent new mental models and it does successfully impose them, like Henry Ford who had managed to get the idea across that each American citizen had to have the possibility to buy a car, an idea which at the time was considered utterly ridiculous. Five years later this idea seemed obvious to everyone.

The innovator’s dilemma

More fundamentally, Christensen explained the reasons why it is more difficult for incumbents to address disruption with what he called the innovator’s dilemma. By definition, disruption corresponds to a different business model. The very essence of disruption is that it is not the continuity of the legacy activity, but a different one. A successful incumbent is one who has been able to optimize the right set of resources, processes and values (priorities) to create a profitable business model. Because these resources, processes and values are optimized to serve one model (the legacy activity), they are by definition unfit to serve another model, one that would be disruption induced.

Thus, AccorHotels is optimized to deliver a similar service in all hotels; the performance criterion chosen as a key element is service uniformity: when I check into an Ibis hotel, I know exactly what to expect, I buy the absence of surprise. With AirBnB, it is quite the opposite: I buy into an element of surprise and into the fact that no two homesteads can ever be the same; the performance criterion AirBnB has opted for is not the same. This is when the disruptor can use this rational disinterest by an incumbent to occupy a space left unprotected.

The expression innovator’s dilemma comes from the fact that, when faced with disruption, an incumbent is torn between two options equally unfavorable: protecting the legacy activity, at the risk of jeopardizing its future by dismissing the potential disruption, or betting on it at the risk of jeopardizing the legacy activity, without being certain that the said disruption will ever become a market.

Experience shows that the protection of the legacy activity tends to be the default choice: the impact of undermining the legacy activity is certain, immediate and massive while the impact of forgoing an opportunity is uncertain, distant and small. In other words, jeopardizing the legacy activity is a sure way to lose a lot and in the very short term, whereas betting on disruption is hoping to win a lot in the long run but with no certainty.

Christensen’s disruption theory is thus first and foremost, a theory that tries to predict the strategic response when disruption occurs in an incumbent’s environment. It does explain why this response is rationally difficult: neither from lack of information, nor from lack of will or lack of time; the response to disruption is dampened because the incumbent is hampered by his/her legacy activity that he/she must protect. Unlike what some critics may have written, Christensen’s theory does not offer a sure-way innovation method, much less that disruptive innovation is an always desirable holy grail. It only allows, and that is already a big deal, to predict how the incumbent will react, all else being equal, if he/she is not aware of the mechanisms associated with disruption.

Thus Intel, inspired by Christensen’s work, was able to avoid leaving all entry-level products to its competitors when realizing it was in fact faced with the said dilemma.

The difficulty with Christensen’s work comes from the fact that his theory evolved over time. In his initial book, The Innovator’s dilemma, published in 1997, and which is still a major reference, he talked about disruptive technology. He then moved on to demonstrate that technologies are never disruptive in essence and what is disruptive is always a business model. I wrote my book A manager’s guide to disruptive innovation to help managers grasp this multi-faceted theory.

A very practical…theory

Through his books and articles, Christensen charted new lines to try and uncover disruption (The Innovator’s solution, Seeing what’s next) and apply his model to different sectors such as health (The Innovator’s Prescription) or education (The Innovative University). Christensen was also a very religious man, and as such, attempted to apply some of his theories to ethical questions and personal development in the book How will you measure your life, in which he provided advice to Harvard students and more generally, to managers. I found this book less interesting, on the brinks of common-places (set clear goals, take care of your loved ones, stay honest all the time rather than often etc.) and lapsing into sentimentalism. Every theory has its limitations …

Christensen shall remain a major management thinker, one I am genuinely interested in as he offers a solid theory directly applicable by managers, which is rarely the case (the other one being Saras Sarasvathy with the notion of effectuation for entrepreneurs). As I regularly see it when working with managers, the disruption theory can explain phenomena otherwise inexplicable and above all, it provides very concrete courses of actions. Organizations questioning their future would do well to better know the work of Clayton Christensen.

To read more about the Innovator’s dilemma and Christensen’s work, check my synthesis book: A manager’s guide to disruptive innovation, published by Diateino. To read more about mental models, read my article: The conflict of mental models: The key to organizational transformation.

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