homepage_name! > Editions > Number 080-081 > Business Thought - Clayton Christensen

Clayton M. Christensen

Awarded the Number 1 Management Thinker in the World

“Decide what you stand for. And then stand for it all the time.” Harvard Business School Professor Clayton Christensen is the architect of, and the world’s foremost authority on, disruptive innovation. Clayton was named the World’s Most Influential Business Management Thinker in 2011 and 2013. Under his guidance one can discover how novel and disruptive approaches to innovation can transform organizations and help unlock entirely new sources of growth.

Clayton M. Christensen was born on April 6, 1952. He is an American scholar, educator, author and business consultant who currently serves as the Kim B. Clark Professor of Business Administration at the Harvard Business School (HBS). At the HBS he teaches an elective course he designed called "Building and Sustaining a Successful Enterprise", which teaches how to build and manage an enduring, successful company or transform an existing organization, and also teaches in many of the school's executive education programs. Christensen was awarded a full professorship with tenure in 1998, and currently holds five honorary doctorates. He is best known for his study of innovation in commercial enterprises. Christensen is also a co-founder of Innosight, a management consulting and investment firm specializing in innovation.

Christensen is the best-selling author of five books, including his seminal work The Innovator's Dilemma (1997), which received the Global Business Book Award for the best business book of the year, The Innovator's Solution (2003), and Seeing What's Next (2004). Disrupting Class (2008) looks at the root causes of why schools struggle and offers solutions, while The Innovator's Prescription (2009) examines how to fix the American healthcare system.

In 2012 came an unconventional book on inspiration and wisdom for achieving a fulfilling life from the world’s leading thinker on innovation. After winning his battle with cancer, Christensen attempts to apply theories of motivation, management and strategy to the task of self management. In How Will You Measure Your Life? Christensen puts forth a series of questions: How can I be sure that I'll find satisfaction in my career? How can I be sure that my personal relationships become enduring sources of happiness? How can I avoid compromising my integrity—and stay out of jail? Using lessons learned from some of the world's greatest businesses, he provides incredible insights into these challenging questions.

Theory of disruptive innovation

An iPhone, any smartphone, an iPad, a notebook computer, a laptop. Every one of these devices turned its industry upside down when it was introduced, driving established companies to the brink of insolvency, or even into oblivion, and paving the way for new players to enter the game. Today, almost instinctively, we understand the concept of disruptive technology. But it wasn’t until after the publication in 1995 of an article by Clayton Christensen in the Harvard Business Review entitled “Disruptive technologies: catching the wave” that the term entered the language. That seminal article was followed in 1997 by Christensen’s pathfinding book, "The Innovator's Dilemma" – one of the most influential business books of all time. Christensen had found an answer to the question that had long mystified the business community: why had such iconic, well-managed firms as Digital Equipment Corporation, Xerox, and dozens of others that had long led their industries, fallen by the wayside? The professor’s answer was not that they had simply gotten behind technologically, but that they had done everything right — listening carefully to their best customers and catering to their needs by investing in sustaining technologies that offered customers added value. The problem was that the dictates of prudent business practice prevented them from investing in the sort of innovation that could turn their own industries upside down: disruptive technologies. In fact, Christensen wrote, “the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms’ managers set up an autonomous organization charged with building a new and independent business around the disruptive technology . . . There is something about the way decisions get made in successful organizations that sow the seeds of eventual failure.” A decade and a half ago this was a shattering insight and it explains the acclaim that Christensen’s work has received throughout the world of business. Whether in electronics or retailing, a successful company with established products will get pushed aside unless managers know when to abandon traditional business practices. Using the lessons of successes and failures from leading companies, "The Innovator's Dilemma" presents a set of rules for capitalizing on the phenomenon of disruptive innovation: when it is right "not" to listen to customers; when to invest in developing lower-performance products that promise lower margins; and when to pursue small markets at the expense of seemingly larger and more lucrative ones.

"The Innovator's Dilemma" was published in 1997. Christensen got some future predictions right. It is interesting to discover them 18 years later. And it's also interesting to use the frameworks described to think about new technologies that constantly keep surfacing in this Information/Digital Age we live in. "It is unclear how long the marketers at Microsoft, Intel, and Seagate can succeed in creating demand for whatever functionality their technologists can supply. Microsoft's Excel spreadsheet software, for example, required 1.2 MB of disk storage capacity in its 1.2 version, released in 1987. Its 5.0 version, released in 1995, required 32 MB of disk storage capacity. Some industry observers believe that if a team of developers were to watch typical users, they would find that functionality has substantially overshot mainstream market demands. If true, this could create an opportunity for a disruptive technology - applets picked off the internet and used in simple internet appliances rather than in full-function computers, for example - to invade this market from below." So essentially, Christensen predicted Google Docs and similar products, already in the year 1997. Or if we stretch it a bit, cloud services not present on our own devices, but in far away server rooms.

One of the more interesting chapters in this book is Chapter 8 on "How to Appraise Your Organisation's Capabilities and Disabilities". In Chapter 8, Christensen breaks down how managers can assess the ability of their organisation to manage different kinds of innovation by looking at: the kind of resources it has ( the mechanisms/processes by which the organisation creates value, which is "intrinsically inimical to change" in order to ensure consistency; and the values of the organisation that employees use to make prioritisation decisions. Christensen notes that "the larger and more complex a company becomes, the more important it is for senior managers to make independent decisions about priorities that are consistent with the strategic direction and the business model of the company....[but these] clear, consistent and broadly understood values, however, also define what an organisation cannot do." Dealing with disruptive change therefore requires managers to create new capabilities, whether by acquiring an organisation, whose processes and values match the new task (and keeping them separate from the existing organisation), or separating out an independent organisation and developing within it the new processes and values required. Also interesting is Chapter 10 on "Managing Disruptive Change: A Case Study". The tenth chapter of this book is basically a manual for approaching electric vehicles as a disruptive technology - a manual for Elon Musk to build Tesla. However the conclusion the author arrives is not the Tesla Model S (a premium product), but rather a cheap and low range model.

"To measure market needs, I would watch carefully what customers do, not simply listen to what they say. Watching how customers actually use a product provides much more reliable information than can be gleaned from a verbal interview or a focus group. Thus, observations indicate that auto users today require a minimum cruising range (that is, the distance that can be driven without refueling) of about 125 to 150 miles; most electric vehicles only offer a minimum cruising range of 50 to 80 miles. Similarly, drivers seem to require cars that accelerate from 0 to 60 miles per hour in less than 10 seconds (necessary primarily to merge safely into highspeed traffic from freeway entrance ramps); most electric vehicles take nearly 20 seconds to get there. And, finally, buyers in the mainstream market demand a wide array of options, but it would be impossible for electric vehicle manufacturers to offer a similar variety within the small initial unit volumes that will characterize that business. According to almost any definition of functionality used for the vertical axis of our proposed chart, the electric vehicle will be worse off compared to a gasoline powered car.

This information, however, is not sufficient to characterize electric vehicles as disruptive. They will only be disruptive if we find that they are also on a trajectory of improvement that might someday make them competitive in parts of the mainstream market.

The trajectories of performance improvement demanded in the market—whether measured in terms of required acceleration, cruising range, or top cruising speed—are relatively flat. This is because traffic laws impose a limit on the usefulness of ever-more-powerful cars, and demographic, economic, and geographic considerations limit the increase in commuting miles for the average driver to less than 1 percent per year.

At the same time, the performance of electric vehicles is improving at a faster rate—between 2 and 4 percent per year—suggesting that sustaining technological advances might indeed carry electric vehicles from their position today, where they cannot compete in mainstream markets, to a position in the future where they might.

... If present rates of improvement continue, however, we would expect the cruising range of electric cars, for example, to intersect with the average range demanded in the mainstream market by 2015, and electric vehicle acceleration to intersect with mainstream demands by 2020."

Even 18 years later this book is still food for thought. Although Christensen’s book looks at the commercial sector, one can apply the insights from the book to other domains, including the public sector. What might it mean for the public sector to manage disruptive change, in the way organisations and teams are set up and resourced? What might a strategy for learning mean in the context of designing public services and infrastructure? In IT for instance, might it entail a shift away from the “waterfall” method of designing infrastructure towards an agile methodology?

Resisting the temptation whose logic was “In this extenuating circumstance, just this once, is OK” has proven to be one of the most important decisions of my life. Why? My life has been one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over in the years that followed. The lesson I learned from this is that it’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for, and draw the line in a safe place.”

“If you defer investing your time and energy until you see that which you need to, chances are it will already be too late.”

“Motivation is the catalyzing ingredient for every successful innovation. The same is true for learning.”

“You can talk all you want about having a clear purpose and strategy for your life, but ultimately this means nothing if you are not investing the resources you have in a way that is consistent with your strategy. In the end, a strategy is nothing but good intentions unless it's effectively implemented.”

“In order to really find happiness, you need to continue looking for opportunities that you believe are meaningful, in which you will be able to learn new things, to succeed, and be given more and more responsibility to shoulder.”

“Because if the decisions you make about where you invest your blood, sweat, and tears are not consistent with the person you aspire to be, you’ll never become that person.”

“In your life, there are going to be constant demands on your time and attention. How are you going to decide which of those demands gets resources? The trap many people fall into is to allocate their time to whoever screams the loudest, and their talent to whatever offers them the fastest reward. That’s a dangerous way to build a strategy.”