Britton Manasco, who writes Corante's "Customer Intelligence" blog, quotes Clayton Christensen as saying that his "students have become so 'data-driven' that they are unable to imagine the disruptions that lie on the horizon."

Britton's post recounts how, at a recent Open Source Business conference, Christensen described a discussion he had had with some of his Harvard Business School students about his concern that "a 'disruptive innovation' is about to overturn the success of the Harvard Business School...[which] is in danger of being over-run by corporate universities (like GE Crotonville), on-the-job training and web-based technical schools like the University of Phoenix."

There's more, all well worth reading, but the key insight Britton reports is that "data and analysis revolve around the past, leaving us blind to the threats and opportunities of the future."

Clayton Christensen is *really* famous now -- the Dilbert cartoon is currently running a series on disruptive innovation! The cartoon in today's IdeaFlow entry is from yesterday --- to see today's Dilbert go here.

(last updated 01/20/04)
Lots of discussion going on about the newly released Innovator’s Solution (“IS”), so here’s a guide to all things IS. I’ll update it regularly and link to it as I continue to read and post my thoughts on this book. If you see something that should be included, send it on to me.
Buy the book

The Innovator’s Solution: Creating and Sustaining Successful Growth

About the authors

Clayton Christensen and Michael Raynor

Blog coverage

IdeaFlow:

Selling to Nonconsumers (IS, Chapter 4) (11/26/03)

The Limits of Predictability in Innovation (11/24/03)

In Market Segmentation, What Counts Is Needs (IS Chapter 3) (11/19/03)

It's All Relative: IS Chapter 2 (11/7/03)

Innovator's Solution: Not Much Of A Solution After All? (11/4/03)

Tea And Innovation -- On Chapter 1 of IS (10/27/03)

Chuck Frey’s Innovation Weblog:

How to select the righ executive to lead a disruptive new business opportunity, 12/09/03

Parallels between IS and the Accenture white paper, Redefining High Performance. (10/28/03)

Customer-Focused Innovation (10/09/03)

Disruptive Innovation: Reflections on IS (9/30/03)

Other blogs:

Innovator's Solution - Still A Dilemma, Mark Federman's What Is The Message? (11/4/03)

Frank Patrick’s Focused Performance (11/01/03)

The E-Learning Vendor’s Dilemma, Jay Cross’s Internet Time (10/29/03)

PVR Blog 10/19/03

Ross Mayfield on Dan Bricklin’s below-referenced post (10/19/03)

Dan Bricklin on IS and Disruptive Blogging (10/17/03)

Rajesh Jain's Emergic.org (10/15/03)

Doug Simpson's Unintended Consequences (9/28/03)

Jerry Lawson's E-Lawyer (9/27/03)

Book reviews/articles

Guru Puts His Theories Into Practice, Globe and Mail, Toronto, Ontario (12/06/03)

Out-of-the-Box, Out Of Style, Boston Globe(11/30/03)

The Master of Innovation, Newsweek (11/17/03)

Christensen, Inc., Newsweek (11/17/03)

Be The Disrupter, Not The Disrupted, San Jose Mercury-News (11/16/03)

The Innovator Disrupts Again, The Business Standard, India (11/11/03)

'The Innovator's Solution' Tries To Counter Utterly Depressing 'Dilemma' by Kevin Maney (USA Today 11/11/03)

'Innovate Or Die,' Repeats Noted Author by Brian Deagon (Investor's Business Daily 11/5/03)

The Down Side of Upmarket, Web Host Monthly (Nov. 2003)

The Industrialized Revolution by Polly LaBarre (Fast Company, Nov. 2003)

First The Dilemma, Now The Solution by Fred Andrews (New York Times 10/19/03; sub reqd – you can also see this free at http://www.innosight.com/)

Graveyard of the New Direction by Leslie Walker (Washington Post 10/16/03)

Old Questions, Fresh Answers (CIO.com 10/15/03)

Established Firms Need The Courage To Disrupt by Robert Weisman (Boston Globe 10/12/03)

Is the ‘Innovator’s Solution’ to Sustained Corporate Growth An Unnatural Act? by Jim Heskett (HBS Working Knowledge 10/06/03)

Innovate Or Die (BusinessWeek 10/06/03)

How Great Companies Stay Great by Brad Wieners (Business 2.0 Oct. 2003 – sub reqd)

Book excerpts

The Innovator's Solution: What Products Will Customers Want to Buy? (ZDNet, 12/01/03)

What Customers Really Want Is For You To Do Their Jobs (CIO Magazine, 11/15/03)

The Innovator's Solution: To become partners in innovation, CIOs must put resources into their companies' new growth businesses (Optimize Magazine Nov. 2003)

Handling New-Market Disruptions (C/Net’s News.com 10/14/03)

Creating A Killer Product (Forbes Online 10/13/03)

How To Pick Managers For Disruptive Growth (HBS Working Knowledge 10/13/03)

Other stuff

Articles on disruptive innovation by Clayton Christensen and his partners at Innosight

In previous chapters, The Innovator’s Solution authors Christensen and Raynor explored a disruptive strategy of “competing against nonconsumption.” But in so doing, companies are faced with the immediate challenge of how to find and sell to the nonconsumers who can become your customers.  A case study with which many of us are familiar — how Sony scored numerous times with disruptions such as the transistor radio and the Walkman — illustrates the point perfectly.

The Sony case also illustrates another point made in this chapter, which is that disruptive products often require disruptive channels for sales and distribution.  This point is even more pertinent when you use the broader definition of channels that the authors are using: “A company’s channel includes no just wholesale distributors and retail stores, but any entity that adds value to or creates value around the company’s product as it wends its way toward the hands of the end user.” Example: computer makers such as IBM and Compaq are the channels through which Intel’s microprocessors and Microsoft’s operating system reach the end-use customer.

So if a disruptive strategy of “competing against nonconsumption” makes so much sense, the authors point out, why do incumbent companies do the opposite, which is “trying to stretch the disruptive innovation to compete against — and ultimately supplant — established products sold by well-entrenched competitors in large, obvious market applications”? The answer has to do with resource allocation.

Mistake No. 1 is to frame the disruption as an opportunity. Christensen and Raynor’s theory (much of which they credit to HBS professor Clark Gilbert) is that the disruption should be framed not as a potential opportunity for further growth, but as a threat to existing business that cannot be overlooked.  Framing the disruption as a threat allows for top-level resource commitments. Then the disruptive technology should be developed by an “autonomous organization” (another division, a spin-off company) that can frame it as an opportunity.

Mistake No. 2 is to promise big numbers in the future in exchange for resources in the present. “The very effort of trying to articulate a convincing case for resources actually forces the entrepreneurs to cram the innovation as a sustaining technology in the existing market,” because the biggest markets whose size can be substantiated are those that already exist. Then when the results fall short of the promised numbers – because the market of nonconsumers is not being effectively targeted – resources are cut.

The authors suggest that companies that try new-market disruption establish a parallel process in which to evaluate potentially disruptive opportunities, a process in which the go/no go decisions are made based not on numerical rules but on how well they fit the pattern for disruption already explicated by the authors. And even then, the best that can be predicted is that “the initial conditions are conducive to successful growth.”

Disruption is, after all, still a risk.

I hadn't gotten around to contacting the authors of The Innovator's Solution to tell them of my blog project on their book -- but they appear to have found it anyway! I received an email today from co-author Michael Raynor, who says (emphasis mine):

[I liked your] correct and measured response on Nov. 4 to Mark Federman's comments -- which were themselves thought-provoking and helpful. In your comments you quoted note 11 of Chapter 1. I'd direct you also to note 14 of chapter 1 -- in which we observe that, in our view, the limits of predictability in innovation have yet to be limned, and the significance and impact of any residual uncertainty are profound issues of enormous importance. Clayton and I are ambitious and hopeful with respect to how far back we can push the veil of ignorance surrounding successful innovation, but we're not dogmatic about just how far it can be pushed. We figure the only way to find out is to try.

The discussion of whether you could really predict innovation results seems to have died down. But it's important, not the least because in some ways it marks the division between companies that support innovation and those that don't.
How much prediction will we ever be able to apply to the innovation process? How a company's leaders answer that question probably also determines how much of the company's current assets its leaders are willing to devote to the innovation process, and how much they feel the company's future prospects depend on successful innovation.

Back to Innovator’s Solution – Chapter 3, “What Products Will Customers Want To Buy?” is one that hits close to home for me, considering the business my team is in (and our company). But there’s a disappointment on the first page of the chapter: “Over 60% of new product efforts are scuttled before they ever reach the market, and of the 40% that do see the light of day, 40% fail to become profitable and are withdrawn from the market,” says Christensen. The disappointment isn’t just that the failure rate is high, but that the numbers are sourced (in one of those wonderful endnotes!) from a 1996 publication – the book Wellsprings of Knowledge by Dorothy Leonard (actually, the endnote says the book was published in 1996; Amazon says the hardback came out in January 1995 and a paperback version in 1998). In client presentations we’ve been using similar numbers that we’ve sourced from a 1998 Dun & Bradstreet study, but it’s disappointing to find even older numbers in a hot-off-the-press book.

In any case, Christensen points out that though the new-product failure rate is high, “failures are not really random.” They are a result of the difficulty of the task: How to connect disruptive innovations with the right customers to create a foothold in the market, then grow profitably along the sustaining trajectory. And identifying those disruptive footholds means “connecting with specific jobs your customers are trying to get done in their lives.”

Interesting discussion about market segmentation, which he defines as the “categorization stage of theory building.” And here’s correlation vs causation again – according to Christensen, “attribute-based categorization of either/both products or customers can reveal correlations between attributes and outcomes…but only…circumstance-based categorization (ie., segmentation schemes) tell causality – what features, functions, and positioning will cause customers to buy a product.

In other words, customers “hire” products to do specific “jobs,” so it’s best to segment the markets to mirror the way customers experience life. The critical unit of analysis is the circumstance, not the customer, which to me suggests qualitative, not quantitative, research. My instincts tell me this is right. And it actually also “fits” with the way we already structure our ideation projects, so that makes me all the happier about it!

Bottom line: One disruptive strategy is to compete against “nonconsumption” for “nonconsumers.” Traditional quantitative market research won’t identify these folks or the jobs they are trying to do. The best way to determine this market is to observe what people seem to be trying to do, then ask them about it. And only after you have identified those needs would you then move into quantitative research to determine the size of the market. Until you know what’s needed, you can’t figure out how many people might have that need.

The Innovator's Solution on the Web resource links have been updated.

I'm still reading, still thinking, still writing....will pick back up again with Chapter 3 shortly. Meanwhile, I've just now updated the Innovator's Solution resources list. My sincere thanks go to Chuck Frey of the Innovation Tools site (including a blog), who's jumped on board, sending me source links to include to what has truly become a collaborative effort between our blogs.

A lengthy power outage at my hotel today kept me away from blogging, but it's been resolved now, and so on to Chapter 2, which I read on the plane yesterday.

Here's another one of those counterintuitive statements that, once you think about it, seems perfectly obvious -- "Few technologies or business ideas are intrinsically sustaining or disruptive in character. Rather, their disruptive impact must be molded into strategy as managers shape the idea into a plan and then implement it." Those who would argue for a process view of innovation already understand this. Innovation is relative to the context in which it occurs.

And even the type of innovation is contextually relative -- "an idea that is disruptive for one business may be sustaining to another."

This chapter also introduces a third contextual dimension to the disruptive innovation model introduced in Dilemma. In this dimension lie the contexts of consumption and competition that give rise to two different kinds of disruptions -- new-market disruptions in which the new technology, service, or product is aimed at introducing new people into the market, and low-end disruptions that attack the least-profitable and most overserved customers.

I still love the endnotes in this book. Check this out from page 70, in a long note pointing out how wrong people were who complained that Dilemma was flawed because sometimes an industry leader manages to avoid being killed by a disruptive competitor. The authors' response: "When we see an airplane fly, it does not disprove the law of gravity."

Links to Innovator's Solution resources

My blog post on Chapter 1 of the IS drew this response from Mark Federman’s What Is The Message? blog. You’ll want to read his entire post – it’s thoughtful, and it’s the first one I’ve seen that’s negative about this book. I’ve added a link to his post to the IS book resources. Here is my response to Mark:

Actually, I totally agree that "business people who attempt to adopt his [Christensen's] principles as gospel do so at their peril." I believe this is true of *any* set of principles. There is *no* business gospel. That's why I spend so much time reading, reading, reading.

You also say that "predictability does not necessarily come from well-researched theory if the process itself is non-deterministic and chaotic." Assume that you are right, and that the processes by which disruptive innovation happens *are* by and large non-deterministic and chaotic. So do we then throw up our hands and say the process -- what's in what Christensen calls the "black box" of innovation -- just cannot be controlled, so let chaos rule? What do we do then?

This is addressed by Christensen in this endnote to Chapter 1 (p. 25): "Ultimately, innovators must judge what they will work on and how they will do it -- and what they should consider when making those decisions is what is in the black box. The acceptance of randomness in innovation then, is not a stepping-stone on the way to greater understanding; it is a barrier." I'm reading that to say *not* that there is no randomness in innovation -- but that to focus a study on innovation on that randomness isn't productive.

You also say, "The outcome of a process is often an emergent property; Murphy's Law (and its many corollories) have almost become business axioms in a complex environment in which predictable determinism has been obsolesced by our increasing understanding of the nature of complexity." To my mind, there's a lot of space between "predictability" and "determinism," and it's in this space that Christensen and Raynor's theorizing fits.

Finally, you say "It is awareness, and not theory or predictions, that are the key to business success." Awareness of what, actually? Surely awareness of that which can be known codified and categorized about the innovation process is a helpful thing. This can be studied, and in fact is what Christensen seems to me to be trying to do. I'd say we need that in addition to, not instead of, an awareness that there are some things about the innovation process that cannot be predicted. We need both for business success.

(last updated 11/19/03)
Lots of discussion going on about the newly released Innovator’s Solution (“IS”), so here’s a guide to all things IS. I’ll update it regularly and link to it as I continue to read and post my thoughts on this book. If you see something that should be included, send it on to me.
Buy the book

The Innovator’s Solution: Creating and Sustaining Successful Growth

About the authors

Clayton Christensen and Michael Raynor

Blog coverage

IdeaFlow:

In Market Segmentation, What Counts Is Needs (IS Chapter 3) (11/19/03)

It's All Relative: IS Chapter 2 (11/7/03)

Innovator's Solution: Not Much Of A Solution After All? (11/4/03)

Tea And Innovation -- On Chapter 1 of IS (10/27/03)

Chuck Frey’s Innovation Weblog:

Parallels between IS and the Accenture white paper, Redefining High Performance. (10/28/03)

Customer-Focused Innovation (10/09/03)

Disruptive Innovation: Reflections on IS (9/30/03)

Other blogs:

Innovator's Solution - Still A Dilemma, Mark Federman's What Is The Message? (11/4/03)

Frank Patrick’s Focused Performance (11/01/03)

The E-Learning Vendor’s Dilemma, Jay Cross’s Internet Time (10/29/03)

PVR Blog 10/19/03

Ross Mayfield on Dan Bricklin’s below-referenced post (10/19/03)

Dan Bricklin on IS and Disruptive Blogging (10/17/03)

Rajesh Jain's Emergic.org (10/15/03)

Doug Simpson's Unintended Consequences (9/28/03)

Jerry Lawson's E-Lawyer (9/27/03)

Book reviews/articles

'The Innovator's Solution' Tries To Counter Utterly Depressing 'Dilemma' by Kevin Maney (USA Today 11/11/03)

'Innovate Or Die,' Repeats Noted Author by Brian Deagon (Investor's Business Daily 11/5/03)

The Industrialized Revolution by Polly LaBarre (Fast Company, Nov. 2003)

First The Dilemma, Now The Solution by Fred Andrews (New York Times 10/19/03; sub reqd – you can also see this free at http://www.innosight.com/)

Graveyard of the New Direction by Leslie Walker (Washington Post 10/16/03)

Old Questions, Fresh Answers (CIO.com 10/15/03)

Established Firms Need The Courage To Disrupt by Robert Weisman (Boston Globe 10/12/03)

Is the ‘Innovator’s Solution’ to Sustained Corporate Growth An Unnatural Act? by Jim Heskett (HBS Working Knowledge 10/06/03)

Innovate Or Die (BusinessWeek 10/06/03)

How Great Companies Stay Great by Brad Wieners (Business 2.0 Oct. 2003 – sub reqd)

Book excerpts

What Customers Really Want Is For You To Do Their Jobs (CIO Magazine, 11/15/03)

The Innovator's Solution: To become partners in innovation, CIOs must put resources into their companies' new growth businesses (Optimize Magazine Nov. 2003)

Handling New-Market Disruptions (C/Net’s News.com 10/14/03)

Creating A Killer Product (Forbes Online 10/13/03)

How To Pick Managers For Disruptive Growth (HBS Working Knowledge 10/13/03)

Other stuff

Articles on disruptive innovation by Clayton Christensen and his partners at Innosight

Strategy and Innovation newsletter, a joint publication of Innosight and HBS (sub reqd)
Finding Growth Through New-Market Disruption Strategies, an HBS-sponsored audio conference featuring Clayton Christensen, will be held December 15. Cost is $400; register here.

Your hard-working IdeaFlow bloggers have been having a little off-blog conversation about Clayton Christensen’s long-awaited new book The Innovator’s Solution: Creating and Sustaining Successful Growth (co-authored with Michael E. Raynor). Our conversation went something like this:

Renee: I've got the new Clayton Christensen…Anybody seen it? I'll be posting on it soon, so if you've read it or know the authors, feel free to weigh in.

Joyce: Renee, I'm in the process of digesting and figuring out how to share info about Innovator's Solution ... which I think is MUST reading ... however, it will probably also be fairly overwhelming to most folks because it has so much counterintuitive material ... and there's so much that could only be implemented or changed at very senior levels.

Leslie: Joyce, I agree with you that so much can only be implemented at very senior levels. It was interesting to me to see that, a year ago, a lot of the engineers at Dell were reading Innovator's Dilemma. And yet, at Dell, the innovation is in the supply chain and the manufacturing, not in the software and hardware that goes out the door (these were software engineers). Those folks certainly did face a dilemma. They could not do anything about what they could see.

John: Yeah, totally.

So let’s take a deep breath and start. I can tell you that the first chapter deserves careful attention and savoring. Last night I settled down at a local Starbucks with a cup of Tazo Zen tea and The Innovator’s Solution. Place was quiet except for Lucinda Williams’ CD, World Without Tears, playing on the sound system. I began to read, underline, make check marks, scrawl notes in the margins.

How do I love this book? Let me count the ways: the carefully rendered statement of the thesis, the placement of the starting point for the argument -- and, oh boy, the footnotes!

It begins, of course, with the now-familiar Innovator’s Dilemma: Once a company matures, growth through innovation is a very risky undertaking at which few companies succeed – because the very fact that the strategies used to run a successful, mature company are wildly at odds with the strategies needed to sustain disruptive innovation.

Pretty quickly Christensen dispenses with the top two reasons for this failure – bad management, risk-averse management – and zeroes in on this one: the widely held belief that growth is so hard to achieve “repeatedly and well” because “creating new-growth businesses is simply unpredictable.” The process, he says, looks unpredictable because its results are unpredictable. But “you cannot say, just by looking at the results of the process, whether the process that created those results is capable of generating predictable output. You must understand the process itself.” And predictability, he explains, comes from well-researched theory.

In effect he’s starting out 10 paces behind where most business books start. He’s laying out all the basis on which he’s going to build a theory, not just laying out a theory. And these couple of pages that expound on what makes a theory good and solid are written so elegantly that, like the rest of the chapter, they seem almost buoyant, not nearly as weighty as it sounds when I describe it.

This elegance I attribute partly to the skillful use of footnotes (actually, they are chapter endnotes). These are big, solid, meaty footnotes, filled with arguments that if put in the chapter itself would just bog it down. Yet they are there at the end of the chapter if you want them.

The endnotes are well worth the time it takes to read them. They go off in fascinating directions – reasoned criticism of management research, a collection of references to articles and books on theory-building, a short discourse on the need for anomaly-seeking (as opposed to anomaly-avoiding) research.

I half expected that note to include a reference to Heidegger’s Being and Time (“when something is unusable for some purpose, then the assignment becomes explicit”). Or to semiotics – after all, an anomaly – phenomena the existing theory cannot explain -- could be considered a break in the “code” (the theory). And to a semiotician it is the places where the code breaks in which the meaning of the code itself is laid bare.

So maybe this is going to turn out to be a semiotics of innovation? I suspect not, but it was fun to sit back after reading Chapter One and spend a little time sipping green tea and meditating on the logical difference between correlation and causality. And looking forward to the next chapter.