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‘Disruptive Innovation’ is More Relevant Than Ever

“First they ignore you; then they laugh at you; then they fight you; then you win.” As many readers will recognize, the quote is from Mahatma Gandhi explaining the process by which non-violent protest can prevail. But if one didn’t know the source, one could easily have thought the speaker was talking about the IT industry, as this is precisely the pattern we have seen time and again with disruptive innovation.

Disruptive Innovation

“First they ignore you; then they laugh at you; then they fight you; then you win.”

In the mid-1970s, the then thriving minicomputer industry ignored primitive personal computers such as the MITS Altair and the Apple I and II; it then laughed at the idea that improved PCs such as the IBM PC and Apple Mac were somehow threats to their superminis. But by the mid-1980s, PCs could be linked into local area networks to share files and printers; this made them a real threat to be fought. Alas, it was too late, and within another decade most of the minicomputer firms had disappeared.

This same pattern has repeated itself with smart phones, cloud computing, Software-as-a-Service, video on demand, and many other IT domains. The taxi cab industry stopped laughing two years ago, and is fighting (and losing) to Uber right now. Bill Gates never laughed at the internet, but Microsoft still lost its pre-eminent market position.

We repeat these familiar stories because of the extraordinary drama at Harvard University over the last month. In the June 23, 2014 issue of The New Yorker, Jill Lepore, Professor of American History at Harvard, wrote a scathing (even mocking) critique of the concept of disruptive innovation, as well as the work of its chief proponent, Professor Clayton Christensen of the Harvard Business School, author of the seminal 1997 book, The Innovator’s Dilemma, and numerous other influential works.

The article was entitled The Disruption Machine - What the gospel of innovation gets wrong. Lepore focuses on some admitted flaws in Christensen’s initial research into the disk drive, steel and other industries, but goes on to dismiss the theory itself as largely a combination of hand-picked anecdotes and circular reasoning. Christensen makes an extended and effective response at Don’t read one without the other.

While Clay Christensen can certainly defend himself, we decided to weigh in on this controversy because of our current focus on disruptive change and the important role that Christensen’s thinking continues to play. The figure below shows the supply-side history of the IT industry as we see it.

New generations of technology have been (with a few important exceptions) overwhelmingly led by new firms, with many once high-flying companies disappearing.

The facts seem indisputable. New generations of technology have been (with a few important exceptions) overwhelmingly led by new firms, with many once high-flying companies disappearing. Christensen’s distinction between sustaining and disruptive innovation is still the simplest and most effective explanation of this extraordinary pattern. This is why his work is indeed often taken as ‘gospel’ within the IT industry. (While the term ‘disruptive innovation’ is often used sloppily and incorrectly, this doesn’t diminish the utility of the theory itself.)

We believe that Christensen’s ideas are actually more relevant than ever. IT-enabled disruptive change is now spreading to manufacturing (3D printing), automotive (ZipCar, Uber, Tesla, Sidecar, self-driving), retail (same-day delivery/drones), financial services (PayPal, Kickstarter, Bitcoin), education (MOOCs) and many other sectors. Understanding these developments is the main focus of our disruptive innovation research. We are particularly interested in the melding of traditional vertical industry and emerging horizontal technology stacks that is taking place in today’s Silicon Valley.

From our experience, it seems that many executives outside of the IT industry are not well versed in Christensen’s thinking, mostly because they have not experienced disruptive change directly. These leaders need to make sure that their firm doesn’t fall victim to the same ignore/laugh/fight/lose pattern. Now is not the time to dismiss the theory of disruptive innovation; it is the time to embrace it. As Microsoft has learned, even when you see it coming, it can be hard to stop.


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