
Disrupting Mr. Disrupter - Futurebot
http://www.economist.com/news/business/21679179-clay-christensen-should-not-be-given-last-word-disruptive-innovation-disrupting-mr
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numlocked
I don't think author of this article has ever actually read anything by
Christensen -- it makes zero mention of what Clay Christensen is best know
for; the Innovator's Dilemma. And nowhere in this does the article actually
state what his alleged thesis is, and what about it isn't being born out. It
just points out a couple of cases of innovation and then waves some hands and
claims Christensen is wrong a lot.

The Innovator's Dilemma is his big idea, and it's still as much a part of the
innovation lexicon as it was in 1997. The accuracy of his prognostications
re:specific companies is pretty irrelevant.

For some reason the article's author is fixated on the idea that Christensen's
thesis has something to do with small companies; it does not. The Innovator's
Dilemma deals with companies established in their industry being unable to
innovate because it will disrupt their own business. Google entering the car
market is a _perfect_ example of this (because Google is NOT a carmaker), not
a counterexample. General Motors is unable to create driverless cars because
it's antithetical to their current business -- THAT'S the innovator's dilemma.

~~~
spinlock
Exactly. I think the author's example of Uber is also way off the mark. Uber
did not disrupt the cab industry the way PCs disrupted the mainframe industry.
Cabs did not provide a good service; they provided a bad service that was
protected by a government backed monopoly. The cab industry was never worried
that it would cannibalize existing businesses by allowing people to hail cabs
on their phones. They just didn't care if people had a good experience because
they had a captive market.

The Uber story really isn't a "good" business case because there are only so
many regulated monopolies. Entrenched businesses, on the other hand, are
everywhere.

~~~
exelius
Uber is disruptive -- to the municipal authorities who regulate taxis. Other
than that, they're a taxi company with an Internet dispatch system.

There are even fewer regulated monopolies that can follow the Uber path
(Airbnb is one of them). Uber was uniquely able to disrupt a bunch of
municipal taxi regulators because a single taxi regulator does not have a very
large budget. Uber can outspend them, set a few precedents in case law, and it
was over. The strategy doesn't work in an industry with centralized regulation
(USDA, FDA, FCC) or in an industry with a colossal amount of money involved
(anything health care related).

~~~
spinlock
That is not "disruption" in the technical sense.

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ThomPete
_"...He rules out Uber because, from the start, it offered a better level of
service than existing taxi firms, rather than something cheap but inferior...
"_

I believe this is exactly where the author an many people get Ubers success
wrong.

Uber big disruption was in challenging legislation not in providing a better
service.

Uber started by allowing limo drivers to make extra money. They then moved on
making it possible almost anyone to start as taxidrivers and thus flodded the
market with available rides. This wouldn't have been possible if they had used
the normal channels.

They also benefitted from the popularity of smartphones and GPS removing the
need for a taxi central for people to call in an order rides.

The problem with existing taxis wasn't in the quality of the service but
rather with accessibility. This is what they disrupted.

Where some of Claytons theories break down is in his second book. Innovators
solution. "Be patient for growth not for profit" which isn't necessarily wrong
but Facebook proves that wrong.

I once asked him about this over twitter he said great question but never
answered it :)

~~~
exelius
> Where some of Claytons theories break down is in his second book. Innovators
> solution. "Be patient for growth not for profit" which isn't necessarily
> wrong but Facebook proves that wrong.

While I do agree with you that his theories break down after the first book,
Facebook was delivering healthy profits pretty soon after IPO. They could have
made profit far earlier, but their investors chose to roll that profit back
into the business and make a big bet on mobile. That bet paid off and hugely
increased the available equity value and allowed them to go on an acquisition
spree and diversify into other growth categories.

Facebook is also a unique business in this context because it didn't really
disrupt an established market. They were just first to reach scale in an
emerging product category with strong network effects. But there was no
product that consumers were over / under served by. You could say advertising,
but their real innovation was on the consumer side: you don't get to show lots
of ads until you have lots of traffic first, and Facebook's traffic and
content acquisition strategy were novel at the time.

~~~
ThomPete
Yes but the point I was trying to make was that. Be patient for growth not for
profit turned out to not hinder Facebook (and google) making money. There were
many years where they werent.

But I also don't think that Clayton was really thinking about startups back
then. He was more thinking about businesses that solves actual problems, not
Yo apps :)

Perhaps what is really the problem is our definition of a business/startup is
lacking some extra definition hmmm...

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landonshoop
Interesting article. Scientific theories are often proven to be obsolete --
business should be no different.

To me, this article also underscores the ever present friction between theory
and practice. I recently was speaking to an advisor (in academia) and, while
his input was incredibly valuable, much of it contradicted what we know to be
true based on interactions with our customers.

How have you all managed this balancing act? Is there a place for academic
theory in product development?

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hyperpallium
Is there evidence that disruption is happening less often? It makes sense that
companies aware of it would take steps to prevent it, such as those suggested
by Christensen, e.g. a separate organization with limited budget (so small
opportunities are attractive to them), One can also aggressively buy up
potential competitors - perhaps explaining recent apparently ridiculously
overpriced acquisitions.

e.g. Intel's Andy Grove had a blurb on the cover of the Innovator's Dilemma,
and Intel has certainly _tried_ to combat ARM with ATOM. At least, they didn't
lose the laptop market. Similarly, MS acted aggressively to curtail netbooks.
(Through chromebooks have had some success.) Neither have had success with
smartphones - but smartphones/tablets also don't seem to have had any success
at all in invading laptop/PC territory, despite being more than powerful
enough.

BTW: having read Christensen's first three books, I feel that he became
solipsistic and over-abstact, and tried to make disruption a business theory-
of-everything; coinciding with his move from academic to consultant. It
amounted to: people buy what they want/need, and when that changes, a
different business organization may be more suitable to serve it (accounting
for things like improving different attributes; faster release cycles;
different business models etc). Did it seem like this to anyone else?

I preferred his early PhD work, and e.g. his graph showing that market supply
for improvements increases more quickly than market demand for improvements
(so is eventually over-served, and customers shift focus to other attributes).
Though I could never find his HDD data or detailed justification for this,
which (IIRC) involved HDD capacities in computers at average vs median prices.

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thoward
It would better for people such as Christensen to call themselves "business
historians." They make ex post facto analyses of what made a business
successful. There's value to that, and it often makes for very interesting
reading especially if you can incorporate all the personal drama.

To purport that you've come up a theory of business success with predictive
power is another thing entirely.

~~~
hodgesrm
The Innovators Dilemma is still completely relevant and has substantial
predictive power today. I'm seeing it in spades in my current company. The
problem is in fact not predictive power but deciding how to avoid being
trapped by it--Innovators Dilemma is weak on actionable solutions.

I have not read the follow-in Innovators Solution but doubt it really solves
the problem in anything like a general way. The trouble is that new markets
are basically very uncertain. Big companies like Disney, Apple, or Boeing that
have crossed into new markets executed successfully on bet-the-company
products. Not everybody pulls it off.

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hodgesrm
I love Clayton Christiansen. I believe his real contribution was to identify
the properties of bureaucracies that make it difficult for them to deal with
changing business conditions. Everybody who has worked in a big company has
seen the behaviors he describes like feature overshoot and chasing high
margins to the detriment of emerging markets. What's amazing is how well he
put the pieces together into a cohesive model.

Given that he's talking about institutions in general it's not surprising
there are many cases where the model does not work. Start-ups are an obvious
example because they can shift strategy quickly. However even large companies
like Microsoft in the 1990s that have "Napoleonic" leadership can react very
quickly to changing business conditions.

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kawera
[dupe]
[https://news.ycombinator.com/item?id=10649933](https://news.ycombinator.com/item?id=10649933)

