Clayton Christensen, the man behind the work on the concept of disruption, died of cancer on January 23, 2020 at the age of 67. He was a great management theorist, like giants such as Peter Drucker or Michael Porter, and his work is more relevant than ever at a time when large companies continue to struggle to respond to the multiple disruptions in their environment. In what follows, I propose a synthesis of his work to show how it can be very useful.
A disruption is a profound change in an environment that redefines the rules of the game. The advent of low-cost air travel, digital photography, and the invention of the Internet are typical examples of disruption. But they are not just technological: the rise in general education levels is also a disruption, as is the decline in the birth rate or changes in social mores (such as gay marriage), all of which are examples of non-technological disruptions with far-reaching consequences.
Importantly, Christensen emphasizes that disruption is a process, not an event. For example, low-cost airlines emerged in the 1970s and took about 15 years to have a real impact on traditional airlines. That impact continues today. This very long lag between the start of a disruption and its first impact explains why it is generally underestimated by the players on the ground. What’s more, disruption often attracts its first customers from so-called non-consumers: the first low-cost customers were not existing airline customers, but bus users. For almost 15 years, low-cost did not take customers from the airlines, which did not perceive it as a threat. But little by little, low cost became more widespread, and generations of students have grown up and continue to use it: it is now encroaching on the traditional segments, but it’s too late for the existing players to react. Another important aspect is the relative notion of disruption: what is disruptive to one player is not necessarily disruptive to another. Digital is a disruption for Kodak because it renders its films useless, but not for Nikon, which will continue to sell cameras, whether mechanical or digital.
A mental model
Disruption is also a challenge for incumbents because it represents a truly new mental model that contradicts their own. Mental models are ways of looking at the world. When Apple launched its iPhone in 2007, it was technically inferior to Nokia’s phones (it was not even 3G compatible) and usability was not considered as important at the time. In the end, the Apple product won. The essence of disruptive innovation is the invention of new mental models and their successful implementation, like Henry Ford’s idea that every American citizen should be able to buy a car, an idea that was considered completely ridiculous at the time. Five years later, the idea seemed obvious to everyone.
The innovator’s dilemma
More fundamentally, Christensen explained why it is harder for incumbents to deal with disruption with what he called the innovator’s dilemma. By definition, disruption is a different business model. The essence of disruption is that it is not the continuation of the incumbent’s activity, but a different one. A successful incumbent is one that 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 unsuited to serve another model that would be disruptive.
For example, the AccorHotels chain is optimized to deliver a similar service across all hotels; the performance metric 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 surprises. With AirBnB it is the opposite: I buy an element of surprise and the fact that no two homes can ever be the same; the performance criterion that AirBnB has chosen is not the same. This is when the disruptor can take advantage of an incumbent’s rational disinterest to occupy an unprotected space.
The term “innovator’s dilemma” comes from the fact that an incumbent faced with disruption is torn between two equally unfavorable options: protect the legacy activity at the risk of jeopardizing its future by rejecting the potential disruption, or bet on the disruption at the risk of jeopardizing the legacy activity without being sure that the said disruption will ever become a market.
Experience shows that protecting 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 missing an opportunity is uncertain, distant, and small. In other words, jeopardizing the legacy activity is a sure way to lose a lot in the very short term, while betting on disruption is hoping to win a lot in the long term but with no certainty.
Christensen’s disruption theory is thus primarily a theory that attempts to predict the strategic response when disruption occurs in an incumbent’s environment. It explains why this response is rationally difficult: not for lack of information, will, or time; the response to disruption is muted because the incumbent is constrained by its legacy activities that it must protect. Contrary to what some critics have written, Christensen’s theory does not offer a surefire method of innovation, let alone that disruptive innovation is an always desirable holy grail. It only allows for predicting how the incumbent will react, all else being equal, if he/she is unaware of the mechanisms associated with disruption, and that is a big deal.
This is how Intel, inspired by Christensen’s work, was able to avoid ceding all entry-level products to its competitors when it realized that it was indeed facing this dilemma.
The difficulty with Christensen’s work is that his theory has evolved over time. In his first book, The Innovator’s Dilemma, published in 1997 and still an important reference, he talked about disruptive technology. He then went on to show that technologies are never disruptive in nature, and that what is disruptive is always a business model. I wrote my book, A Manager’s Guide to Disruptive Innovation, to help managers understand this multifaceted theory.
A very practical…theory
Through his books and articles, Christensen broke new ground in trying to uncover disruption (The Innovator’s Solution, Seeing what’s next) and applying 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 tried to apply some of his theories to ethical issues and personal development in the book How will you measure your life, in which he gave advice to Harvard students and more generally to managers. I found this book less interesting, on the edge of platitudes (set clear goals, take care of your loved ones, be honest all the time rather than often, etc.) and lapsing into sentimentality. Every theory has its limits …
Christensen will remain an important management thinker, one I am really interested in because he offers a solid theory that is directly applicable by managers, which is rarely the case (the other being Saras Sarasvathy with the notion of effectuation for entrepreneurs). As I regularly see in my work with managers, disruption theory can explain otherwise unexplainable phenomena and, above all, it offers very concrete courses of action. Organizations questioning their future would do well to become better acquainted with the work of Clayton Christensen.
➕To read more about the Innovator’s dilemma, check my synthesis book:A Manager’s Guide to Disruptive Innovation. To read more about mental models, read The Conflict of Mental Models: The Key to Organizational Transformation.
🇫🇷 French version of this article here.
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