How To Escape The Innovator's | Keen On... Clay Christensen

Summary

In this TechCrunch TV interview, Professor Clayton M. Christensen, author of 'The Innovator's Dilemma,' discusses the challenges faced by companies in maintaining success. He explains how doing the 'right thing' can lead to a company's downfall, using examples like Cisco, IBM, and Toyota. Christensen emphasizes the need for companies to create new business units to adapt to disruptive technologies, cautioning against relying solely on successful models of the past. He also touches on the potential for disruption in education and healthcare, advocating for technology to make these sectors more affordable and accessible.

Takeaways

• 🤔 The Innovator's Dilemma is a theory that explains why successful companies can fail by doing the right things.
• 🏆 Companies like IBM, Microsoft, and Google exemplify the theory of the Innovator's Dilemma.
• 🔄 Disruptive technologies often start at the low end of the market and gradually improve to disrupt established players.
• 📉 Lucent and Nortel were disrupted by Cisco's routers, which initially were not good enough for voice but improved over time.
• 🚗 Toyota disrupted the US auto market by starting with small, subcompact cars and gradually improving them.
• 🚗 Hyundai and Kia disrupted Toyota by entering the market at the low end and improving their products.
• 🍎 Apple is a company that has managed to avoid the Innovator's Dilemma by reinventing itself multiple times.
• 💼 Business units within a corporation are not designed to evolve; they need to be shut down and replaced to evolve.
• 🏥 In healthcare, disruption is needed to make services more affordable and accessible.
• 🏫 In education, online learning can supplement traditional teaching methods, making education more accessible.
• ⏱ The pace of disruption is increasing, making it harder for individuals and companies to keep up.

Q & A

What is the Innovator's Dilemma?

The Innovator's Dilemma is a concept introduced by Professor Clayton M. Christensen that describes a situation where successful companies can fail by doing the right things. It suggests that even the best-run companies can be outperformed by new entrants with lower-cost technologies that eventually improve and disrupt the market.

How did Professor Christensen come up with the concept of the Innovator's Dilemma?

Professor Christensen was trying to understand why companies that were once unassailable in business history ended up in the middle of the pack or at the bottom of the heap. He concluded that doing the right thing can actually lead to a company's downfall, which led to the concept of the Innovator's Dilemma.

Can you provide an example of the Innovator's Dilemma in the technology industry?

One example given by Professor Christensen is Cisco's disruption of the circuit switching market. Cisco introduced routers, which used packet switching and were initially slower but cheaper than circuit switching. As routers improved, they eventually replaced circuit switching technology, causing the downfall of companies like Lucent and Nortel.

How did Toyota exemplify the Innovator's Dilemma in the automotive industry?

Toyota entered the market at the bottom with small, subcompact cars while companies like General Motors and Ford focused on larger vehicles. As Toyota improved their cars, they eventually competed with the larger vehicles, causing customers to switch to the cheaper, yet now comparable, Toyota cars.

Is it possible for companies to escape the Innovator's Dilemma?

Yes, some companies can escape the Innovator's Dilemma by setting up separate business units to handle disruptive technologies. For example, IBM successfully transitioned from mainframes to minicomputers and then to personal computers by creating separate business units in different locations with different business models.

What advice does Professor Christensen have for companies like Google that are trying to reinvent themselves?

Professor Christensen suggests that companies like Google need to have multiple types of business units that can generate profit in different ways. He warns against focusing solely on innovation as a great idea, but emphasizes the need for a new business model that can support and grow the new idea.

How does the concept of disruption apply to industries like education and healthcare?

Disruption is critical in both healthcare and education. In healthcare, technology should be brought to lower-cost venues and caregivers to perform more sophisticated tasks, making care more affordable and accessible. In education, online learning can supplement traditional teaching, allowing teachers to take on a tutoring role and providing more personalized education.

What is the role of technology in making healthcare affordable and accessible according to Professor Christensen?

Professor Christensen believes that technology should be used to enable lower-cost venues of care and lower-cost caregivers to perform more sophisticated tasks. This disruptive approach can make healthcare more affordable and accessible rather than expecting expensive providers to become cheaper.

How does online learning change the role of teachers in education?

Online learning allows teachers to shift from delivering content in a monolithic way to becoming tutors. This approach can lead to more personalized education where teachers can focus on individual student needs rather than just lecturing.

Does Professor Christensen have any concerns about the pace of disruption and its impact on people's ability to keep up?

Yes, Professor Christensen expresses concern about the increasing pace of disruption and its impact on people's ability to reinvent themselves. He worries that business books and articles, which often provide snapshots of success at a given point in time, can mislead people into emulating strategies that may not be successful in the future.