Clayton Christensen (The Innovator's Dilemma) on How to Build a Disruptive Business | Startup Grind

Summary

Christy Kerner introduces Kay Christensen, a Harvard professor and successful entrepreneur, who discusses three theories from his research on innovation: disruption, the capitalist dilemma, and the job to be done. Christensen emphasizes the importance of disruptive innovations for economic growth and jobs, while sustaining and efficiency innovations, though valuable, do not create net growth. He critiques the current investment metrics that favor efficiency over disruptive innovations, potentially leading to economic stagnation, and highlights the significance of understanding the 'job to be done' for business success.

Takeaways

• 😀 Christy Kerner is the Director of the Center for Entrepreneurship at a State University and has a background in entrepreneurship.
• 📚 The next speaker, Kay Christensen, is a successful entrepreneur, author, and Harvard professor, known for his expertise in both practical business and academic research.
• 🌟 Christensen discusses three theories from his research: disruption, the capitalist dilemma, the law of conservation of modularity, and the law of wasting abundance.
• 🚀 Disruptive innovations are those that make products more affordable and accessible to larger populations, creating growth and jobs.
• 🛠 Sustaining innovations improve existing products but do not create net growth or jobs; they are essential for maintaining a company's competitiveness.
• 💡 Efficiency innovations aim to do more with less and often eliminate jobs, but they are crucial for maintaining competitiveness and profitability.
• 💼 The capitalist dilemma highlights the challenge of where growth comes from and how businesses must balance disruptive, sustaining, and efficiency innovations.
• 📉 Metrics used in finance, such as the internal rate of return (IRR), tend to favor efficiency innovations over disruptive ones, which can lead to a focus on short-term gains rather than long-term growth.
• 🌐 The law of conservation of modularity suggests that modular interfaces between services and customers can lead to customer mobility and competition.
• 📊 Capital has become abundant and cheap, which should change how businesses and investors approach investment opportunities and resource allocation.
• 🔍 Understanding the 'job to be done' by a product or service is crucial for business success and can significantly impact a company's growth trajectory.
• 🏦 The banking industry serves as an example where traditional banks have become unfocused, leading to opportunities for specialized, focused companies to thrive.

Q & A

What is Christy Kerner's current role?

Christy Kerner is the Director of the center for entrepreneurship at a State University in Phoenix, Arizona.

What is the significance of the speaker being described as a 'unicorn' in the context of the script?

The speaker is referred to as a 'unicorn' because they are a rare combination of a successful entrepreneur, author, and a tenured professor at Harvard University.

What are the three theories mentioned by the speaker that are relevant to the discussion with Mark Andreas?

The three theories mentioned are the 'Capitalist Dilemma', 'Job to be Done', and the 'Law of Conservation of Modularity' and 'Law of Wasting Abundance'.

How does the speaker describe the process of disruptive innovation in the context of technological products?

Disruptive innovation is described as starting with complex and expensive products accessible to a smaller, wealthier, and more skilled customer base, and then becoming more affordable and accessible to larger populations over time, such as the transition from mainframe computers to personal computers and then to smartphones.

What is the role of sustaining innovations in the industry?

Sustaining innovations make good products better, maintaining margins and preventing companies from falling behind in the market. However, they do not create net growth or jobs.

How does the speaker explain the impact of efficiency innovations on jobs?

Efficiency innovations are designed to help make more with less, which often results in job elimination. For example, Walmart's entry into a community can lead to a loss of jobs in retailing due to its more efficient operations.

What is the 'Law of Conservation of Modularity' and how does it apply to the banking industry?

The 'Law of Conservation of Modularity' refers to the standardization of interfaces, making it easier for customers to switch between services. In banking, this has led to a lack of 'stickiness' with customers due to the modular and interchangeable nature of banking services.

How does the speaker suggest that the metrics used in finance education may hinder disruptive innovation?

The speaker suggests that the metrics, such as internal rate of return (IRR), tend to favor efficiency innovations over disruptive ones because disruptive innovations often have longer payback periods and are riskier, making them less attractive based on these metrics.

What is the 'Job to be Done' theory and why is it important for understanding customer behavior?

The 'Job to be Done' theory posits that customers 'hire' products to get a job done. Understanding the specific job that a customer needs to accomplish can significantly increase the likelihood of a product's success in the market.

How does the speaker illustrate the concept of disruptive innovation using the example of the New York Times?

The speaker uses the New York Times as an example of a company that expanded beyond its original job of informing the public, adding sections for various other jobs like personal advertisements and job listings. This diversification made the New York Times less focused and less relevant to customers who had specific jobs to be done.

What is the potential consequence of consistently favoring efficiency innovations over disruptive ones, as illustrated by the speaker?

The potential consequence is economic stagnation, as seen in Japan, where a focus on efficiency innovations has led to a lack of disruptive innovations and a flatlining economy with abundant capital but no growth.