There's a lot of buzz and talk in various communities lately about a new New Yorker story by Jill Lepore, in which she seeks to dismantle Clayton Christensen's famed concept of "the Innovator's Dilemma"
and its corresponding concept of disruptive innovation. It's no secret that I'm a big fan of the concepts put forth by Christensen, and five years ago, as part of a sponsored set of videos, I did a quick two-minute white board video explaining the concept
The concept of the Innovator's Dilemma and disruptive innovation became so big so fast that it has, reasonably, come under some attack of late. Part of this is just the inevitable backlash that comes with a popular idea. An even bigger part of it is that many have jumped onto the bandwagon without really understanding it. And, many of those are selling snake oil: the idea that companies can actually "beat" the innovator's dilemma. However, as we noted last year
, the very reason why disruptive innovation is so disruptive is because the incumbents don't see it as innovation
. Part of the problem
with the concept of disruptive innovation is the idea that, when graphed out simply, it always feels
like the incumbent can see what's coming. They just have to recognize the "cheaper, not quite as good" offering, and realize that it can disrupt their business.
But that's wrong on multiple accounts. First, truly disruptive innovation usually is barely even on the radar of the incumbent players. It's not that they don't think it's disruptive, it's that they don't even see it as innovation or being in the same realm. Craigslist disrupted the newspaper business, and many in the newspaper business still
don't realize that. Disruptive innovation doesn't always come neatly "up from the bottom" as the graphs show. They often come in orthogonally from a different dimension entirely.
Second, industries that are disrupted often face a whole bunch
disruptive competitors -- and (in part because of the point above), it's very difficult to tell which one(s) will actually be disruptive. Economist Joshua Gans has a fantastic explanation of this
, noting that disruptive innovation has to fulfill two criteria: perform "worse" than incumbent technology on certain metrics and also be on a fast path for improvement (though I don't agree with Gans' claim that the improvement has to be on those same metrics -- in many cases, I'd argue it's actually on the metrics the customers truly
value, rather than the ones they claim to value, which are not always the same). The issue is that it's easy to pinpoint technologies that meet the first criteria, but nearly impossible
to spot the ones that meet the second criteria. Thus, you end up with lots of potentially disruptive technologies, but actually spotting the actually
disruptive technologies isn't so easy.
That's why Lepore's complaint about companies that tried
to disrupt themselves and failed goes wrong.
Time, Inc., founded in 1922, auto-disrupted, too. In 1994, the company launched Pathfinder, an early new-media venture, an umbrella Web site for its magazines, at a cost estimated to have exceeded a hundred million dollars; the site was abandoned in 1999. Had Pathfinder been successful, it would have been greeted, retrospectively, as evidence of disruptive innovation. Instead, as one of its producers put it, “it’s like it never existed.”
Lepore isn't really attacking the nature of "the innovator's dilemma" or "disruptive innovation" at all. She's really -- rightfully -- attacking the idea that incumbents can successfully recognize and fight it off. In the history of technology innovation, the list of companies that have truly recognized and responded to disruptive innovation is a fairly short list. I can think of Intel flipping from making memory to making microprocessors and possibly IBM flipping from focusing mainly on big hardware to services (though, even that one's a bit fuzzy). There may be a few other stories here and there, but for the most part, big companies miss disruptive innovations by a long shot.
Beyond the reasons listed above, the other big reason why incumbents fail to react properly to disruptive innovation is that they overestimate their own ability to "catch up later," while missing the key reasons why
a disruptive innovation is so successful. For years, for example, I've heard execs in the entertainment industry insist that when
the internet was really important, then
they could really start investing in an internet strategy. But, of course, by then, it's often too late, and they're playing catchup. Not only that, but they're playing catchup in a realm that they don't fully understand, often mimicking the superficial innovations they see, while completely missing the true innovations under the surface.
To be clear, Christensen may be a reasonable target here. As Tim Lee rightfully notes
, Christensen himself has built up a pretty big and profitable consulting business trying to "help" big companies successfully navigate disruption. And there are hundreds to thousands of consultants out there pretending they can do the same thing. And, in some cases, those folks may have the right idea, in general. Hell, in the video above, I, too, am guilty of suggesting that companies can sometimes out-innovate disruptors. It's very tempting to believe that understanding this theory is useful in successfully avoiding the disruption wave. But, the combination of it being nearly impossible to figure out which disruptive innovation is really disruptive, combined with general corporate inertia, makes it nearly impossible to predict precisely
which disruptive innovation matters.
But that doesn't (and shouldn't) take away from the importance of the underlying concept and trajectory of disruptive innovation as a whole. The fact that you can't precisely predict which
innovations will be disruptive doesn't mean that there aren't any disruptive innovations, or that the theory isn't useful in understanding what's happening in the market. It's just not great as a predictor of "this company will beat that company" -- which is where Christensen himself often runs into problems
But, in terms of understanding wider trends, where incumbent companies are likely to go wrong, and even in pinpointing opportunities for disruption
, the concepts behind the Innovator's Dilemma are of massive importance. The lack of exact predictive power of "this technology will disrupt that incumbent in this way" doesn't rid the entire concept of value. Understanding disruptive innovation is a very powerful and very important tool in recognizing and understanding innovation trends. That doesn't mean it's useful in saying Startup A will definitely disrupt Incumbent B. More importantly, it doesn't mean Incumbent C will be able to recognize or prevent disruption to itself. But if that's what you're trying to do with it, you're using the tool wrong.
Bonus reading: Check out disruptor Will Oremus applying the theory of disruptive innovation to dismantling Lepore's article directly.