The Christensen Era
Clayton Christensen moved innovation from workshops to boardrooms. Before Christensen, innovation was almost exclusively the province of techies; an occasional, and often risky, bet that some new device or ingredient could change the character of competition in an existing rivalry. Thanks to Christensen, firms realized that the nature and timing of innovation could be called upon strategically to shape the very nature of an industry’s evolution, and possibly the sustainability of a firm’s success. After Christensen’s revelation, nothing about innovation has ever been the same again; innovation is now regarded as a legitimate and important strategic asset in corporate boardrooms. It was Andy Grove, former CEO and co-founder of Intel, who had realized, “You can be the subject of a strategic inflection point but you can also be the cause of one”; but it was Clay Christensen who provided the insights to allow executives to actually act on this choice.
In a familiar innovative approach, Christensen took an already available tool, the wave-like S-curve, and reinterpreted how we might use it. Years before, both Nikolai Kondratiev and Joseph Schumpeter had argued that change at the macroeconomic level was unceasing, and that, periodically, major technological revolutions, such as steam, synthetic chemicals, automobiles, computers and the like, upset entire industrial landscapes across a wide-range of interconnected industries, at the same time: technologies, firms and skills are all swept aside by a tsunami wave of change, and the industries involved are forever fundamentally altered. Schumpeter described this wave-like phenomenon as “creative destruction,” a sort of “industrial mutation.... that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Schumpeter also believed that “this process of Creative Destruction is the essential fact about capitalism,” which was later explained by Melvin Kranzberg’s second law of technology, that “invention is the mother of necessity.” The macroeconomic focus of these discussions, and the mysterious nature of invention at the time, suggested that while innovation could certainly be a source of profound change, its province was well outside the realm of managerial decisions.
By the 1960s, however, if not before, S-curves were being used tactically by engineers to assess the functional achievement of discrete technologies (light bulb efficiency, for example), materials (tire wear) and mechanical progress (fuel efficiency or horsepower of automobile engines, although not on the same S-curve) as a way of forecasting the likely life-expectancy of particular technologies. Important information, no doubt, but, once again, far from the sorts of things that reliably catches the attention of the C-suite.
Christensen, however, saw what so many of us hadn’t, and that was his recognition, in “The Innovator’s Dilemma,” that when a key technology, or process, or material is substituted for along an S-curve, so the fortunes of the people and organizations that produced those items were also changed, and often for the worse. As a result, Christensen saw that innovation was an industry phenomenon, not just a firm phenomenon, that it was continuous, and that when one industry leader was displaced as a result of a new innovation, it was likely that their market-leading cohorts would also be displaced, at the same time; think Agfa and Fuji Film’s film business along with Kodak, and Motorola, Blackberry and Sony-Ericsson along with Nokia. Insights such as these, at last, managed to win some of the C-suite’s attention, if only as a distraction from their benchmarking of their equally vulnerable market leading peers. What was clear, however, was that when one leader fell, the others did as well.
What Christensen also saw in such disruption, was that it was nearly always outsiders to the established industry, and not the incumbent market leaders, who launched the next generation S-curve. The incumbents were often late to jump to a new curve, or never even made the jump. Their present success impeded their vision, ambition and daring regarding the future, and their unfamiliarity with, or rejection of, new approaches inevitably led to decision hesitation about what to do next, and when to do it, which in turn led to new firms dominating the new generation of an industry’s progress. As a result, big change almost always began on the edges of established industries; and success in the present S-curve was a good predictor of failure or frustration along future curves. As Walt Kelly famously remarked, “we have met the enemy and it is us!”
So, in summary, Christensen’s gift to us was an approach to innovation that was:
An industry, not merely a firm, phenomenon.Where industries were witnesses to continuous dynamic change, punctuated occasionally by large-scale technical, competitive and organizational disruption predicated by the incumbent market leaders not being sufficiently responsive to changing customer desires.Outsiders authoring each successive new generation of an industry’s evolution, as the previously successful, incumbent market leaders hesitated to change; more often than not, hoping to extend the present curve for just a bit longer.All of which, makes innovation more than just a technical phenomenon, but instead a recurring cycle of organizational success and failure, driven by strategic decisions made, or not made, at the level of the firm.
Christensen gave us a reliable concept of innovation-driven change, where the prospect of continuous change was at center of strategic decision-making, and where it was possible to foresee, if not predict, the likelihood of disruption in the offing. All of which, finally, making innovation a worthy topic of strategic discussion at the very top of a firm.
This post first appeared as an Editor's Pick on Forbes.com on January 27, 2020.