{"id":408,"date":"2014-10-10T22:14:45","date_gmt":"2014-10-10T22:14:45","guid":{"rendered":"http:\/\/bhide.net\/?p=408"},"modified":"2020-10-27T08:16:44","modified_gmt":"2020-10-27T12:16:44","slug":"qualifying-clay-christensen-quartz-essay-with-pankaj-ghemwat","status":"publish","type":"post","link":"https:\/\/bhide.net\/wordpress_files\/index.php\/qualifying-clay-christensen-quartz-essay-with-pankaj-ghemwat\/","title":{"rendered":"Qualifying Clay Christensen"},"content":{"rendered":"

Amar Bhid\u00e9 and Pankaj Ghemawat<\/span><\/h4>\n

Quartz<\/em>\u00a0 October 9, 2014<\/a><\/p>\n

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Clay Christensen\u2019s theories are great for entrepreneurs, but not executives<\/a><\/h2>\n<\/header>\n
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\u00a0Simplicity sells. This dictum, advanced by Clay Christensen in The Innovator\u2019s Dilemma<\/em> has also been central to his book\u2019s blockbuster success. But to what degree are Christensen\u2019s simple, enormously influential propositions reliable?<\/div>\n

\nIt\u2019s a mixed bag.The idea that successful new technologies rarely start out competing directly with the old was groundbreaking. McKinsey\u2019s Richard Foster had claimed that new technologies are generally inferior. If that were so, Christensen countered, why would anyone ever adopt them? In fact, Christensen pointed out, new technologies first find a foothold by providing compelling benefits to peripheral niche markets that are not being well served. Significant improvements then permit some upstarts to challenge incumbents in their core markets.\u00a0Staples and Amazon, which took on the existing order from the start, are exceptions; even they did not face large\u00a0entrenched incumbents.<\/p>\n

Like many other brilliant insights, this seems blindingly obvious after the fact. It also provides a valuable lesson for entrepreneurs: unless you have a truly breakthrough technology and immense financial resources, don\u2019t aim slingshots at Goliaths. Find and serve those few customers who will find your offering special.<\/p>\n

But what made The Innovator\u2019s Dilemma<\/em> a blockbuster success was the prescription it offered executives\u2014not entrepreneurs. Established companies are vulnerable to technological disruption, said Christensen, because they pay too much attention to their existing customers and neglect emerging threats from new technologies. The solution for an incumbent was to preempt upstarts by creating small nimble units that didn\u2019t serve existing customers or worry about existing sales.<\/p>\n

Moreover, effective preemption required incumbents to offer stripped down substitutes for their core products. New technologies that \u201cbrought the big, established companies to their knees weren\u2019t better or more advanced\u2014they were actually worse,\u201d wrote Christensen. \u201cBut the new products were usually cheaper and easier to use.\u201d<\/p>\n

Some corporate chieftains found the formula irresistible. Intel\u2019s then CEO Andrew Grove, was inspired to take seriously the threat from cheap computers and launch the low-end Celeron chip that quickly captured 35% of the low-cost PC market.<\/p>\n

Unfortunately, this simple diagnosis and prescription maps rather poorly onto the messiness of technological change. Incumbents often cannot predict which new technologies will morph into mortal threats. Intel\u2019s low-cost chips were well positioned against rival AMD to catch the netbook wave but the semiconductor behemoth failed to anticipate the explosive growth of tablets and smartphones that used low-power chips produced by the likes of Qualcomm. Similarly Christensen\u2019s 1997 book contained an extensive analysis of electric cars whose sales remain negligible but not of hybrids that did find a respectable niche.<\/p>\n

The pervasiveness of competitive enterprise ensures that most initiatives fizzle. And of those few that take off, many don\u2019t displace existing products or processes. Automobiles replaced horse-drawn buggies, but airplanes didn\u2019t replace cars and typewriters didn\u2019t replace pencils as many had predicted. Schumpeter notwithstanding, non-destructive creation<\/a>\u00a0(pdf)\u00a0is as essential a fact of modern capitalism as creative destruction.<\/p>\n

While\u00a0complacency corrodes any enterprise, incumbents cannot afford to be spooked by every will-o\u2019-the-wisp. Managers of long-lived organizations have to deal with many threats, not the least those posed by head-on competitors.<\/p>\n

Christensen\u2019s claim that disruptive technologies typically emerge from the low end is not a reliable guide for identifying the more serious threats. Yes, Nucor and other mini-mills may have overwhelmed integrated steel producers like Bethlehem and US Steel by working their way up from low-end reinforcing bar products to sophisticated sheet steel. (Mini-mills may also have enjoyed huge cost advantages from using non-union labor.) But the early electronic calculators were better and many times more expensive than slide rules and metal tennis rackets provided more power than wood rackets at higher prices. Digital video editing was first sold in very high-end systems to professional users before migrating down to cheaper desktop software.<\/p>\n

Apple\u2019s iPhones offered revolutionary features at eye popping prices when they were introduced. Christensen predicted they would fail. Instead Jobs\u2019s \u201camazing!\u201d \u201ccool\u201d brainchild pushed Nokia, the high-volume, low cost producer out of the mobile phone business and jeopardized Intel\u2019s leadership in semiconductors. In 1999, Christensen had criticized Microsoft\u2019s Excel spreadsheet for being too big and over-featured and predicted low-end substitutes based on Java would \u201cget Microsoft long before the Justice Department does<\/a>.\u201d As it happens, Microsoft\u2019s suite of office products generated nearly $25 billion in revenue last year.<\/p>\n

Less isn\u2019t always more, in other words.<\/p>\n

Even foresight and all-out effort provides limited protection to incumbents threatened by revolutionary technological change. Software Arts, developer of the pioneering Visicalc spreadsheet stinted no effort to create a next generation product as the first 8-bit personal computers were being replaced by 16-bit machines. Lotus\u2019s 1-2-3 spreadsheet was just better. Contrary to myth, Kodak didn\u2019t neglect digital photography; it is facile to assert that if the film maker had tried harder or earlier it would have emerged as the leader in the new market. Likewise it is implausible that a skunk works could have sheltered Canon\u2019s digital cameras from picture-taking smartphones, and Faber-Castell\u2019s slide rules from electronic calculators.<\/p>\n

Then there are Microsoft\u2019s travails in tablets. Microsoft made a huge commitment at the turn of the millennium, with Bill Gates declaring in 2001 that within five years tablets would be \u201cthe most popular form of PC sold in America<\/a>.\u201d But it was Apple that made an elegant and expensive go of the form factor\u2014eight years later.<\/p>\n

The alternative to the hypothesis that new technologies destroy incumbents is that the process of technological change has much in common with the unpredictability of biological evolution.\u00a0And even when \u201cdisruption\u201d is predictable, trying to forestall it may not be the right option. Would it really make sense for Harvard Business School, for instance, to abandon its well-honed face-to-face discussion model and jump with both feet onto the MOOC (massive open online course) bandwagon even if the latter\u2019s general success were assured?<\/p>\n

More broadly, the messiness of the real world demands close attention to context and consideration of a wide range of options, including an entry through acquisition or incremental innovation\u2014or a graceful exit\u2014after the dust settles. Disrupting yourself cannot be the default choice.<\/p>\n

\u201cFor every complex problem there is an answer that is clear, simple, and wrong,\u201d H.L. Mencken wrote. The hedgehog who knows just one big thing cannot master the unruliness of competitive enterprise. In the conduct of business and other human affairs, we need the fox\u2019s knowledge of many little things. But neither\u00a0should we look to scholars, savants, or big data for nostrums that effectively combine this multifarious knowledge. There is no ducking case-by-case judgments and anxious leaps of faith. That\u2019s why the life of the innovator is such a thrill, the rewards of successful enterprise are so great, and success is never forever.<\/p>\n<\/div>\n

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Amar Bhid\u00e9 and Pankaj Ghemawat Quartz\u00a0 October 9, 2014 Clay Christensen\u2019s theories are great for entrepreneurs, but not executives \u00a0Simplicity<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"gallery","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","footnotes":"","_links_to":"","_links_to_target":""},"categories":[4],"tags":[],"class_list":["post-408","post","type-post","status-publish","format-gallery","hentry","category-innovation","post_format-post-format-gallery"],"_links":{"self":[{"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/posts\/408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/comments?post=408"}],"version-history":[{"count":18,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/posts\/408\/revisions"}],"predecessor-version":[{"id":950,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/posts\/408\/revisions\/950"}],"wp:attachment":[{"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/media?parent=408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/categories?post=408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bhide.net\/wordpress_files\/index.php\/wp-json\/wp\/v2\/tags?post=408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}