Christensen, a business theorist, introduced the word disruption several years ago… are we facing the “amazoned” enterprise era?
According to Ginni Rometty, IBM’s boss, the digital revolution has two phases. In the first, Silicon Valley firms make all the running as they create new markets and eviscerate weak firms in sleepy industries. This has been the story until now. Tech firms have captured 42% of the rise in the value of America’s stockmarket since 2014 as investors forecast they will win an ever-bigger share of corporate profits. A new, terrifying phrase has entered the lexicon of business jargon: being “Amazoned”.
The second phase favours the incumbents, Rometty believes, and is starting about now.
They summon the will to adapt, innovate to create new, digital, products and increase efficiency. The schema is plainly self-serving. IBM is itself fighting for survival against cloud-based tech rivals and most of its clients are conventional firms. Yet she is correct that incumbents in many industries are at last getting their acts together on technology.
If you’re sick of hearing about disruption, blame Clayton Christensen, who introduced the concept into business jargon.
Christensen is possibly the most influential management thinker in Silicon Valley. His 1997 book, The Innovator’s Dilemma, was embraced by Intel’s Andy Grove, quoted by Steve Jobs, and called one of the six best business books ever by The Economist. In it, Christensen introduced his theory of disruption, which explains how established, successful companies leave themselves vulnerable to competition from upstarts by abandoning the lower end of the market. Transistor radios, for example, were sold cheaply to teenagers and eventually overtook the expensive, high-quality vacuum-tube radios that once dominated the market. A more recent example might be AirBnb’s assault on the hotel industry.
Riding the success of his ideas, Christensen, a Harvard Business School professor, has published several more books exploring innovation, established a nonprofit think tank (the Clayton Christensen Institute), and launched consulting and investing firms. He’s also faced criticism, like this New Republic piece decrying how disruption has become an odious cliche.
Recently, Quartz interviewed Chirstensen about his new book “Competing Against Luck: The Story of Innovation and Customer Choice, Christensen, with co-authors Taddy Hall, Karen Dillon, and David Duncan, tries to explain why some products are successful and so many are not.
These are some of his opinions:
- “…disruption is a theory about competitive response. If I have a new innovation I want to introduce into the marketplace, I want to predict if competitors in that market are going to ignore me or going to fight me. The theory of disruption helps you understand that quite well. But in many ways, it’s not a manual for how to grow or how to predict what customers want.”
- “[Jobs to be done] is the second side of the same coin: How can I be sure that competitors won’t kill me and how can I be sure customers will want to buy the product? So it’s actually a very important compliment to disruption.”
- “If you organize your company around a job to be done, it’s actually a lot harder for a new entrant to disrupt you, because most disruptive companies just have my product versus your product, and mine’s cheaper than yours. Jobs to be done is actually good protection for companies worried about being disrupted.”
- “We discover jobs to be done, we don’t develop them or consciously iterate toward them. In the book, we’re tying to say, now that you understand the idea, there’s a methodology that will help you identify these jobs. You’ve got to keep your ear to the ground, because you’ll happen upon the job.”
“What we didn’t anticipate, and what in many ways was a fault of mine, was that the term disruption has so many different connotations in the English language, that it allows people to justify whatever they want to do as, “Oh, this is disruptive,” and they don’t ever read the book. The population of people where the fewest have read the book are venture capitalists. They are arrogant and smart and why do they need to read something?”