Clayton Christensen

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“Christensen’s Disruption Theory Is Not Correct”

November 30, 2015 in Excerpts, Science/Tech | Permalink

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There has, of course, been plenty of pushback against Clayton Christensen’s theory of disruption (most notably in Jill Lepore’s 2014 New Yorker takedown), but in a Washington Post editorial, Vivek Wadhwa suggests we don’t even concern ourselves about disproving such a thing when the ground has so significantly shifted in the last 20 years that it can’t possibly be applicable anymore.

Saying Uber isn’t truly disruptive, as Christensen does, because it doesn’t neatly fit within the strictures of his theory, is silliness. Ridesharing + driverless could be the most disruptive economic event of our times, regardless of what a classic model says about it. That new normal will be good and bad, a boon and bane all at once, requiring not just free-market solutions but political ones as well.

From Wadhwa:

Christensen says that Uber and Tesla Motors aren’t genuinely disruptive, not fitting the tenets of his theory of disruptive innovation. In that, the competition comes from the lower end or an unserved part of a market and then migrates upward to the mainstream market. He says that Uber has gone in exactly the opposite direction by building a position in the mainstream market and then addressing historically overlooked segments.  And Tesla Motors can’t be disruptive because it is tackling the high end of the car market.  “If disruption theory is correct, Tesla’s future holds either acquisition by a much larger incumbent or a years-long and hard-fought battle for market significance,” say Christensen and his co-authors in the paper.

Christensen’s disruption theory is not correct. The competition no longer comes from the lower end of a market; it comes from other, completely different, industries.  For the taxi industry, Uber came out of nowhere. At first Uber tried competing with high-end limousines. Then it launched UberX to offer cheap taxi service. Now it wants it all.  Through UberFresh, it is piloting same-day grocery delivery; through UberEats, it promises lunch in 10 minutes. Uber is challenging supermarkets, Amazon.com, and the catering industry — all at the same time. With UberHealth, it is planning to bring flu shots to people in need. When Uber finishes writing the software for its self-driving cars, it will create a genuine tsunami of disruption in every industry that depends upon transportation.

Tesla has already proven the superiority of its electric cars. Now it is changing their economics.•

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“If Tesla Won’t Disrupt The Industry, What Could?”

April 19, 2015 in Excerpts, Science/Tech, Urban Studies | Permalink

Not everyone believes in Disruption, a theory developed and articulated by Harvard Business School’s Clayton Christensen. It is interesting to wonder, however, if Tesla, which explicitly aims to disrupt Big Auto, will achieve its goal. The professor had some colleagues study Elon Musk’s outfit, and they don’t consider it to be truly disruptive. They do feel, however, that a short-range, golf cart-ish EV might be.

I doubt one blanket solution will emerge. Tesla, other EV makers (including those manufacturing “community cars”), autonomous vehicles, ridesharing, etc., will probably be a collective force for change.

From a Harvard Business Review piece:

As the theory of disruptive innovation celebrates its 20th birthday—it was first articulated in a 1995 HBR article—recognition is growing that it has been co-opted as a trendy buzzword and applied to businesses that aren’t truly disruptive. “The word is [now] used to justify whatever anybody—an entrepreneur or a college student—wants to do,” Christensen told Bloomberg last year, responding to criticism of his work in the New Yorker. Bartman says that the popular press routinely cites Tesla and Airbnb as examples of disruptive innovations. Airbnb’s business model seems to fit the definition, he adds—but does Tesla’s?

To investigate, Bartman’s team posed five questions it uses to evaluate disruptive innovations. First, does the product either target overserved customers (by offering lower performance at a lower price) or create a new market (by targeting customers who couldn’t use or afford the existing product)? Second, does it create “asymmetric motivation,” meaning that while the disrupter is motivated to enter higher performance segments over time, existing players aren’t motivated to fight it? Third, can it improve performance fast enough to keep pace with customers’ expectations while retaining its low cost structure? Fourth, does it create new value networks, including sales channels? Fifth, does it disrupt all incumbents, or can an existing player exploit the opportunity?

As Bartman worked through the questions, it became clear that Tesla is not a disrupter. It’s a classic “sustaining innovation”—a product that, according to Christensen’s definition, offers incrementally better performance at a higher price. There’s nothing rudimentary about Teslas, which compete on price against cars by BMW and Mercedes. …

If Tesla won’t disrupt the industry, what could? [Tom] Bartman’s research points to the “neighborhood electric vehicle”—a low-speed vehicle that resembles a souped-up golf cart.•

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“For 300 Years, Higher Education Was Not Disrupted Because There Was No Technological Core”

February 9, 2015 in Science/Tech, Urban Studies, Videos | Permalink

Harvard Business School’s Professor Clayton Christensen, student of disruption, being interviewed by VC veteran Mark Suster about the near-term future of higher education, provides the money quote: “In fifteen years from now half of U.S. universities may be in bankruptcy.” America’s higher-education system has been one of our greatest triumphs, one of the great marvels of all civilization, but the growing costs seem unsustainable and the giant money at stake makes nimble reinvention difficult. Some sea change will likely occur.

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“I Think Higher Education Is Just On The Edge Of The Crevasse”

February 20, 2013 in Excerpts, Science/Tech, Urban Studies | Permalink

Jeff Howe of Wired has a new interview with the The Innovator’s Dilemma author Clayton Christensen. A passage about the industries (no surprises, really) most prone to the creative disturbance of our Digital Age:

“Jeff Howe:

If you had to list some industries right now that are either in a state of disruptive crisis or will be soon, what would they be?

Clayton Christensen:  

Journalism, certainly, and publishing broadly. Anything supported by advertising. That all of this is being disrupted is now beyond question. And then I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don’t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble.

Jeff Howe: 

Why is higher education vulnerable?

Clayton Christensen: 

The availability of online learning. It will take root in its simplest applications, then just get better and better. You know, Harvard Business School doesn’t teach accounting anymore, because there’s a guy out of BYU whose online accounting course is so good. He is extraordinary, and our accounting faculty, on average, is average.

Jeff Howe: 

What happens to all our institutions of advanced learning?

Clayton Christensen: 

Some will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera but then provide more-specialized courses in person. Hybrids are actually a principle regardless of industry. If you want to use a new technology in a mainstream existing market, it has to be a hybrid. It’s like the electric car. If you want to have a viable electric car, you have to ask if there is a market where the customers want a car that won’t go far or fast. The answer is, parents of teenagers would love to put their teens in a car that won’t go far or fast. Little by little, the technology will emerge to take it on longer trips. But if you want to have this new technology employed on the California freeways right now, it has to be a hybrid like a Prius, where you take the best of the old with the best of the new.” (Thanks Browser.)

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