It was said that the late Steve Jobs was deeply influenced by a certain book, The Innovator’s Dilemma, and for a good reason. Its author, Clayton Christensen, was a Harvard professor with a deep understanding of the phenomenon of disruptive innovation and its effects on businesses.

Christensen, who passed away in January this year, was known to be both an amazing thinker and an incredible teacher. He had a gift of drawing from distant, almost odd analogies to make a point the listener would be hard pressed to forget in future.

As the world mourns his passing, we look back on the treasures he left us in his works and distil three valuable lessons on disruptive innovation.

Photo: Evgenia Eliseeva

The Managerial Mindset

Innovation is imperative in any industry or business; this is an undisputed fact in today’s world. However, Christensen was very particular in discerning the difference between sustainable and disruptive innovation. Sustaining innovations focus on improving a current business model or product, building on the attributes that customers already want. These make up about 90% of innovative solutions developed in businesses and are highly prized and sought after by industry giants.

On the other hand, disruptive innovations focus on simplifying, altering and redesigning a product, often sacrificing one or two favoured attributes in order to make it more accessible to the market. This often decreases the product’s margins, and customers of the original product rarely accept the newly innovated product immediately.

Why then do disruptive innovations usually gain the majority of market share and threaten the entrenched industry players very quickly? It’s simply because they tend to be much more affordable, efficient, easier to produce and supersede the mainstream product on many different attributes.

Perhaps the most important skill Christensen taught in dealing with disruptive innovations was to identify such phenomena. The intuitive thing to do would be to collect feedback from customers to determine how to further innovate products.

A Common Language

Due to its confusing nature, developing disruptive innovations is difficult, and particularly so in large companies. In his article Meeting the Challenge of Disruptive Change, Christensen stressed that organisational culture plays a major role in the acceptance of such technologies.

He often tells of the time he spent half an hour explaining his disruptive innovation theory to an Intel senior staff, Andy Grove, helping him to understand the significance of the disruptive innovation threat they were facing at the time. Andy grasped this significance quickly and proceeded to build his company’s culture by educating all his managers on disruptive innovation. He later said that while Christensen’s models did not provide direct answers, they gave Intel a common language around which to discuss innovation and relevant issues.

This is what truly defines a great company culture: when a company views disruptive innovation through the same lenses and perfectly understands their approach to such.

New Measurement of Success

In the article “The ongoing process of building a theory of disruption”, Christensen pointed out that disruption is not a technology problem but a business problem. The explanation? Simply that management has geared its rewards structure to encourage sustaining innovations rather than its much riskier disruptive counterparts.

For large companies that wish to remain open to disruptive technologies, Christensen made three recommendations. First, encourage small-scale development of new, low-margin offerings targeting beyond the company’s current target consumers. Second, adopt an integrated approach and align both strategy and finance to reduce potential roadblocks for innovation projects. Third, develop new metrics to evaluate success that do not blatantly favour sustaining innovations over disruptive ones.

Christensen provided the world with a wealth of valuable insight on innovation and how it affects the market and businesses. But that is not to say that study in this field is complete — far from it, in fact. There are always new cases that defy understood theories and further anomalies to be analysed. As we look back on the teachings of so great an innovator, we cannot help but feel excited about the amazing theories that remain to be discovered that will impact our world.

Clayton Christensen was an American academic and business consultant who developed the widely known theory of “disruptive innovation”, first introduced in his book “The Innovator’s Dilemma”. His disruptive innovation theories have been adopted by companies and innovation teams all over the world, including at DBS. The Economist termed him as “the most influential management thinker of his time”. Christensen passed away on 23 January 2020, aged 67, from leukaemia.