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Christensen on Innovation

October 6th, 2002 · No Comments

Dan Gillmor summarises Clay Christensen’s (author of “The Innovator’s Dilemma”) talk at a Harvard Business School conference:

Middle managers decide which ideas get carried forward. Senior managers don’t see the ideas first. What happens too often is that middle managers only propose things they think will be successful — and don’t propose things they believe senior management will reject. The proposals that get forwarded, he says, look like the ones that have been approved before.

“It doesn’t need to be that way,” he says.

Ideas need to go through different evaluation processes, he says. The ideas that reinforce existing things should go through one, and ideas that are disruptive should go through another.

Strategies for new opportunities: The ideal customers for a new idea are not already customers.

Johnson & Johnson’s medical device business acquired disruptive technologies. Litmus test: “Does it allow larger population of less-skilled people to do things?” All growth has come from those businesses, he says.

As it turns out, the last paragraph is what I have taken as the base for the Tech Talks in the coming week – Technology’s Next Markets.

Other notes from the conference: Kevin Marks, Denise Howell.

A few interesting points from Kevin Marks’ blog on what Christensen had to say (and which are very relevant for us in Emergic):

You need to recognise disruptive situations – there is an asymmetry of motivation, which is easier in a new business.

When you enter a market, the established competitors are motivated to leave if there is an asymmetry of motivation – if they have a place to move to that is higher margin they will. With a sustaining tech the incumbent will win about 100%. You need to harness the asymmetry.

Current customers are no good for a new opportunity. A type 1 disruption is finding the new, low cost market that the established busines doesn’t want. eg personal computer vs minis/mainframe.

Type 2 disruption is compete against non-consumption – find a new plane of competition. Cisco packet switch not good enough from telephony to start with, so market was open.

Non consumers are the ideal initial target.

Market segmentation obscures the targets for innovation – segment by goal, not by demographic.

Choosing a team – standard way is to use adjectives like visionary etc. Skills are developed by the problems they have previously wrestled with. In a successful business, the problems they have wrestled with aren’t the right kind for new growth companies. Look for experiences needed to be successful in a new business. Need to provide these experiences.

How do you compensate a disruptive team in a large organisation? Hasn’t seen correlation with stock options – offer excitement of building something big and new.

Adds Halley Suitt:

Yesterday, at our conference Clay Christensen was talking about how Sony put little cheap, crappy, transistor radios in the pockets of kids’ bluejeans when rock and roll was new and their parents didn’t want them listening to rock and roll or even wearing bluejeans. I remember listening to WABC and Cousin Brucie on a little radio like that. He was talking about competition. He was explaining how Sony sussed out the fact that they were competing against non-consumption. That is, they weren’t getting these kids to replace a table top radio like their parents owned. They were getting these kids to buy something they really wanted that they’d never bought before and therefore, they were competing against nothing. Imagine the freedom you have when you are the only guy in the game and you’ve hit on something someone really wants and will pay you whatever price to own.

Then he talked about voice recognition software and the picture of an administrative assistant on the box, looking thrilled to wear a little headset and use this impossibly clumsy software, which instead of simply typing 80 words per minute with 99% accuracy, she could now learn to talk really SLOWLY and have a 60% accuracy rate and spend lots of time making the software work instead of using something that did work for her.

He said one thing that stuck with me. Maybe you should consider making a product that does something people really need to do and helps them do it easily. Maybe you should sell products people actually need.


Christensen

Tags: Management

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