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The Innovator's Solution: Creating and Sustaining Successful Growth
A seminal work by bestselling author Clayton M. Christensen.
In his international bestseller The Innovator's Dilemma, Clayton M. Christensen exposed this crushing paradox behind the failure of many industry leaders: by placing too much focus on pleasing their most profitable customers, these firms actually paved the way for their own demise by ignoring the disruptive technologies that aggressively evolved to displace them. In The Innovator’s Solution, Christensen and coauthor Michael E. Raynor help all companies understand how to become disruptors themselves.
Clay Christensen (author of the award-winning Harvard Business Review article, “How Will You Measure Your Life?”) and Raynor not only reveal that innovation is more predictable than most managers have come to believe, they also provide helpful advice on the business decisions crucial to truly disruptive growth. Citing in-depth research and theories tested in hundreds of companies across many industries, the authors identify the processes that create successful innovation—and they show managers how to tailor their strategies to the changing circumstances of a dynamic world.
The Innovator’s Solution is an important addition to any innovation library.
Published by Harvard Business Review Press.
In his international bestseller The Innovator's Dilemma, Clayton M. Christensen exposed this crushing paradox behind the failure of many industry leaders: by placing too much focus on pleasing their most profitable customers, these firms actually paved the way for their own demise by ignoring the disruptive technologies that aggressively evolved to displace them. In The Innovator’s Solution, Christensen and coauthor Michael E. Raynor help all companies understand how to become disruptors themselves.
Clay Christensen (author of the award-winning Harvard Business Review article, “How Will You Measure Your Life?”) and Raynor not only reveal that innovation is more predictable than most managers have come to believe, they also provide helpful advice on the business decisions crucial to truly disruptive growth. Citing in-depth research and theories tested in hundreds of companies across many industries, the authors identify the processes that create successful innovation—and they show managers how to tailor their strategies to the changing circumstances of a dynamic world.
The Innovator’s Solution is an important addition to any innovation library.
Published by Harvard Business Review Press.
304 pages, Hardcover
First published January 1, 2003
About the author
Clayton M. Christensen
109 books2,023 followersClayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, with a joint appointment in the Technology & Operations Management and General Management faculty groups. He is best known for his study of innovation in commercial enterprises. His first book, The Innovator's Dilemma, articulated his theory of disruptive technology.
Christensen was born in Salt Lake City, Utah, the second of eight children. He holds a B.A. with highest honors in economics at Brigham Young University (1975), an M.Phil. in applied econometrics and the economics of less-developed countries at Oxford University (1977, Rhodes Scholar), an MBA with High Distinction at the Harvard Business School (1979, George F. Baker Scholar), and a DBA at the Harvard Business School (1992).
Clay Christensen lives in Belmont, Massachusetts with his five children, wife Christine, and is a member of The Church of Jesus Christ of Latter-day Saints. He has served in several leadership positions in the Church. He served as an Area Seventy beginning in April 2002. Prior to that he served as a counselor in the Massachusetts Boston Mission Presidency. He has also served as a bishop. He speaks fluent Korean.
Christensen is currently battling follicular lymphoma.
For further details and an ordered list of the author's works, see the author's Wikipedia page.
Christensen was born in Salt Lake City, Utah, the second of eight children. He holds a B.A. with highest honors in economics at Brigham Young University (1975), an M.Phil. in applied econometrics and the economics of less-developed countries at Oxford University (1977, Rhodes Scholar), an MBA with High Distinction at the Harvard Business School (1979, George F. Baker Scholar), and a DBA at the Harvard Business School (1992).
Clay Christensen lives in Belmont, Massachusetts with his five children, wife Christine, and is a member of The Church of Jesus Christ of Latter-day Saints. He has served in several leadership positions in the Church. He served as an Area Seventy beginning in April 2002. Prior to that he served as a counselor in the Massachusetts Boston Mission Presidency. He has also served as a bishop. He speaks fluent Korean.
Christensen is currently battling follicular lymphoma.
For further details and an ordered list of the author's works, see the author's Wikipedia page.
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April 19, 2014
A wonderful follow up book to Innovator's Dilemma from Mr. Christensen. In this book Mr. Christensen gives the entrepreneurs different aspects to be considered when coming up with an innovative solution. He points out how traditional way of working may not be the most suitable and in fact in many situations harmful for developments of innovative disruptive solutions.
The key take away from the books is
1. Start innovating early. Do not wait for the company to reach a stage where it becomes imperative to innovate to grow. In this case the pressure will be too much and the expectations gargantuan to be able to succeed. The funding will become bad money. The authors highlight that public companies have to satisfy their shareholders who expect an year on year growth year after year. A company that 10 million may be able to grow at 20% by increasing their sales by another 2 million, but a 1 billion company will find it difficult to get 200 million to grow by 20% and a 10 billion company will find the climb even steeper. Since the focus of the management will be immediate boost to revenues, projects that have a potential in a long run will tend to be put off, or at best ignored.
2. Start innovating in an early which is obvious, but will be ignored by the well established players as they will find it unfruitful to be in that area. This is a corollary to the earlier statement. If one starts addressing a low end market it would not interest a well entrenched company in the same field that would be catering to premium customers. Slowly as the innovation becomes better chances are that the innovative company will overcome the incumbent. The authors give the example of how mini steel companies addressed a market which did not seem lucrative for the big steel companies and how over a period of time it has reached a stage where the mini steel mills today serve 50% of the industry needs.
3. It is stressed that the traditional way of slicing and dicing the customers by gender, age group, income group, geography may not succeed all the time. They stress that it is important to understand the work that the customer is trying to address. The authors give the example of how a fast food joint employed traditional means of gathering information about their customers and sliced and diced them according to gender etc and found no improvement in the sales based on actions that they arrived at based on this survey. The later carried out another survey based around the purpose of the customers. They found that the same customer needed thicker milk shakes in the morning as it lasted them till they reached their office and also satisfied their hunger till lunch time. The customers of same nature (classified by traditional slicing and dicing mechanism) needed something more thinner during lunchtime when they were in a hurry to get back to work. And the same customers in the evening needed these to be much thinner so that their children could finish them off soon. When the milkshakes were now prepared as per this survey the joint saw a surge in sales.
4. The distribution channel also needs to adjust to the innovation. The authors give the example of how a venture by Intel and SAP to address the needs of small and medium businesses failed to take off as they used the same marketing and sales channel as they used to sell the regular SAP software to sell this watered down version of SAP. The sales people had no incentive to sell this as the revenues and profits were smaller and it did not help them meet their targets. The stress is that it is important to have the right marketing and sales channel.
5. The authors state that there are two types of customers addressing whom will help the innovation kick off. The over-served and the non-users. The over served are easier targets as they are already users of the product and are looking for something with lesser features and that costs lesser. It is more difficult to address the non-users as they have to be lured into using the product. This can be achieved only by making the product so good and easy to use that they are attracted to using it.
6. The other aspect that needs to be kept in mind is that most products become modularized and commoditized over a period of time and the profits from it become unattractive. To avoid this it is important to know which are the key areas over which the company must keep hold on so as to keep it a lucrative business and which parts/modules can be outsourced. The decision should not be based on what is the "core competency" of the organization, but rather based on what should be the "core competency" of the organization. The example of IBM in PCs is quoted. IBM approached PC manufacturing the same way as they did for their mainframes. The parts, operating system and microprocessors, required for the PC was outsourced to Microsoft and Intel respectively. They only put their brand name behind the PCs. The history shows that they were wrong. Today IBM is non-entity in the PC business whereas Microsoft and Intel are biggies. Intel which was primarily a DRAM manufacturer shifted to microprocessor manufacturing due to market pressures and it has become a big player today.
7. It is not possible to avoid modularization or commoditization, what can be done is as one thing becomes modular the company should have another proprietary product or a key part of the product to sustain its business and growth.
8. The Resources - Processes - Values of a company are key determinants to the success or failure of the organization in disruptive growth. In most incumbent organizations the Processes are fixed and inflexible. The Resources are used to the Processes and have little incentive to think beyond these. Over a period of time the Values too freeze and it is difficult to dislodge these. These are circumstances which do not encourage growth of disruptive innovation. Given this perspective, it is important that the organizations that wish to encourage disruptive growth hive off smaller organizations and set them off on an innovative track without being encumbered by the Resources, Process and Values of the larger organization. Without this split it becomes very difficult to achieve disruptive innovation.
9. it is also important that once the disruptive innovation has picked up traction that the Processes that benefited the parent organization be looked into and be introduced as and when required into the these smaller organizations to make them more efficient and process driven.
10. The authors differentiate between bad money and good money for driving innovation. An investor who is in a hurry for profits and is OK to wait for growth is a good investor and brings in good money. On the other hand an investor who is patient for profit but is impatient for growth is a bad investor and brings in bad money. Organizations need to be vary of the intentions of the investor before accepting funding from them.
11. The senior executives have to play an important role in letting disruptive innovations grow in their organization. They need to ensure to create an atmosphere where such innovations are nurtured and not snipped off in the bud.
All in all an exceptional book, to be read by the leaders in all organizations and by those who wish to become leaders of Organizations.
The key take away from the books is
1. Start innovating early. Do not wait for the company to reach a stage where it becomes imperative to innovate to grow. In this case the pressure will be too much and the expectations gargantuan to be able to succeed. The funding will become bad money. The authors highlight that public companies have to satisfy their shareholders who expect an year on year growth year after year. A company that 10 million may be able to grow at 20% by increasing their sales by another 2 million, but a 1 billion company will find it difficult to get 200 million to grow by 20% and a 10 billion company will find the climb even steeper. Since the focus of the management will be immediate boost to revenues, projects that have a potential in a long run will tend to be put off, or at best ignored.
2. Start innovating in an early which is obvious, but will be ignored by the well established players as they will find it unfruitful to be in that area. This is a corollary to the earlier statement. If one starts addressing a low end market it would not interest a well entrenched company in the same field that would be catering to premium customers. Slowly as the innovation becomes better chances are that the innovative company will overcome the incumbent. The authors give the example of how mini steel companies addressed a market which did not seem lucrative for the big steel companies and how over a period of time it has reached a stage where the mini steel mills today serve 50% of the industry needs.
3. It is stressed that the traditional way of slicing and dicing the customers by gender, age group, income group, geography may not succeed all the time. They stress that it is important to understand the work that the customer is trying to address. The authors give the example of how a fast food joint employed traditional means of gathering information about their customers and sliced and diced them according to gender etc and found no improvement in the sales based on actions that they arrived at based on this survey. The later carried out another survey based around the purpose of the customers. They found that the same customer needed thicker milk shakes in the morning as it lasted them till they reached their office and also satisfied their hunger till lunch time. The customers of same nature (classified by traditional slicing and dicing mechanism) needed something more thinner during lunchtime when they were in a hurry to get back to work. And the same customers in the evening needed these to be much thinner so that their children could finish them off soon. When the milkshakes were now prepared as per this survey the joint saw a surge in sales.
4. The distribution channel also needs to adjust to the innovation. The authors give the example of how a venture by Intel and SAP to address the needs of small and medium businesses failed to take off as they used the same marketing and sales channel as they used to sell the regular SAP software to sell this watered down version of SAP. The sales people had no incentive to sell this as the revenues and profits were smaller and it did not help them meet their targets. The stress is that it is important to have the right marketing and sales channel.
5. The authors state that there are two types of customers addressing whom will help the innovation kick off. The over-served and the non-users. The over served are easier targets as they are already users of the product and are looking for something with lesser features and that costs lesser. It is more difficult to address the non-users as they have to be lured into using the product. This can be achieved only by making the product so good and easy to use that they are attracted to using it.
6. The other aspect that needs to be kept in mind is that most products become modularized and commoditized over a period of time and the profits from it become unattractive. To avoid this it is important to know which are the key areas over which the company must keep hold on so as to keep it a lucrative business and which parts/modules can be outsourced. The decision should not be based on what is the "core competency" of the organization, but rather based on what should be the "core competency" of the organization. The example of IBM in PCs is quoted. IBM approached PC manufacturing the same way as they did for their mainframes. The parts, operating system and microprocessors, required for the PC was outsourced to Microsoft and Intel respectively. They only put their brand name behind the PCs. The history shows that they were wrong. Today IBM is non-entity in the PC business whereas Microsoft and Intel are biggies. Intel which was primarily a DRAM manufacturer shifted to microprocessor manufacturing due to market pressures and it has become a big player today.
7. It is not possible to avoid modularization or commoditization, what can be done is as one thing becomes modular the company should have another proprietary product or a key part of the product to sustain its business and growth.
8. The Resources - Processes - Values of a company are key determinants to the success or failure of the organization in disruptive growth. In most incumbent organizations the Processes are fixed and inflexible. The Resources are used to the Processes and have little incentive to think beyond these. Over a period of time the Values too freeze and it is difficult to dislodge these. These are circumstances which do not encourage growth of disruptive innovation. Given this perspective, it is important that the organizations that wish to encourage disruptive growth hive off smaller organizations and set them off on an innovative track without being encumbered by the Resources, Process and Values of the larger organization. Without this split it becomes very difficult to achieve disruptive innovation.
9. it is also important that once the disruptive innovation has picked up traction that the Processes that benefited the parent organization be looked into and be introduced as and when required into the these smaller organizations to make them more efficient and process driven.
10. The authors differentiate between bad money and good money for driving innovation. An investor who is in a hurry for profits and is OK to wait for growth is a good investor and brings in good money. On the other hand an investor who is patient for profit but is impatient for growth is a bad investor and brings in bad money. Organizations need to be vary of the intentions of the investor before accepting funding from them.
11. The senior executives have to play an important role in letting disruptive innovations grow in their organization. They need to ensure to create an atmosphere where such innovations are nurtured and not snipped off in the bud.
All in all an exceptional book, to be read by the leaders in all organizations and by those who wish to become leaders of Organizations.
September 15, 2013
It took me a while, but worth finally persevering to the end. This isn't your typical business book, with a few nice aphorisms and over and done with in a couple of hours. No, this is a tightly argued guide to repeated disruptive innovation. And its not easy, in fact, Christensen even admits that he knows of only a handful of businesses that have achieved it, and a large part of their success came from the influence of their founders. The suggestions he makes does, however, suggest an explanation for why so few businesses have managed it - it is incredibly difficult, and involves winning at two very different strategies simultaneously. On the good side, it suggests some ways to possibly escape the dilemma, on the bad for me side, disruption is a lot more likely to come from outsiders rather than incumbents, no matter how clear it is that the industry is in the middle o a shake down.
September 27, 2014
"Disruption" is one of the most misunderstood terms — it implies not only a technological advancement, but a specific kind of innovation that — while un-interesting at first— is poised to become a real breakthrough.
There are two types of disruptive innovation: ones is low-end disruption (i.e. something that costs less than the main thing and performs worse for a while, until it gets better but still costs less), the other is new-market disruption (i.e. a product whose main consumer is someone that was until then a non-consumer). This book explains how to recognize disruption, how to prepare for it, and how to embrace it. It's really well written and in my opinion a required reading for those planning to start our manage a business, our for those that like to know his stuff works and how to recognize patterns.
There are two types of disruptive innovation: ones is low-end disruption (i.e. something that costs less than the main thing and performs worse for a while, until it gets better but still costs less), the other is new-market disruption (i.e. a product whose main consumer is someone that was until then a non-consumer). This book explains how to recognize disruption, how to prepare for it, and how to embrace it. It's really well written and in my opinion a required reading for those planning to start our manage a business, our for those that like to know his stuff works and how to recognize patterns.
July 6, 2013
Where The Innovator's Dilemma was about theory, this is about implementation-a recipe for managers looking to lead successful companies. Christensen admirably tackles the complex problem of guiding a company though times of disruption. There's a lot here, but the essence is that if you want to succeed, start with an idea that is somewhat profitable and go after customers who are under-served, either because no product exists that fits their needs, or they're the least profitable segment of an established market. If you want to make a lot of money, you need to have a product that is "not-yet-good-enough" so that your firm can compete on quality and innovation as opposed to cost.
Christensen advises against purely causal management-picking executive who have succeeded before or following the latest reorganization fad. He is particularly opposed to 'focusing on our core competencies' as the kind of accounting trick that hollows out a company over the long term. The kind of foresight required to move towards where the market is going rather than where's it been isn't easy to acquire, the insight and flexibility needed to switch strategies in midstream is even harder to find, but Christensen makes a compelling argument that good management is possible.
Christensen advises against purely causal management-picking executive who have succeeded before or following the latest reorganization fad. He is particularly opposed to 'focusing on our core competencies' as the kind of accounting trick that hollows out a company over the long term. The kind of foresight required to move towards where the market is going rather than where's it been isn't easy to acquire, the insight and flexibility needed to switch strategies in midstream is even harder to find, but Christensen makes a compelling argument that good management is possible.
May 18, 2019
A few nuggets wrapped in so much business-speak that it's genuinely hard to read. There's only so many times I can hear terms like "enhancing shareholder value," "new-market disruptive growth businesses," and "earn attractive returns on lower gross margins" before my eyes glaze over. I found myself tuning in and out, and would suddenly realize that I remembered nothing from the last 20 minutes of reading.
Also, like so many business books, it's not clear if this book gives you tools that are predictive (i.e., useful in the future) or merely observational (i.e., are just describing something that happened in the past). The parts that lovingly describe the innovation of RIM and the Blackberry, and then not long after, explain that the camera phone likely has no future, make me doubt some of the "theoretical models" proposed in this book.
Nevertheless, there is a bit of good content hidden in these pages:
* The problem discussed in The Innovator's Dilemma, where large, established companies can rarely create new innovations and get disrupted by newcomers, is rarely caused by a lack of ideas. The real problem is usually in how ideas are selected and shaped. When some new product idea comes along and disrupts a large established company, in many cases, that large company had known about that idea all along, and had perhaps even tried to build it themselves, but failed to do so due to the way the company prioritized, funded, and developed products. In other words, the ability of big businesses to innovate is limited by process, not creativity.
* The main way to create a "disruptive" product is to (a) come up with a technology or approach that gives a market segment access to a product they could never access before and then (b) gradually improve the technology more and more to move "up market" and capture more and more market share. In the first stage, your product can be worse than your competitors, as you're actually competing against non-usage: that is, the customers in that segment can't use any of the alternative products (e.g., because they are too expensive or require too much expertise), so they'll still gladly buy your inferior product. Moreover, this segment usually offers lower margins and will seem like a small market, so your larger competitors will often gladly abandon that market to you so they can chase higher margin opportunities elsewhere. Once you've established a foothold in that market segment, the second stage is to start improving your technology and moving "up market," gradually capturing more and more demanding market segments. By the time the competitor realizes what has happened, your lead with the new technology will be too great for them to overcome.
* Segment markets by the situation (i.e., the problem to be solved) and not by the attributes of the customer or product. For example, if you were selling milkshakes, you might be tempted to segment the market into people who like thick milkshakes vs thin ones, sweet vs non sweet, etc. This is not as effective as segmenting the market by what problem people are trying to solve when they choose to buy (or not buy!) a milkshake: e.g., the person who has a long commute or the parent who wants to buy their kids a treat. If you segment based on the problem to be solved, you'll realize that the attributes of the product only matter in terms of how they help to solve that problem: e.g., for the commuter, you'll want a product that can last through a long commute (thick!) and can be eaten with one hand, while driving, without making a mess (a nice container with a straw). You'll also realize that your competitors aren't just other milkshakes, but other foods commuters might consider, such as bagels, egg sandwiches, donuts, etc.
* Integrated vs modular design is determined by whether the technology is "good enough." For example, computers in the 60s and 70s weren't fast enough, so the most successful companies tended to be integrated, building all the parts and software themselves to eke out every possible gram of performance. However, as hardware improved, computers offered way more performance than a typical customer could use, which opened the door for modular parts and outsourcing. Modular design is always a compromise, but if you have performance to spare, it offers advantages in terms of time to market and margins that make it worthwhile. Each time this happens, the integrated solutions have to move up market to the most demanding market segments that are still competing on performance.
* Your company's cost structure plays a major role in determining your values and culture. That is, most companies will never prioritize work that results in lower profit margins. As a result, the products that your company will build, the customers you'll approach, the people you hire, and many other aspects are all derived from the type of profits you hope to generate; this fact is so pervasive that it becomes hard to see, as you won't even consider other options. Therefore, think about cost structure very carefully!
* Design your company so your *ideal* customers can deliver the profits you need. That is, (a) figure out which customers you're really after, (b) figure out the type of profit margins you want in your business, and then (c) make sure that the products you build can deliver the type of profits you're after when sold to your ideal customers. The worst thing that could happen is that your ideal customer is ready to sign, but the deal would not be profitable enough if you signed them!
Having written down my take aways, I must say that this is yet another business book that would've worked better as a long blog post or talk...
Also, like so many business books, it's not clear if this book gives you tools that are predictive (i.e., useful in the future) or merely observational (i.e., are just describing something that happened in the past). The parts that lovingly describe the innovation of RIM and the Blackberry, and then not long after, explain that the camera phone likely has no future, make me doubt some of the "theoretical models" proposed in this book.
Nevertheless, there is a bit of good content hidden in these pages:
* The problem discussed in The Innovator's Dilemma, where large, established companies can rarely create new innovations and get disrupted by newcomers, is rarely caused by a lack of ideas. The real problem is usually in how ideas are selected and shaped. When some new product idea comes along and disrupts a large established company, in many cases, that large company had known about that idea all along, and had perhaps even tried to build it themselves, but failed to do so due to the way the company prioritized, funded, and developed products. In other words, the ability of big businesses to innovate is limited by process, not creativity.
* The main way to create a "disruptive" product is to (a) come up with a technology or approach that gives a market segment access to a product they could never access before and then (b) gradually improve the technology more and more to move "up market" and capture more and more market share. In the first stage, your product can be worse than your competitors, as you're actually competing against non-usage: that is, the customers in that segment can't use any of the alternative products (e.g., because they are too expensive or require too much expertise), so they'll still gladly buy your inferior product. Moreover, this segment usually offers lower margins and will seem like a small market, so your larger competitors will often gladly abandon that market to you so they can chase higher margin opportunities elsewhere. Once you've established a foothold in that market segment, the second stage is to start improving your technology and moving "up market," gradually capturing more and more demanding market segments. By the time the competitor realizes what has happened, your lead with the new technology will be too great for them to overcome.
* Segment markets by the situation (i.e., the problem to be solved) and not by the attributes of the customer or product. For example, if you were selling milkshakes, you might be tempted to segment the market into people who like thick milkshakes vs thin ones, sweet vs non sweet, etc. This is not as effective as segmenting the market by what problem people are trying to solve when they choose to buy (or not buy!) a milkshake: e.g., the person who has a long commute or the parent who wants to buy their kids a treat. If you segment based on the problem to be solved, you'll realize that the attributes of the product only matter in terms of how they help to solve that problem: e.g., for the commuter, you'll want a product that can last through a long commute (thick!) and can be eaten with one hand, while driving, without making a mess (a nice container with a straw). You'll also realize that your competitors aren't just other milkshakes, but other foods commuters might consider, such as bagels, egg sandwiches, donuts, etc.
* Integrated vs modular design is determined by whether the technology is "good enough." For example, computers in the 60s and 70s weren't fast enough, so the most successful companies tended to be integrated, building all the parts and software themselves to eke out every possible gram of performance. However, as hardware improved, computers offered way more performance than a typical customer could use, which opened the door for modular parts and outsourcing. Modular design is always a compromise, but if you have performance to spare, it offers advantages in terms of time to market and margins that make it worthwhile. Each time this happens, the integrated solutions have to move up market to the most demanding market segments that are still competing on performance.
* Your company's cost structure plays a major role in determining your values and culture. That is, most companies will never prioritize work that results in lower profit margins. As a result, the products that your company will build, the customers you'll approach, the people you hire, and many other aspects are all derived from the type of profits you hope to generate; this fact is so pervasive that it becomes hard to see, as you won't even consider other options. Therefore, think about cost structure very carefully!
* Design your company so your *ideal* customers can deliver the profits you need. That is, (a) figure out which customers you're really after, (b) figure out the type of profit margins you want in your business, and then (c) make sure that the products you build can deliver the type of profits you're after when sold to your ideal customers. The worst thing that could happen is that your ideal customer is ready to sign, but the deal would not be profitable enough if you signed them!
Having written down my take aways, I must say that this is yet another business book that would've worked better as a long blog post or talk...
March 30, 2019
I’ve come to appreciate this book more and more over the years. Great insights for thinking through strategy. I still think we use the word “disruption” too much and it’s good going back and reminding myself of its original meaning.
September 4, 2008
I finially finished working my way through this excellent book. I think the Solution is actually better than the Problem - but is not a substitute.
It has excellent lessons, with the usual case studies that is standard Christenson fare. I believe these to be important regardless of your particular situation - may you be a worker bee in a big organization, an entrepreneur trying to figure out how to break into a market or a big company exec trying to figure out how to not get eaten by the dozens of downmarket competitors.
I particularly like the framework that is laid out for evaluating the position of a given company in the oscillating cycle of specialization vs commoditization (and back) and how that changes what a company should be focusing on.
It has excellent lessons, with the usual case studies that is standard Christenson fare. I believe these to be important regardless of your particular situation - may you be a worker bee in a big organization, an entrepreneur trying to figure out how to break into a market or a big company exec trying to figure out how to not get eaten by the dozens of downmarket competitors.
I particularly like the framework that is laid out for evaluating the position of a given company in the oscillating cycle of specialization vs commoditization (and back) and how that changes what a company should be focusing on.
January 1, 2010
Picked up this book off-hand out of curiosity, but couldn't put it down. Many of the books in this genre are full of fluff, but this one is filled with theory and insight. This evening, I was reading an article on Google moving into the netbook arena next year with its mobile-based Android operating system. Steve Ballmer has repeatedly dismissed the idea of Android/Chrome being any threat to Microsoft Office, but Google is doing exactly what this book warns, positioning itself in a seemingly non-threatening space ripe for upward expansion.
A week after putting this down, I'm still thinking about the content.
A week after putting this down, I'm still thinking about the content.
April 11, 2016
Solved a dilemma I had.
April 22, 2021
Repetitive (to the Innovator’s Dilemma and to itself), outdated, very boring to read. 😟
January 5, 2021
Not your typical shallow marketing book filled with mumbo-jumbo which could be condensed into a few pages.
This no-bullshit book dives deep into the case studies and research to provide great insights thinking about the strategy and execution of it. Few days after finishing it I still find myself thinking about some of the concepts introduced here (e.g. competing with nonconsumption).
I rate it 4 stars because it is not an easy read and listening to the audio version definitely didn't help with that. Will take some time in the future to actually read it.
Here are the main takeaways:
1. Never target an incumbent with a sustaining solution
In almost all cases, an incumbent will win if they are threatened by a sustaining technology. They will simply do more of what they’re good at, serving their customers with product improvements. The solution is to enter the market from below. Create a product that is not as good as the incumbents', but is cheaper, easier or more convenient. It’s important to begin with targeting a lower profit margin. Incumbents would rather let a low margin business go and concentrate on high margin growth (flee, not fight).
2. Customers ‘hire’ products to get specific ‘jobs’ done
"Companies that target their products at the circumstances in which customers find themselves, rather than at the customers themselves, are those that can launch predictably successful products."
3. Core competence is a dangerously inward-looking notion
"Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you’re good at. And staying competitive as the basis for competition shifts necessarily requires a willingness and ability to learn new things rather than clinging hopefully to the sources of past glory."
4. Proprietary architectures lead to overshooting what the market needs
An industry is always in a state of flux and never completely one or the other. The trick for senior managers is to build up the instinct for where the market is moving and to move towards it.
"Managers of industry-leading businesses need to watch vigilantly in the right places to spot these trends as they begin because the processes of commoditization and de-commoditization both begin at the periphery, not the core."
5. Use the emergent strategy to develop disruptive innovations
There are two fundamentally different processes for strategy formation: deliberate and emergent. Deliberate is common. It is analytical, rigorous, and formulated after a deep review of factors like market segment sizing, customer needs, competition, projected returns and so on.
Emergent strategy is the cumulative effect of all the day-to-day decisions made to invest and prioritize resources. These decisions are made from middle management and at the individual employee level. You can tell what a company’s strategy is by looking at what comes out of the resource allocation process and not what goes into it. This scenario should dominate when the future is hard to forecast and it is not yet clear which direction the business should take.
6. Appoint people for their ability to learn, not their track record
“It is not as important that managers have succeeded with the problems as it is for them to have wrestled with it and developed the skills and intuition for how to meet the challenge successfully the next time around … Failure and bouncing back from failure can be critical courses in the school of experience.”
7. Be patient for growth and impatient for profit
Launch new-growth businesses regularly, when the core business is in healthy shape. When financial results signal the need to do it, it is probably too late.
As an organization grows, continue to divide up business units so that each unit can launch new ventures and be patient for growth, as they are small enough to benefit from small opportunities (disruptive innovations will start out small).
Minimize the use of profit from the core business to subsidize losses in the new-growth ventures. Be impatient for profit and patient for growth. If a venture is profitable, it remains likely to continue even when the core business is struggling.
8. Launching disruptive businesses can be a repeatable process
1. The best time to invest in growth is when the company is growing.
2. Appoint senior executive to shepherd ideas and resource allocation.
3. Create a team and a process for shaping ideas.
4. Train the troops. Sales, marketing, and engineering, in particular, must be trained to spot disruptive ideas because these individuals are most likely to encounter them and see the opportunities.
This no-bullshit book dives deep into the case studies and research to provide great insights thinking about the strategy and execution of it. Few days after finishing it I still find myself thinking about some of the concepts introduced here (e.g. competing with nonconsumption).
I rate it 4 stars because it is not an easy read and listening to the audio version definitely didn't help with that. Will take some time in the future to actually read it.
Here are the main takeaways:
1. Never target an incumbent with a sustaining solution
In almost all cases, an incumbent will win if they are threatened by a sustaining technology. They will simply do more of what they’re good at, serving their customers with product improvements. The solution is to enter the market from below. Create a product that is not as good as the incumbents', but is cheaper, easier or more convenient. It’s important to begin with targeting a lower profit margin. Incumbents would rather let a low margin business go and concentrate on high margin growth (flee, not fight).
2. Customers ‘hire’ products to get specific ‘jobs’ done
"Companies that target their products at the circumstances in which customers find themselves, rather than at the customers themselves, are those that can launch predictably successful products."
3. Core competence is a dangerously inward-looking notion
"Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you’re good at. And staying competitive as the basis for competition shifts necessarily requires a willingness and ability to learn new things rather than clinging hopefully to the sources of past glory."
4. Proprietary architectures lead to overshooting what the market needs
An industry is always in a state of flux and never completely one or the other. The trick for senior managers is to build up the instinct for where the market is moving and to move towards it.
"Managers of industry-leading businesses need to watch vigilantly in the right places to spot these trends as they begin because the processes of commoditization and de-commoditization both begin at the periphery, not the core."
5. Use the emergent strategy to develop disruptive innovations
There are two fundamentally different processes for strategy formation: deliberate and emergent. Deliberate is common. It is analytical, rigorous, and formulated after a deep review of factors like market segment sizing, customer needs, competition, projected returns and so on.
Emergent strategy is the cumulative effect of all the day-to-day decisions made to invest and prioritize resources. These decisions are made from middle management and at the individual employee level. You can tell what a company’s strategy is by looking at what comes out of the resource allocation process and not what goes into it. This scenario should dominate when the future is hard to forecast and it is not yet clear which direction the business should take.
6. Appoint people for their ability to learn, not their track record
“It is not as important that managers have succeeded with the problems as it is for them to have wrestled with it and developed the skills and intuition for how to meet the challenge successfully the next time around … Failure and bouncing back from failure can be critical courses in the school of experience.”
7. Be patient for growth and impatient for profit
Launch new-growth businesses regularly, when the core business is in healthy shape. When financial results signal the need to do it, it is probably too late.
As an organization grows, continue to divide up business units so that each unit can launch new ventures and be patient for growth, as they are small enough to benefit from small opportunities (disruptive innovations will start out small).
Minimize the use of profit from the core business to subsidize losses in the new-growth ventures. Be impatient for profit and patient for growth. If a venture is profitable, it remains likely to continue even when the core business is struggling.
8. Launching disruptive businesses can be a repeatable process
1. The best time to invest in growth is when the company is growing.
2. Appoint senior executive to shepherd ideas and resource allocation.
3. Create a team and a process for shaping ideas.
4. Train the troops. Sales, marketing, and engineering, in particular, must be trained to spot disruptive ideas because these individuals are most likely to encounter them and see the opportunities.
December 25, 2019
Christiansen to bardzo madry czlowiek. Jego ksiazki zawieraja duzo madrosci, pisze o biznesie, i moglo by sie wydawac, ze ksiazki o biznesie przeznaczone sa tylko dla biznesmenow w garniturach.... moim zdaniem, jednak tak nie jest. ksiazki Christiansena moga tez zainteresowac kogos, kto po prostu stara sie zrozumiec wspolczesny swiat. Christiansen poprzez swoje ksiazki odslania schematy funkcjonowania wspolczesnego swiata,
po przeczytaniu ksiazek Christiansena i dokladnym przeanalizowaniu zaczynam inaczej patrzyc na rzeczywistosc i jakos potrafie lepiej ocenic politykow, bznesmenow pod wzgledem etycznego, rzetelnego zarzadzania, prowadzenia polityki, podejmowania decyzji...
po przeczytaniu ksiazek Christiansena i dokladnym przeanalizowaniu zaczynam inaczej patrzyc na rzeczywistosc i jakos potrafie lepiej ocenic politykow, bznesmenow pod wzgledem etycznego, rzetelnego zarzadzania, prowadzenia polityki, podejmowania decyzji...
May 20, 2020
Really amazing book, full of a lot of management, strategy, leadership, and business insights backed with a great amount of case studies and research from the authors. It presents a new and clear way of creating disruptive innovations and also how to make them sustainable.
All mentioned points and guidelines could be put immediately into practice and that makes the book very practical and helpful. The main aspects that intrigued me the most are finding the jobs-to-be-done of the customers, competing with non-consumption, and creating new channels under the radar of your competitors.
In a nutshell, I strongly recommend reading the book.
All mentioned points and guidelines could be put immediately into practice and that makes the book very practical and helpful. The main aspects that intrigued me the most are finding the jobs-to-be-done of the customers, competing with non-consumption, and creating new channels under the radar of your competitors.
In a nutshell, I strongly recommend reading the book.
November 16, 2020
Very little bullshit and a lot of compelling theory and sound reasoning about getting the initial conditions right when building new growth ventures. Indeed, the graduated version of the Innovator's Dilemma!
May 26, 2020
Painfully insightful. One would do well to keep a little Christensen angel on their shoulder.
Worthy of re-reads.
Worthy of re-reads.
January 11, 2021
[Audiobook] Came recommended by a good friend and I started without realizing that it's the second book in a series. The book is solid and offers good examples about the business world, a world still rather foreign to me. While the business examples are somewhat dated (Palm Pilot, Blackberry, etc), you get the added benefit of seeing how everything plays out with hindsight, confirming many and disproving a few of the author's predictions.
I would recommend for anyone in the business world, though I think you'd be better served reading the first book (The Innovator's Dilemma) prior to moving on. However, I never felt at a loss reading The Innovator's Solution as it covers different, parallel topics to Dilemma.
I would recommend for anyone in the business world, though I think you'd be better served reading the first book (The Innovator's Dilemma) prior to moving on. However, I never felt at a loss reading The Innovator's Solution as it covers different, parallel topics to Dilemma.
February 12, 2023
Couple or interesting ideas from analysing some well known companies and how they innovated to build new disruptive businesses. However from stories of Intel, Intuit, IBM or Microsoft, i did not learn that much new stuff. Quite shallow analysis in my opinion and i had troubles to be pulled 100% into the reading. More of an recap for me…
November 27, 2019
Initially, I read this book out of boredom, but it was 99% worth it. Not only did I gather more intell on what it takes to run a successful business but I also learned how to create success universally apart from business. Also, the lessons taught are ones that use examples and real people to motivate and inspire, which I took appreciation towards on a personal level.
October 22, 2022
The 1st business book I’ve read as recommended by the company that I’m working for. Not sure what to expect but the languages can be more succinct I guess ;)
March 6, 2010
Glenn recommended this to me over dinner before Christmas as the $20 version of one of his favorite classes/professors at HBS. Imagine my delight when I discovered it was available on the Kindle (after getting a Kindle for Christmas this year one of the hardest things initially was deciding what to read on it, since I have a stack of physical books I want to read and I didn't want to repurchase any of those). The book is all about the business of innovation, and is rife with historical examples and graphs that make it easy to understand. It is also a delightfully practical book, and while I can't make use of most it right now (I don't have a company to run or a team to manage), it's nice to read a book that is intended to be useful in addition to informative.
For anyone interested in the business of innovation, I highly recommend this. It is especially relevant in Silicon Valley and the high tech world, and many of the book's examples are drawn from there. It may have been more appropriate to start with The Innovator's Dilemma, but I didn't feel like I was starting in the middle by jumping straight to the Solution.
For anyone interested in the business of innovation, I highly recommend this. It is especially relevant in Silicon Valley and the high tech world, and many of the book's examples are drawn from there. It may have been more appropriate to start with The Innovator's Dilemma, but I didn't feel like I was starting in the middle by jumping straight to the Solution.
September 30, 2016
It is not an easy book, I wont lie.
And doing it in Audio format probably made it even harder.
It is written in a very formal style. And although he tries to summarise key points and keep referring back to them, there is just so much information/theory/examples in this book.
You need to be in the type of position in a company where you get exposed to these high level sales/ideas/innovation decisions for this book to probably make any sense.
It really does clarify a lot about why certain things work, and why others don't.
The book is truly insightful. Doing the Audio version you probably just need a summary sheet to reference back to, since there is no way you can recall all that was said.
Other books that I've read about building a business and entrepreneurship etc. always focus on an isolated case of how someone with unlimited funding made a success etc. This book, being based on theory and case studies made a lot more sense.
And doing it in Audio format probably made it even harder.
It is written in a very formal style. And although he tries to summarise key points and keep referring back to them, there is just so much information/theory/examples in this book.
You need to be in the type of position in a company where you get exposed to these high level sales/ideas/innovation decisions for this book to probably make any sense.
It really does clarify a lot about why certain things work, and why others don't.
The book is truly insightful. Doing the Audio version you probably just need a summary sheet to reference back to, since there is no way you can recall all that was said.
Other books that I've read about building a business and entrepreneurship etc. always focus on an isolated case of how someone with unlimited funding made a success etc. This book, being based on theory and case studies made a lot more sense.
January 26, 2012
A truly thought-provoking business book about how to make innovation work in all companies. However brilliant the content, it is written in a very formal style, and is hard to read.
Details: Back by excellent research and detailed analysis this book explains how some companies succeed with innovation and why some fail. Using case studies the authors delve into what makes companies successfully innovate and comes up with some surprising rules around organizational structure.
However, this is written too much like an academic treatise and I think it would be too dense for most readers.
The Takeaway: Wonderful ideas but takes some effort.
Details: Back by excellent research and detailed analysis this book explains how some companies succeed with innovation and why some fail. Using case studies the authors delve into what makes companies successfully innovate and comes up with some surprising rules around organizational structure.
However, this is written too much like an academic treatise and I think it would be too dense for most readers.
The Takeaway: Wonderful ideas but takes some effort.
March 25, 2017
The book is just continuation of The Innovator's Dilemma. Like an update on the previous book with changes in industry. And how the theory proposed in Innovator's dilemma should be used by managers to progress the growth path for their organization. Practically things are so dynamic that theory and reality are very different. Book is a good advisor to managers but i still don't see its that useful other than to be used as a good reads for B-schools.
January 9, 2022
While the authors' "corporate language" was quite off-putting for this reader at first, I came to appreciate the sheer analytic and conceptual power of their argument more and more. If, like me, your main interest is mission-driven, non-profit organizations, you'll need to do a bit of translating - but there's plenty of reason to make this effort. Much to be learned.
July 1, 2012
One of the best business books I have ever read. I read this during undergrad study in Business. I could almost feel the light bulb coming on in my head! Told using easy-to-understand language, it is a must read for those who wish to understand how to compete in today's business environment.
December 2, 2007
a very interesting business book about disruption and innovation, including what established firms can do to remain leaders
July 18, 2011
A lot of good interesting ideas and well founded research. Just a bit over my head
April 4, 2013
One of the top 5 business books I've read. Explained a lot of things I noticed about creating and growing software products!
February 22, 2018
Examples were a bit outdated. Enjoyed the part describing how Blackberry / RIM was on the right track and camera phones were unlikely to take off.
July 31, 2023
Innovator's Solution is a very good effort by business school academics at understanding what especially larger corporations need to keep in mind if they want their companies to keep innovating. In trying to provide such guidance to the larger corporations, the authors (Christensen and Raynor) also provide great guidance to smaller companies seeking to succeed in innovation--and especially "disruption".
"Disruptive innovation" is possibly an overused term. Some might think "disruption" is bad in and of itself, and others may think it is good. More generally, as the authors use the term, it is innovation which improves either the value/performance of a product or service addressing either what seems to be something treated as an uninteresting commodity or something which at present is not being addressed (especially in communities formerly unable to afford the solutions to the particular need to be addressed.)
The authors show, for example, how when a company has successfully addressed the demands of one market, it often seeks to move up to higher value add/higher margin markets. Its investment decisions will tend to be biased towards projects/new products with higher gross margins than the market it has originally satisfied, and which often has drawn in more competitors as "me too" and which--at least at the technological value/performance points of the original solution--will tend to exhibit lower margins. At that stage, a company offering the product/service in a new way so as to substantially improve the value/performance points for that market will succeed--whether a new company or the original company--but only if it seeks such "new" way of satisfying that market.
For larger corporations, there is a whole lot of advice about how separate teams and separate processes will be needed to avoid coopting or fears of cannibalization. In reading this, one gets a feeling of how difficult it is for a successful company to continue to innovate once it gets big. It is possible but...as the authors show, not many have succeeded.
The book's greater utility, accordingly, is for smaller companies seeking to succeed with a "disruptive" innovation. Summarizing their strategy, they should look for customers who are relatively speaking ignored by the larger guys, or those who heretofore have been excluded altogether. By focusing first on customers not important to the big guys, it may be possible for innovative companies even to "service" these customers of larger companies no longer so interested in serving them, and whose overall margins can be increased by the innovative company contracting to take over these less important customers. The book is extremely helpful to understand these dynamics, even if it is a little rich in "MBA jargon".
Among some of the best insights:
"Financial results measure how healthy the business was, not how healthy the business is."
"Competing [disruptive businesses] to project big numbers forces them to declare a strategy that confidently crams the innovation into a large, existing and obvious market whose size can be statistically substantiated. This means competing against noncompetition."
"...companies that have excelled in the race to make the best possible products fund themselves making products that are too good."--in other words, they will be vulnerable to limited functionality products or services that are cheaper (customer pays only for what he wants).
To an extent, disruptive businesses need to find a toehold in the market--usually where the big guys are less interested, and then build superior cost, convenience, or experience in those markets before trying to move up (or expand out).
Finally, the authors also point to the fact that innovation will typically be learning while doing esp if attacking a market which is not yet "consuming" the product or service offered. This requires focusing on profitability early on as the business focuses on what the target market will value enough to pay for it, and then to scale and go up market featuring what the innovation was that led to entry on to the market.
There are many other insights in this valuable book--but still with all its benefits, one cannot but help yearn for more analysis using real live businesses, and especially dedicated businesses without all of the corporate bureaucracy these Harvard professors are focusing on. 4.3 starts
"Disruptive innovation" is possibly an overused term. Some might think "disruption" is bad in and of itself, and others may think it is good. More generally, as the authors use the term, it is innovation which improves either the value/performance of a product or service addressing either what seems to be something treated as an uninteresting commodity or something which at present is not being addressed (especially in communities formerly unable to afford the solutions to the particular need to be addressed.)
The authors show, for example, how when a company has successfully addressed the demands of one market, it often seeks to move up to higher value add/higher margin markets. Its investment decisions will tend to be biased towards projects/new products with higher gross margins than the market it has originally satisfied, and which often has drawn in more competitors as "me too" and which--at least at the technological value/performance points of the original solution--will tend to exhibit lower margins. At that stage, a company offering the product/service in a new way so as to substantially improve the value/performance points for that market will succeed--whether a new company or the original company--but only if it seeks such "new" way of satisfying that market.
For larger corporations, there is a whole lot of advice about how separate teams and separate processes will be needed to avoid coopting or fears of cannibalization. In reading this, one gets a feeling of how difficult it is for a successful company to continue to innovate once it gets big. It is possible but...as the authors show, not many have succeeded.
The book's greater utility, accordingly, is for smaller companies seeking to succeed with a "disruptive" innovation. Summarizing their strategy, they should look for customers who are relatively speaking ignored by the larger guys, or those who heretofore have been excluded altogether. By focusing first on customers not important to the big guys, it may be possible for innovative companies even to "service" these customers of larger companies no longer so interested in serving them, and whose overall margins can be increased by the innovative company contracting to take over these less important customers. The book is extremely helpful to understand these dynamics, even if it is a little rich in "MBA jargon".
Among some of the best insights:
"Financial results measure how healthy the business was, not how healthy the business is."
"Competing [disruptive businesses] to project big numbers forces them to declare a strategy that confidently crams the innovation into a large, existing and obvious market whose size can be statistically substantiated. This means competing against noncompetition."
"...companies that have excelled in the race to make the best possible products fund themselves making products that are too good."--in other words, they will be vulnerable to limited functionality products or services that are cheaper (customer pays only for what he wants).
To an extent, disruptive businesses need to find a toehold in the market--usually where the big guys are less interested, and then build superior cost, convenience, or experience in those markets before trying to move up (or expand out).
Finally, the authors also point to the fact that innovation will typically be learning while doing esp if attacking a market which is not yet "consuming" the product or service offered. This requires focusing on profitability early on as the business focuses on what the target market will value enough to pay for it, and then to scale and go up market featuring what the innovation was that led to entry on to the market.
There are many other insights in this valuable book--but still with all its benefits, one cannot but help yearn for more analysis using real live businesses, and especially dedicated businesses without all of the corporate bureaucracy these Harvard professors are focusing on. 4.3 starts
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