Six Keys to Building New Markets by Unleashing Disruptive Innovation

Posted on October 16, 2005 by John Hunter

Six Keys to Building New Markets by Unleashing Disruptive Innovation by Clayton M. Christensen, Michael E. Raynor, and Scott D. Anthony in Harvard Management Update:

Companies have two basic options when they seek to build new-growth businesses. They can try to take an existing market from an entrenched competitor with sustaining innovations. Or they can try to take on a competitor with disruptive innovations that either create new markets or take root among an incumbent’s worst customers. Our research overwhelmingly suggests that companies should seek out growth based on disruption.

Clayton Christensen has put forth this position in several of his books including the Innovator’s Solution.

Managers typically grow impatient when we tell them this. “Theory?” they say. “That sounds like theoretical. That sounds like impractical.” But theory is eminently practical. Managers are the world’s most voracious consumers of theory. Every plan a manager makes, every action a manager takes, is based on some implicit understanding of what causes what and why.

The problem is, managers all too frequently use a one-size-fits-all theory. But the ground beneath them inevitably shifts. Strategies that worked so wonderfully in the past no longer suffice.

Very well put in my opinion. Unfortunately we do not often stop to examine the theory and therefore fail to learn as we should as we experiment and get new results. The most effective way I know of to improve the learning is to use the PDSA cycle, predict the effects of change and then examining the results of change. As simple as those two acts are, they are skipped far to frequently.

His second point, that managers frequently use overly simplistic models or theories is also important. Management is not well suited for simple theories that can be applied in any situation. Many interdependent variables are often at play and management requires not application of simple rules but applying knowledge in complex situations as best you can. Management is challenging and simple answers are often of little value – even though they are desired.

It seems like Harvard has taken to making enough content from articles available for free (or maybe they have for awhile and I just am finding them more often now…) and then charging for the full article. I think it is wise to make a large enough portion of the article that readers can find it useful, and then charge for more (if charging for articles is your business model). They really should explain what you are buying though. I can’t tell if there is more to the article than is on the web site (if they make available 2 pages of 5 pages they should state that clearly). It should be clear to the customer what they are buying.

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