published on Monday, December 1, 2003
in The Miami Herald
Authors offer a lesson in smarter innovation.
Innovator's Solution: Creating and Sustaining Successful Growth.
Clayton M. Christensen and Michael E. Raynor. Harvard Business School
Press. 288 pages. $29.95
You can be sure that when people began sharing music online, most
observers didn't think that established business structures were
threatened. Or that inkjet printers would supplant laser printing.
Or that the introduction of transistor radios would not only doom
large radio consoles, but also become catalysts for the extinction
of most appliance stores. Understanding these disruptive innovations
(so called because they literally disrupt existing business structures)
is the key to successful innovation and sustained growth, according
to the authors of this new best-selling book.
IN THEIR WORDS
They write: 'How do you create products that customers want to
buy - ones that become so successful they `disrupt' the market?
It's not easy. Three in five new-product-development efforts are
scuttled before they ever reach the market. Of the ones that do
see the light of day, 40 percent never become profitable and simply
disappear. Most of these failures are predictable - and avoidable.
Why? Because most managers trying to come up with new products don't
properly consider the circumstances in which customers find themselves
when making purchasing decisions. Or as marketing expert Theodore
Levitt once told his M.B.A. students at Harvard: 'People don't want
to buy a quarter-inch drill. They want a quarter-inch hole.' Much
of the art of marketing focuses on identifying groups or segments
of customers that are similar enough that the same product or service
will appeal to all of them. Managers need to segment their markets
to mirror the way their customers experience life -- and not base
decisions on irrelevant data that focus on customer attributes.
Managers need to realize that customers, in effect, 'hire' products
to do specific 'jobs.' That's one reason why retail formats like
Home Depot and Lowe's have become so successful: Their stores are
literally organized around jobs to be done.''
The authors also write about spin-offs and product extensions,
and the need for separate, autonomous business units to manage them,
and the skills needed by managers to foster and exploit the disruption.
In fact, they state, failing to heed this advice is an almost certain
guarantee of failure.
Christensen and Raynor do a lot more than simply observe and advise;
though written for laymen, their book is a heady, dense brew of
research, statistics, anecdotes and charts, accompanied by lengthy
and detailed footnotes. It's a lot to digest for most managers,
and might itself be open to a few disruptive initiatives, since
they state that low-end, down market users are the most promising
initial customers. So why is there no audio version of their book?
A CD-ROM or DVD would also be good media for conveying its lessons,
as would a simplified (but not ''For Dummies'') repackaging of the
material. The publisher needs to take the authors' advice to heart
to capitalize on this book's success, lest a competitor actually
implements their strategies. (Come on guys; you gotta walk it like
you talk it!)
STILL WORTH IT
But The Innovator's Solution is an intelligent, perceptive
(and frequently counter-intuitive) look at innovation, and well
worth the time it takes to read and digest it to gain a greater
understanding of the complex and profound combination of forces
driving business development.