The Innovator's Solution: Creating and Sustaining Successful Growth

Edited 20 Dec 07 to add links to natural capitalism books I was talking to a friend the other day about why major (multi-billion dollar a year) companies are not good at innovation, and he recommended this book. Wow! Looking at the companies I know and admire, it all became clear. Innovation *is* disruptive; the most promising marketplace is the opposite of their existing defense and intelligence clients--the people that do not get adequate intelligence support from the existing cash cow; and all of the middle and senior managers (Washington-based) are incrementalists who had succeeded at building bodies-for-hire accounts over decades. For those who feel an intuitive faith in disruptive endeavors, this book is inspiring and also instructional. It specifically suggests that entrants will beat incumbents when the objective is to substitute lower-cost good-enough solutions for client needs that are not satisfied by high end production. However, it also makes clear that the *last* place you want to sell disruptive solutions in to is the existing high end client base. Go for new customers and new contexts. In government intelligence terms: stop trying to teach the spies that they need to do a better job on open sources of information in 33+ languages. Instead, go after the Departments of State, Commerce, Treasury, Agriculture, Homeland Security, and the elements of the Department of Defense that do not get adequate classified intelligence support. Establish Open Source Intelligence (OSINT) as a viable endeavor there, and in ten years come back and crush the spies in head on competition. Three "litmus tests" that the authors put forward are very helpful to those seeking to monetize disruptive new ideas: 1) Is there a population of clients that has historically been under-funded, under-staffed, and have as a result *gone without*? 2) Is this group likely to appreciate lower cost "good enough" solutions? 3) Is it possible to be profitable while providing these clients lower cost good enough solutions (e.g. monitoring risk around the world, at the sub-state level, something the spies simply cannot do effectively despite their $50 billion a year budget)? Another major lesson I drew from this book is that alternative channels can be phenomenally successful. One example the book uses: instead of selling low-cost throw away cameras through photography shops oriented to high-end perfectionists, move them into grocery stores and discount stores for the low-end market that could not afford a traditional camera. This *makes sense.* Hence, instead of trying to sell low-cost open source services to the people who think they have the most to lose from promoting them (the mandarins of the high-cost secrets), go instead to the least well-served end-users, the logisticians, acquisition managers, diplomats, etcetera, and get them to test localized rather than centralized solutions that then "explode" as other end-users see the low-cost success and em

This is one of the best books on business strategy to be published in a long time. If you haven't read the earlier "Innovator's Dilemma", don't bother, just read this book instead. One of the most interesting discussions in this book is just the definition of a disruptive innovation. It is not, as one might think, simply something new or technically innovative. More importantly, the disruption is relative to the current state of the business. In fact, the exact same innovation may be disruptive to some businesses, but sustaining for others. For example, online retailing, though technically innovative, is not disruptive to existing catalog retailers -- it is merely a more effecient method of doing business. However, it can be very disruptive to existing "bricks and mortar" businesses. I particularly like the academic bent to the book. While by no means a textbook, the authors strongly emphasize that you can't just look for trends in business, and try to predict futures based on trends. Rather, you need to create defensible, testable theory based from the trends, and only then can you start to develop a more scientific approach to strategy. For example, the authors cite popular books which champion opposite theories of vertical intergration. Rather than blithely saying the vertical integration is good or bad, they try to develop a theory for the contexts where this makes sense, or where outsourcing is a better way to operate. All in all, this book is not the fundamental treatise on strategy that Michael Porter's seminal book is, but it is still a must read for the modern business.

The innovator's solution helps answer all of the questions raised in Christensen's first book: the innovator's dilemma. The book is well researched -- to be expected. However, what is different is that the explanations are clearer and more business focused. I can apply these concepts and through processes to my work, which is the best thing, one can say about a business book. The chapters on growth and avoiding commoditization are particularly important in today's environment. To be sure that some of the concepts are proposed in an academic way and it takes a while to understand what the "more than good enough" and "less than good enough" concepts. Nevertheless, it works and is worth the time to reflect on what these concepts mean to your business and your future.Disruption is one of the forces in our society and business. It is one that this book explains very well. You do not have to read the first book "dilemma" to understand and get value out of this book, but once you read the "solution", you can gain a greater appreciation of Christensen's earlier works.

The first two chapters of this book are so well thought out and beautifully written that reading them literally made my muscles ache and toes curl. I've never had that strong a reaction to any portion of a business book before.The Innovator's Solution builds on Professor Christensen's landmark book, The Innovator's Dilemma, and explains how managers can overcome the bias he described in the earlier book toward being blindsided by new entrants bringing disruptive technology and products to bear.There's so much good material in The Innovator's Solution that it is hard to fairly summarize it. Let me attempt to give you an overview. The authors point out, based on the studies of others, that few large companies are able to grow faster than average. Worse still for managers, they point out that studies of those few which have grown faster are often contradictory in their findings. Best practices may be nothing more than an accidental reaction to a temporary situation. The authors go on to create a generalized theory of what needs to be done in every situation that a company may face in creating and responding to disruptive technologies and products. It's as though Michael Porter had taken his tomes on competitive advantage and provided a single theory for when to apply what. As such, this is one of the most advanced books for creating management processes for using disruptive technologies and business models to discomfit the competition in profitable ways.Appreciating Figure 2-3 on page 44 is worth the price of the book alone. The authors have created a graphic to explain how markets develop in growth and competitive characteristics. No one who ever sees this graphic depiction will ever think about competitive and development strategies in the same way again.Although the authors use examples from many different industries, the most detailed and compelling examples come from technology based companies and industries. I found the Sony examples particularly interesting for their repeated creation of new markets and business models. The book beautifully elaborates on the thinking processes that companies use to lose competitive advantage . . . and should help many leaders counter these wrong-headed thoughts and instincts.Why, then, does the book have so much theory? As the authors candidly point out at the end, there are few models for what they are proposing. As a result, they have cobbled together a theory from bits and pieces of concepts that appeal to them and seem to fit with one another. Only with experience can we tell how good this theory is. But it's worth understanding and considering. The authors seem to have missed the bulk of the examples of companies that have made continuing business model innovations in the last decade. That appears to be because they relied on the published literature prior to 2003 to find examples, rather than doing their own research from scratch. Since continuing business model innovators are seldom

In a previous work, The Innovator's Dilemma, Christensen examines why so many companies fail to remain competitive "when they confront certain types of market and technological change....the good companies -- the kinds that many managers have admired for years and tried to emulate, the companies known for their abilities to innovate and execute....It is about well-managed companies that have their competitive antennae up, listen astutely to their customers....invest aggressively in new technologies, and yet they still lose market dominance." According to Christensen, the innovator's dilemma occurs when the logical, competent decisions of management which are critical to the success of their companies are also the reasons why they lose their positions of leadership. I wholly agree with Christensen that a given problem must first be fully understood before efforts to solve it are initiated. The challenge is even greater when the given problem poses a dilemma which (in essence) involves a paradox: Whatever has been essential to success can also cause failure. What to do?In The Innovator's Solution, Christensen and Raynor offer a wealth of strategies and tactics to solve such a dilemma, revealed by their rigorous research on hundreds of different companies. In their book, they summarize "a set of theories that can guide managers who need to grow new businesses with predictable success -- to become disruptors rather than disruptees -- and ultimately kill the well-run, established competitors." More specifically, Christensen and Raynor suggest appropriate responses to situations such as these:* When a disruptive foothold is needed which competitors "will be happy to ignore or be relieved to walk away from" * When there are opportunities to help customers "get done more conveniently and inexpensively what they are already trying to get done"* When a low-end disruption is feasible and a business model is therefore necessary "that can make attractive profits at the discount prices required to capture customers at the low end of the market"* When determining the criteria for selecting members of a management team for a new ventureNOTE: Christensen and Raynor correctly suggest that among the most important criteria is sufficient prior experience with solving problems comparable with those the new venture seems certain to encounter.* When disruption (and competing against non-consumption in particular) "requires a longer runway before a steep ascent is possible."Christensen and Raynor have no illusions whatsoever about the difficulties of creating and then sustaining successful growth, however "growth" may be defined and measured. Moreover, they observe "To our knowledge, no company has been able to build an engine of disruptive growth and keep it running and running." Among the many reasons why I admire this book so much is its direct relevance to decision-makers in organizations which have already achieved success and seem to sustaining it. Better yet, le