How Useful is the Theory of Disruptive Innovation?

Book description

In his 1997 book, The Innovator’s Dilemma, Harvard Business School professor Clayton M. Christensen provided an explanation for the failure of respected and well-managed companies. Good managers face a dilemma, he argued, because by doing the very things they need to do to succeed — listen to customers, invest in the business, and build distinctive capabilities — they run the risk of ignoring rivals with “disruptive” innovations. Christensen’s theory of disruptive innovation has gripped the business consciousness like few other ideas in recent years, and its predictive power is rarely questioned. But what is the right way to apply this theory? What are its core elements, and how predictive is it? In this article, authors Andrew A. King and Baljir Baatartogtokh examine these questions. To begin with, they found that the theory’s essential validity and generalizability has been seldom tested in the academic literature. The studies that have been published fail to provide confirmatory evidence for the theory. To assess the theory, the authors surveyed and interviewed experts on each of 77 cases discussed in Christensen’s two books, The Innovator’s Dilemma and The Innovator’s Solution (the latter with coauthor Michael E. Raynor). Based on the interviews, the authors found that many of the theory’s exemplary cases did not fit its conditions and predictions. A handful corresponded with all of the theory’s elements (for instance, the disruptions by salesforce.com, Intuit QuickBooks, and Amazon.com). But the majority were found to include different motivating forces, and some displayed unpredicted outcomes. Among them were cases involving legacy costs, the effect of numerous competitors, and changing economies of scale. The threats faced by the companies in the sample, the authors say, cannot be understood from a single viewpoint or solved by a single prescription. “Instead,” they write, “managers need to evaluate difficult problems from a number of different perspectives. In that spirit, we do not advocate discarding the theory of disruption. Rather, we recommend using its best parts in addition to classical approaches to strategic analysis.” Case studies about disruptive innovation “can provide warnings of what may happen,” the authors argue, “but they are no substitute for critical thinking. High-level theories can give managers encouragement, but they are no replacement for careful analysis and difficult choices.”