by The Editors
Editor’s note: Clayton Christensen died on Jan. 23, 2020. Here we present some of his seminal HBR pieces through an adaptation of the introduction to the book The Clayton M. Christensen Reader.
Clayton M. Christensen is best known for his theory of disruptive innovation, in which he warns large, established companies of the danger of becoming too good at what they do best. To grow profit margins and revenue, he observes, such companies tend to develop products to satisfy the demands of their most sophisticated customers. As successful as this strategy may be, it means that those companies also tend to ignore opportunities to meet the needs of less sophisticated customers — who may eventually form much larger markets. An upstart can therefore introduce a simpler product that is cheaper and thus becomes more widely adopted (a “disruptive innovation”). Through incremental innovation, that product is refined and moves upmarket, completing the disruption of the original company.
Christensen’s work on disruption is nuanced and often misunderstood. Not every hugely innovative technology is “disruptive” (though you wouldn’t know that from the way journalists and tech enthusiasts throw the word around). Not every start-up will beat the incumbent. Not every big company is going to be disrupted. Reading Christensen’s original Harvard Business Review articles on disruption yields a more accurate picture of his theory and how businesses can prepare for and overcome the threat he describes.
Much of that picture comes from the case studies embedded in each article. Christensen was a deliberate storyteller, and his business examples serve as parables; compelling and memorable, they give readers the context to apply his ideas to their own industries. Those who know Christensen’s work are familiar with the success of steel minimills (disrupters!) and the fate of Digital Equipment Corporation (disrupted!); they know what goes into the creation of the best milk shake (a product with a job to do) and why the iPod was the MP3 player that really took off (an innovative business model). In “How Will You Measure Your Life?” Christensen reflects on his use of storytelling to persuade one powerful CEO to change strategy and go to the bottom of the market. “If I’d been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I [told him the story of the minimills and] taught him how to think.” Christensen’s articles do the same for readers.
Here we’ve collected the most essential and influential of Christensen’s HBR articles. In them, Christensen examines many different pieces of the disruption puzzle. Understanding those pieces is critical for strategy teams, product development units, and organizational leaders. They include:
The threat of disruptive innovation: the core theory of why bad things happen to good companies. “Disruptive Technologies: Catching the Wave” is the big-picture “why is this a problem” article warning established companies that a seemingly rational concern with profit margins can have disastrous results. It outlines several classic examples — primarily disk drives, along with Apple and Digital Equipment Corporation — to show that there is a pattern big companies should pay attention to.
Organizational structure: “Meeting the Challenge of Disruptive Change” describes how leaders can structure their organizations to allow the kinds of innovation that stave off disruption. Here Christensen runs Digital Equipment Corporation through his framework to show how it can be used to explain that company’s infamous reversal of fortune.
Product innovation: “Marketing Malpractice: The Cause and the Cure” again asks why good managers struggle to innovate successfully, this time focusing on the discipline of product innovation itself, rather than on organizational and management structures. By understanding the tasks that customers look to a product for (the “job to be done”), a company can develop offerings — products, services, and whole brands — that customers truly value. Christensen uses the “milk shake” example to show how product developers should be considering their task.
The financial tools in the way: Established financial incentives often make it unattractive for companies to innovate. In “Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things,” Christensen and his coauthors target metrics such as discounted cash flow, net present value, and earnings per share, along with attitudes towards fixed and sunk costs. They suggest that leaders take up other methods for evaluating investments — ones that consider future value.
Business model innovation: Product innovations might be necessary, but to be truly disruptive, they often need to be delivered to the market through new business models. In “Reinventing Your Business Model,” Christensen and his coauthors describe how to determine if your company needs a new business model and what makes one successful, using examples ranging from Apple’s iTunes to CVS’s MinuteClinics.
The role of business models in M&A: To reinvent their business models, companies sometimes decide to merge with or acquire another firm. But the failure rate of M&A is somewhere between 70% and 90%. “The New M&A Playbook” explains that the failures often stem from a lack of clarity about why a merger or acquisition is being pursued. Companies need to consider whether they are really after business model reinvention or are simply looking to bolster their current model. These purposes demand very different implementations of a deal — from paying the right price to determining how employees and other resources will be handled.
Where your industry’s future growth lies: If disruption is predictable, we should be able to step back and look at markets as a whole to understand how disruption will change an industry over time. “Skate to Where the Money Will Be” describes a pattern of evolution of markets and industries that can help managers see where their next source of profits will be — so that they don’t find themselves outpaced by another company in that new sphere.
The extendable core: How do you know how big a particular threat to your business actually is? “Surviving Disruption” helps you calculate the strengths of your own potential disrupter’s business model along with your own relative advantages and determine what conditions could keep your disrupter from triumphing. Christensen and his coauthor build on the jobs-to-be-done theory and introduce the “extendable core” — the part of a disrupter’s business model that enables it to keep undercutting you as it creeps upmarket into your territory.
Disruptive innovation, revisited: The ideas summed up in the phase “disruptive innovation” have become a powerful part of business thinking in the 20 years since they were introduced — but they’re in danger of losing their usefulness, because they’ve been misunderstood and misapplied. In “What is Disruptive Innovation?” Christensen and his coauthors revisit the essential concepts, show the importance of using the term precisely, and share what they have learned from two decades’ application of the idea in the field.
What makes good management theory: By testing a business theory with the scientific method — by conducting a reality check — we can learn whether the theory will really help us predict the future. “Why Hard-Nosed Executives Should Care About Management Theory,” argues for a more rigorous testing of theories so that managers can gain a better sense of whether an idea is relevant to their specific situation.
A personal strategy: Christensen extends his examination to the personal realm, arguing that bad things sometimes happen to good people because those people lack a strategy for their lives. In “How Will You Measure Your Life?” he uses concepts from business to challenge readers to manage their careers and personal lives in a way that leads to lasting satisfaction.
To Christensen, the role of every general manager is to lay a foundation for future growth. To that end, managers need to understand disruptive innovation, the threat it poses, and how to lead their teams and organizations to create growth that can keep pace with ever-evolving technologies, industries, and customers.
This article is adapted from The Clayton M. Christensen Reader (Harvard Business Review Press, 2016)