20 years after Disruptive Innovation

The theory of disruptive innovation was introduced in the Harvard Business Review in 1995 and it has since become part of common business parlance. Twenty years after the publication of the original article, Clayton Chistensen, Michael Raynor, and Rory McDonald present a state of the art in a recent HBR article.

The authors fear that

disruption theory is in danger of becoming a victim of its own success. Despite broad dissemination, the theory’s core concepts have been widely misunderstood and its basic tenets frequently misapplied. Furthermore, essential refinements in the theory over the past 20 years appear to have been overshadowed by the popularity of the initial formulation. As a result, the theory is sometimes criticized for shortcomings that have already been addressed.

And they are not pleased either with the way the expression itself is being used.

Too frequently, they use the term loosely to invoke the concept of innovation in support of whatever it is they wish to do. Many researchers, writers, and consultants use “disruptive innovation” to describe any situation in which an industry is shaken up and previously successful incumbents stumble. But that’s much too broad a usage.

Nor how

executives with a good understanding of disruption theory tend to forget some of its subtler aspects when making strategic decisions.

They identify four points that get overlooked or misunderstood:

  1. Disruption is a process.
  2. Disrupters often build business models that are very different from those of incumbents.
  3. Some disruptive innovations succeed; some don’t.
  4. The mantra “Disrupt or be disrupted” can misguide us.

 

disruptive innovation

The latter part of the article reviews ways in which the authors’ thinking about disruptive innovation has evolved and it ends on a cautionary note:

Disruption theory does not, and never will, explain everything about innovation specifically or business success generally. Far too many other forces are in play, each of which will reward further study. Integrating them all into a comprehensive theory of business success is an ambitious goal, one we are unlikely to attain anytime soon.

See also A new version of Porter’s five-forces model.

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Congratulations Paul Krugman

the new Nobel recipient in Economics.

The Nobel Prize citation highlights two distinct but connected contributions: Mr. Krugman’s development of the “new trade theory” and his work on the “new economic geography.” International trade has a long history in economics, and for the bulk of the field’s history, patterns of trade have been explained by factor endowments and comparative advantage. Why does England export wool and Portugal export wine? The cold winters of Yorkshire produce really fluffy sheep and the banks of the Douro produce splendid grapes.

Yet comparative advantage does little to explain much of modern international trade, especially not trade within industries. (Economix Blog)

Euro article published

Cuadernos Latinoamericanos de Administración of Universidad del Bosque in Colombia have published a short article by my colleague John Yelvington and I on the volatility of the Euro.

The article is in English.

Alma mater hail!

McGill U logoIn the [2007] annual Times Higher-QS World University Rankings, McGill University placed 12th overall—the first time a Canadian university has cracked the top 15 to join Harvard, Oxford, Cambridge, Yale and others among the dozen best universities in the world. The school also ranked ahead of such prestigious US universities as Duke, Stanford, John Hopkins and Cornell. As with last year, Harvard topped the list, with Oxford, Cambridge and Yale tied for second.

McGill also had the distinction of being classed as the best public university on the continent. (McGill Reporter)

Sutton on Pfeffer

our three greatest living academic organizational theorists are, in my opinion, The University of Michigan’s Karl Weick, Stanford’s (now retired) James March, and Jeff Pfeffer. When I say “academic,” I mean scholars who have contributed important theories and published extensively in peer reviewed academic journals. If you look at the work of any organizational theorist who has ever lived, no one except for perhaps Nobel Prize Winner Herbert Simon exceeds the breadth and depth of Jeff’s contributions. (…)

What distinguishes Jeff from other star academic organizational theorists, however, is that he uses so much of this academic knowledge to influence what organizations and their managers actually do. Jeff isn’t as well known in managerial circles as Peter Drucker or Jim Collins. But I believe that his work should be as well-known because his ideas are so research-based and so practical. And unlike most star academics in his field, Jeff is deeply immersed in the stuff of organizational life. (source)