After the New Yorker piece, what of disruptive innovation?

I don't read a lot of books aimed at the MBA crowd, but one set I have liked, and sometimes cite here, are Clayton Christensen's on inovation and disruption.  As you may have heard, a recent article in the New Yorker by Jill Lepore took a gimlet-eye view to the whole concept and raised serious questions about Christensen's methods.  This was then summarized by another author in Slate and since then Christensen has responded in part via a Business Week interview.  He's also scheduled to be interviewed on PBS this weekend, so likely there will be further developments.  Indeed, after sketching this out on the commute home I discovered a Financial Times article whose tone is very similar to what I have written below.

Lepore's piece is definitely worth reading, though I definitely don't agree with Edward Tufte (another author I admire & often cite) that this was an "A+" article. There's also parts that can be just skipped over: Lepore engages in a shooting-fish-in-a-barrel exercise going after the army of business consultants and pseudo-journalists who mindlessly bleat "disruption!" and "innovation!".

Christensen has written a raft of books (I've read maybe 4 of them) as well as a pile of academic papers, so one New Yorker piece can't cover all the bases.  Indeed, one of Christensen's  complaints in the Business Week interview is that Lepore did not appear read any of the academic work that fleshed out the work or dealt with issues that arose after the books were published. An even bigger complaint of his is that Lepore didn't interview him and give him an opportunity to address the issues she raises.

the key issue Lepore raises is the very real possibility that Christensen has picked and trimmed his data.  In particular, she charges that he misclassified several companies in his analyses as failures, when they actually succeeded.  Some of this rings true, but a lot gets down to definitions.  For example, if a company sidesteps from the hard disk drive market to floppies, has it been successfully disrupted (as Christensen claims) or survived (as Lepore claims).

A gaping weakness in Lepore's piece is that she does not address one of the key observations in Christensen's books: that successful new entrants in a field can take on a powerful incumbent by gradually working their way up the food chain, with the incumbent willingly ceding lower margin businesses.  In particular, Lepore blames U.S. Steel losing market to mini-mills purely on labor issues, whereas Christensen in his books and his rebuttal interview shows that mini-mills progressively took over product segments.  That's a useful pattern to model other industries, whereas "labor trouble" is quite generic. This occurred to me before the Business Week article appeared; too bad I didn't beat them to the punch.

Another area of contention is the issue of whether large companies can successfully sustain small innovators.  Christensen cites many examples in his books of cases in which insufficient separation resulted in the main company squashing the promising subsidiary.  GM's Saturn division is a great example: originally intended to be very different from any other GM division, but ultimately lost all independence.  Delta's Song and United's TED discount airline forays show a similar pattern; we flew Song once and it was definitely a different vibe than Delta, but I predicted it would be killed off because it wasn't truly separate.  On the other hand, as Lepore points out, sometimes it seems to be some convenient post-hoc labeling to get things to work well.

Lepore also piles on Christensen's public failures, in particular an investment fund that quickly folded and his prediction that iPhone would flop.  Christensen says that  rules at his academic institutions prevented him from having any role managing the fund.  I'd also point out (and I am not positive on actively managed funds) that perhaps a fund concept is correct, but if you don't have the capital and perseverance, you may never see success (which is one reason I'm no fan of active management).  On the iPhone, Christensen admits failure but then tries to cram it into his theory: he had seen it as a sustaining innovation in cell phones whereas it ended up disrupting computers.  I think that's a stretch, or at least iPhone survived long enough to disrupt by being just a better cell phone but it was a success as a high end product first.

Ultimately, the challenge for any theory of business practices is that there a many, many ways for companies to fail, ranging from poor execution to the untimely death of a key player to utterly unpredictable world events. It is a mistake to see disruption as a panacea, as the bleating business  crowd sometimes seems to.  And by disruption, I mean in a very specific sense: to fit Christensen's model a technology must be new and it must be inferior to existing  technologies it is perceived to compete with. The appropriate strategy in this case is some combination of flanking and sniping: go for markets the incumbent has ignored (either because they don't yet exist or they are too small to bother with.  The creation of new markets, often by accident, is an idea that Lepore seems to have missed entirely. 

Lepore also falls into the naive trap that it is the incumbents who decide if a disruptive attack succeeds, rather than the customers. In particular, she claims that disruption theory is irrelevant to education or medicine, because teachers and doctors have strong dedications to their field.  Doesn't matter, and history shows it.  As my one adviser once pointed out, there used to be doctors who made careers performing ulcer surgery; Tagamet and the other H2 blockers essentially eliminated this specialty. CVS' MinuteClinics and similar concepts are significantly altering the primary care landscape, and platforms like FitBit will almost certainly radically change how doctors interact with patients. Similarly, MOOCs and the University of Phoenix institutions are changing the educational landscape.  I'm not one at all to claim these are all positive effects, but they are real.  Ignoring their reality is a certain recipe for being blindsided by the changes they are bringing on.

As you might expect, while I might watch companies I deal with for disruption, my strongest interest is in the genomics space. Here are a few that have happened or are worth watching

"Next generation" sequencing in some ways resembles a disruptive attack on the earlier automated fluorescent Sanger market.  In particular, when the  first NGS machines showed up, they really were useless for any of the previous applications of sequencing, plus they didn't play well with most of the existing ecosystem.  But, on a cost angle it's hard to claim the early 454 or Solexa instruments were cheaper, even if you  figure in all the ancillary equipment for Sanger (colony pickers & prep robots) they made obsolete.  It took a lot of method development, plus radical shifts in what to do with sequencing, that led to short read technologies dominating.  I also suspect, though I haven't made a close study, that a progressive nibbling away of markets occurred. I would tend to think that only recently, long after Illumina, 454 and the rest had overtaken Sanger, were many applications really switched over from Sanger.  Debate on that point welcome!

Ion Torrent was intended to be a disruptive attack on Illumina and 454, offering shorter, noiser reads but at low cost. Illumina, the incumbent, blunted that with the MiSeq, narrowing the cost gap between established and upstart. It would be an interesting study to see how the old 454 market has broken between Ion and Illumina, but I'm guessing Illumina has really taken the bulk and Ion can't claim much credit for driving Roche out.  It's worth addressing a criticism found in some of the comments on these various pieces: even if  a technology doesn't steal an existing market (one commenter claimed minicomputers didn't disrupt mainframes since mainframes maintained certain markets), having potential future markets denied by an upstart can be just as devastating.

On the other hand, Oxford Nanopore's MinION really does look like it fits Christensen's model  With a price point far below the incumbents, and the early results oozing out of the MAP showing much lower read accuracy, this is a potential disruptor. But, that will require either existing markets that can tolerate the low quality (and value the cost/portability  advantages) or entirely new markets that just don't need quality but can't exist without lower cost (or portability).

What other technologies might follow Christensen's disruptive path to success? I'd look for things coming out of the DIY Bio crowd: cheap&crude PCR thermocyclers perhaps -- but maybe those aren't really different enough.  Cheap digital PCR destroying the qPCR market? Perhaps a really cheap lab-on-a-chip technology replacing a lot of assays?  Or cellphone parts reconstituted as microscopes and cell counters.  The crystal ball is murky!  

I'm glad the Lepore piece came out, because it has made me think carefully about Christensen's work, and while I don't believe I was an excessive cheerleader before, I'll be even more careful in the future.  Conversely, it would be very unfortunate if many take away the idea that there is "no there there" in disruption innovation theory, and they can just ignore it.  The Lepore piece is a useful cool shower, but shouldn't be mistaken for an ice cold one.