Innovation talk: Disruption of disruption theory only an interruption

This has been the year that disruption got disrupted. Or, avoiding the hyperbole, 2014 has been the year when Clayton Christensen's famous theory of disruption came under more sceptical scrutiny than ever.

Harvard business professor Christensen is probably the world's pre-eminent business theorist, famous for inventing the concept of disruptive innovation in his landmark 1997 book, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail.

Disruption, as he framed it, is the David-and-Goliath myth writ large for the business world, the process by which a Goliath-style incumbent can be successfully challenged by a smaller David-style rival, whose advantage lies in exploiting new technologies that allow for cheaper, nimbler new products that undercut the Goliath’s more advanced, unwieldy ones. Christensen further distinguished between new market disruption, whereby new technologies arrive to disrupt the status quo, and low-end disruption, whereby cheap, modular products become good enough for most users, so that the more expensive, integrated incumbents struggle to compete.

All this has been a cornerstone of business theory ever since, the stuff of nightmares for chief executives of established, industry-leading companies, and the stuff of dreams for plucky young entrepreneurs, to whom disruption has become a guiding mantra.

Scathing attack

But back in June, Harvard academic

Jill Lepore

wrote a scathing piece in the

New Yorker

, pouring scorn on Christensen’s methodology and theory. For all the holes she punched in Christensen’s work, however, the logical fallacies in Lepore’s article were apparent. But it prompted an extensive public conversation. In late October, Christensen gave an interview to

Henry Blodget

, of

Business Insider

, defending his theory. That interview has led to a recent discussion among the more cerebral technology commentators, illuminating many of Christensen’s theoretical strengths and weaknesses. Above all, in the interview, Christensen returns to the one company that seems to defy disruptive gravity: Apple.

“If Apple keeps its strategy of very high prices, their share of that market will diminish,” Christensen said. “And so, ultimately, they’ll make a lot of profit on 100 units. And Samsung, if they win, they will be making all of the units in the industry, but no profit. Either way, you’re screwed, but that’s the theory behind why I said Apple won’t succeed, because in the end modularity always wins.”

This insistence on Christensen’s part that Apple faces inevitable disruption illustrates a key blind spot of his theories: the case studies he used for his framework were all business-to-business scenarios, where the customer prioritised price and features on a matrix, because that’s what businesses do when making large purchasing decisions. Thus, Christensen’s model is predicated on a “rational” market.

But transpose those models to regular consumers, and you get multiple extra factors beyond just price and features. As we are now well aware, thanks to the work of behavioural economists such as Daniel Kahneman, real people are thoroughly irrational in their decision-making, and price and features are only two of many criteria people use to determine their purchases.

Elaborating on this, the extremely perceptive technology writer Ben Thompson pointed out that Christensen's theory of low-end disruption was flawed because it ignored a crucial factor in the purchasing decisions people make: user experience. As Thompson put it: "User experience is unique in that, like emotional jobs-to-be-done, a product can never be 'too good', and, like technical jobs-to-be-done, it is always possible to improve – or to fall behind."

Multi-dimensional world

Considering factors such as user experience is like introducing an entirely new dimension to the equation, as if we were going from a two-dimensional to a multi-dimensional world. The key here is that user experience matters for actual users, whereas businesses don’t tend to put any priority on user experience – there’s a good reason that corporate software is usually so appalling. Thus, the difference in a consumer market isn’t between integrated and modular, as Christensen puts it, but between differentiated and undifferentiated.

In the mobile space, we are seeing how, far from fulfilling Christensen’s prophecy, Samsung is actually succumbing to low-end disruption, rather than Apple, because its phones, ultimately, are not very differentiated from those of HTC or Motorola – they have a glass screen and run variants of Android – whereas Apple’s phones are the only ones that run iOS.

That pattern, of products appealing to consumers for all sorts of emotional reasons such as the excellence of their design and ease of use – their differentiation – isn’t factored into Christensen’s model of disruption, yet it is seen in all sorts of industries, from automobiles to architecture to education.

Ultimately, however, Christensen has provided us with a vocabulary to identify a very real phenomenon: how industries are vulnerable to new competition. Rather than being dismissed, I suspect that Christensen’s work will be expanded and refined as we begin to incorporate those extra dimensions into his framework.