Seeing What's Next: Using Theories of Innovation to Predict Industry Change
Clayton M. Christensen, Erik A. Roth, Scott D. Anthony
by Clayton M. Christensen, Erik A. Roth, Scott D. Anthony
When a disruptive innovation is launched, it changes the entire industry and every firm operating within in
This book is an intensely theoretically book. The analytics and case studies used are elementary, but the conceptual frameworks will have true strategists buzzing. Departing from his usual formula, Christensen and co-authors Scott Anthony and Erik Roth, aim "Seeing What's Next "at those who watch industries from the outside and must make important decisions based on what they see.
This book argues that it is possible to predict which companies will win and which will lose in a specific situation-and provides a practical framework for doing so.
Most books on innovation-including Christensen's previous two books-approached innovation from the inside-out, showing firms how they can create innovations inside their own companies. This book is written from an "outside-in" perspective, showing how executives, investors, and analysts can assess the impact of a new innovation on the firms they have a vested interest in.
In Seeing What's Next, the authors take on the challenge of helping executives and managers consider the likelihood of disruptive technology changes occurring and how they should evaluate their potential responses in light of current information. The analysis looks at both the perspective of the companies that will be disrupted and displaced as well as those who are leading the disruptions.
The first few chapters reinforce the theories on Innovation and quickly leads us to a framework for analysis in line with the title. Sensing Change, Competitive Battles, Non-market forces and Strategic Choices are the four dimensions of this framework that apply the principles of Disruptive Innovation. Using this framework it is not only interesting as to how the authors are able to explain the outcomes in the past but also enable us to forecast the future of competitive battles and technology trajectories with reasonable accuracy. The authors do mention at the end of the book that there will be exceptions that may not fit into this theoretical framework, but the aim of all theories is to improve our understanding of the phenomenon under study.
Five industries are analyzed in detail in this book - Education, Health Care, Aviation, Semi Conductors and Telecom in addition to a chapter on global competitiveness of companies and countries. These chapters and detailed, and explain the technological issues with simplicity for a non-technocrat to understand. At the end there is a quick summary of concepts used in this book, which can be termed as an executive summary of The Innovator's Dilemma and The Innovator's Solution in one chapter.
In this book, the authors proclaim that good theory provides a robust way to understand important developments, even when data is limited. And theory is even more helpful when there is so much data that it is tough to discern what information really matters. Theory helps to identify signals of change amongst a deluge of meaningless "noise". Three big theoretical frameworks are brought together in this work, as outlined in previous Christensen's books.
Firstly the Disruptive Innovation Theory - refers to how new entrants to an industry can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents. Disruptive innovation can be of two types: Firstly low end disruptions which deliver a low priced alternative to customers who are overshot by existing offerings or Secondly the new-market disruptions, which create new growth by making it easier to for people to do something that historically required deep expertise or wealth.
Secondly the Resources, Processes and Values Theory - that helps to explain why existing companies have such difficultly in grappling with disruptive innovations. The theory holds that resources (what an organization has), processes (how work is done), and values (the criteria by which resources are allocated) collectively define the organization's strengths as well as its weaknesses and blind spots.
Thirdly the Value Chain Evolution Theory - this framework helps to assess whether an organization has made the organizational design choices to compete successfully. The golden rule underlying this theory is that companies ought to control any activity or combination of activities within the value chain that drive performance along the dimensions that matter most to customers. In other words, they should integrate to improve performance along dimensions that are "not good enough" for what customers need and outsource what is "more that good enough" (those features and improvements that customer don't need and won't pay more to use).
In Part I, "How to Use Theory to Analyze," they identify the "signals of change" which indicate where the best opportunities are; explain how to size up competitors; how to identify which strategic choices are of greatest importance; and then explain how nonmarket factors influence innovation.
Then in Part II, "Illustrations of Theory-Based Analysis," they apply various TBA tools when examining the future of education, aviation, semiconductors, healthcare, and telecommunications; using the same tools, they also assess strategies for both corporations and countries. Then in the "Conclusions" section, they step back and recap where they have taken their reader, suggest areas for further investigation, and provide some final thoughts. I especially appreciate the Appendix in which the authors provide a summary of the book's key concepts.
It is a great book for anyone who must strategically plan for any organization.
The book tells readers how to use theories of innovation to predict change. Don't miss the helpful appendix that summarizes the previous two books.
About the Author
Christensen is one of the brightest stars in business right now, and is recognized as one of the world's leading experts on innovation. He is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School, with a joint appointment in Technology & Operations Management and General Management
Scott D. Anthony is a Partner at Innosight LLC and Erik A. Roth is a consultant in McKinsey & Company's Boston office.
Have you read a good book recently that is topical and useful? If you'd like to share your review, do write in to us. The review should be between 300-400 words.
Email this article | Respond to this article