New View on Innovation from Christensen

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[This article was originally posted on LinkedIn December 24, 2014]

Clayton Christensen is, of course, well known for his work on disruptive innovation. For that reason, I was intrigued to read an article, co-authored by Christensen, in the January/February 2014 issue of Foreign Affairs in which disruptive innovation is NOT mentioned. I recommend this article to anyone interested in innovation, and very briefly summarize some highlights of it here.

The article—which also lists Bryan C. Mezue and Derek van Bever as authors—focuses on the role of innovation in market creation, and instead of dividing the world of innovation into disruptive and sustaining innovation, it introduces a different set of three categories:

  • Sustaining Innovation. This is essentially the same as Christensen’s normal sustaining innovation; innovations that, “replace old products with new and better ones.”
  • Efficiency Innovation. This is very similar to Melissa Schilling’s definition of process innovation, and, “it helps companies produce more for less.”
  • Market-Creating Innovation. This appears to encompass (at least) low-end disruptive innovations, and is defined as innovations that transform existing product and service offerings, “into products and services that are cheap enough and accessible enough to reach an entirely new population of customers.”

The market-creating innovation definition is very similar to (though still subtly different from) standard definitions of disruptive innovations. For instance, Michael Raynor has defined disruptive innovations as, “products or services that appeal to markets or market segments that are economically unattractive to incumbents, typically because the solution is ‘worse’ from the perspective of mainstream, profitable markets or market segments.” Nevertheless, disruptive innovation is not actually mentioned in the article (though one example of market-creating innovation is characterized as, “disruptive”), and the focus on this article is on the impact that market-creating innovations have on economies.

That impact seems to be the main thesis of the article: sustaining innovations maintain jobs; and increase customer satisfaction, efficiency innovations improve margins, but can actually eliminate jobs; only market-creating innovations make economies expand by creating new jobs as whole new supply chains are created around them.

Happy Holidays—and successful market creation—to all!