Business Strategy Innovation

The Innovator's Solution: Creating and Sustaining Successful Growth (Summary)

by Clayton M. Christensen and Michael E. Raynor

Why do so many successful companies fail? It's not because they stop listening to their customers. It's because they listen too closely to their best customers. These loyal, high-paying clients demand better, faster, and more powerful versions of existing products, trapping companies in a cycle of 'sustaining innovation' and leaving them completely blind to the simple, cheap, and 'good enough' products that are about to steal their entire market from the bottom up.

Focus on the 'Job to Be Done'

Customers don't simply buy products; they 'hire' them to do a specific 'job' in their lives. Understanding the real jobā€”the progress a customer is trying to makeā€”is the key to creating products that people will eagerly pull into their lives.

A fast-food chain trying to sell more milkshakes discovered that many customers 'hired' a milkshake for their long, boring morning commute. The 'job' was to be a thick, one-handed breakfast that lasted the whole drive. This insight led them to make the shakes thicker, not just 'tastier', to better perform the specific job of alleviating commute boredom.

Your Biggest Competitor Is Often 'Nothing'

The most fertile ground for disruptive growth isn't taking market share from rivals, but targeting 'non-consumption'ā€”situations where potential customers can't afford or access a product and therefore use nothing at all.

Before the personal computer, small businesses used 'nothing' for their accountingā€”just pen-and-paper ledgers. Early, simple PCs from Apple and IBM didn't compete with powerful mainframes; they competed with non-consumption, creating a massive new market by making computing accessible for the first time.

Disruption Requires a Separate Home

Established companies cannot nurture a disruptive innovation within their existing business model, as its lower margins and different customer base will be seen as a failure. Disruptive ventures need their own autonomous business unit with the freedom to create a new model.

Hewlett-Packard successfully launched its disruptive inkjet printer business by creating a completely separate division in Vancouver, WA, far from its corporate headquarters and its established, high-margin laser printer business. This new unit had the freedom to develop a different business modelā€”sell cheap printers, make money on inkā€”that the parent company would have rejected.

The Lines of Disruption Are Predictable

Disruption is not a random act. Companies can analyze industries to identify which competitors are motivated to flee a market segment and which are motivated to attack it, allowing them to strategically choose where to play and how to win.

Minimills like Nucor disrupted the steel industry by first attacking the low-quality rebar marketā€”a segment the integrated steel giants were happy to abandon for higher-margin products. Once they had a foothold and improved their technology, the minimills moved upmarket, predictably forcing the incumbents into smaller and smaller segments.

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