Tuesday, April 18, 2017

Criticisms of The Theory of Disruption


The theory of disruptive technology that Clayton Christensen wrote in his book "Innovator's Dilemma," is one of the most influential business ideas of the last 25 years. However, up until now, some people questioning this theory. At the beginning of this semester, I read a paper from MIT Sloan titled "How Useful is The Theory of Disruptive Innovation." I also have the discussion about this in Management Disruptive Technology class.

There are four elements in the theory of disruption about how the incumbents are disrupted by the new entrants: 1) The incumbents that are improving their products along the trajectory of innovation; 2) The pace of sustaining innovation exceeds customer needs; 3) The incumbents have the capability to respond but failed to exploit it; 4) The incumbents flounder as a result of the disruption.

Andrew A. King and Baljir Baatartogtokh, the authors of the MIT Sloan paper, did surveys and interviews with experts on each of 77 cases explained in The Innovator’s Dilemma. It turned out that only a few of them exactly fit with four elements of the theory of disruption. Not all of the incumbents in the cases were developing products along the trajectory of innovation and surpassed customer needs. 39% of incumbents were unlikely to be able to counter the threats of disruptive innovation and 38% of the cases sustaining innovations were not displaced as a result of the disruptions. Then, only 9% of the cases that conform to the theory.

Clayton Christensen responded to that critique by saying that Andrew King and Baljir Baatartogtokh's research was lacking. They only interviewed one or two experts from each 77 businesses mentioned in the Innovator's Dilemma; while Christensen had interviewed more than 25 industry experts and employees in each industry's cases. Christensen also tried to learn what was happening in that industry by carefully studied the industry-wide production data. Furthermore, Christensen claimed that the research related to the theory of disruption had done over the years and it is shown that there are differences between industries regarding how they are being disrupted. This phenomenon is not captured by the MIT Sloan paper.

In my opinion, regardless of the correctness of the theory, it is not only about which cases are disruptive or not. Beyond all of these debates, this theory is useful for anticipating the disruptive innovations that threaten the business. One thing that needed to be pointing out is incumbents often overlook about the emergence of new entrants that usually comes with lower quality products. Then, these entrants can improve their quality and beat incumbents. After knowing about this threat, the next important things is planning how to deal with that. Some big companies probably create an independent team to do the research about new innovations so that they will be ready if there are changes in the market.  In conclusion, the disruptive innovation still becomes one phenomenon that we need to consider when running a business to avoid disruption from other company.

Reference:
http://sloanreview.mit.edu/article/how-useful-is-the-theory-of-disruptive-innovation/
https://www.bostonglobe.com/business/2015/10/24/clay-christensen-explains-defends-disruptive-innovation/fmYOKIJXOSPPMquj8HQM1O/story.html?p1=Article_Related_Box_Article


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