Here are my takeaways from Clayton Christensen in bulletform – material for appr 100 tweets:
. Three types of innovation – all are needed – keep the balance
. Sustaining innovation doesn’t lead to growth, for growth you need disruptive innovation. Most managers naturally stay focused on sustaining innovation – protecting the core business. There was an interesting perspective of how smart managers become stupid over night.
. Efficiency Innovation is always a safe choice, improving profits in the short term by eliminating jobs. The rational economic choice is predictably – in order of priority: 1) efficiency, 2) nothing – and only 3) disruptive innovation that can lead to growth. This explains why we have excess cash and still lack willingness to invest. The result is a 2-3% decline in jobs every year.
. The recipe for disruptive innovation to create growth is: 1) look for areas of non-consumption; 2) provide an offer which is accessible and affordable. The way to compete is by ‘going under and then up the value chain’ – several good examples provided, including Toyota vs American cars; Steel industry – integrated mills vs minimills; subcontractors – DELL vs Asus. The main company is happy to leave a segment or subcontract a part which is non-core for ‘20% less cost’– the revenue is unchanged and profits go up. The entrant is happy, because both revenue and profit goes up. This is accordingly the reason why successful companies fall – because they are driven by financial metrics like IRR and RONA, which in turn drive this behavior. This is how ‘smart’ becomes ‘stupid’ – when the disruption happens.
. Competitive response – who can kill us? How can we kill them?
. Split business to stay small and hungry. All of tomorrows successful companies are small today. As you grow you lose your understanding of where opportunity is and your ability to see it
. A low cost strategy only works with a high cost competitor (integrated mills vs minimills example – once the last integrated mill left a segment, prices dropped 20%)
. In many disruptions, there were no signal from the customers of the company who got disrupted. The quest for better products and better prices for the best customers – the pursuit for profit – drives this behavior. Hold this against an idea of a worse product and a worse margin for new customers – this is when doing the wrong thing is the right thing. This is also why businesses must be split – some disruptive innovation requires a different business model to understand the opportunity. When integrated in an existing business model, they will often look less attractive from a short term profitability perspective.
. Sustaining innovation often makes you compete against yourself – new product vs old product
The one line summary: Look for areas of non-consumption – go under and up – provide an accessible and affordable offer – which will be infinitely better than nothing – this is disruptive innovation – this is where growth comes from
… and this is what we need to do to create new jobs!
Some points from Implements intro by Stig Albertsen:
. Only 33% of ‘must win battles’ succeed.
. #1 barrier to change is ‘meaningfulness to frontline people’
. Only 14% of employees are fully engaged
. You have to ‘say yes to the mess’ – 75% of all things happen unplanned
. Humanize the organization – build communities of passion (knowledge and engagement)
. The next change leader will be the co-creating empathic expert