This fascinating book by Clayton Christensen, the world famous innovation guru and his
co authors, Scott Anthony and Erik Roth attempts to help executives anticipate industry
change. Christensen advocates a different kind of approach while trying to visualise the
future. Such an approach is driven more by conceptual understanding and less by data.
Managers often swear by data. When they attempt to do something that has not been done before, or when the future is going to be different from the past, this approach does not work. Data is only available about the past.
Christensen’s first book, “The Innovator’s Dilemma” explained why launching newgrowth businesses is so hard. His second book, “The Innovator’s Solution” explained
how to make the process of launching growth businesses more predictable. The
Innovator’s Dilemma and The Innovator’s Solution introduced three important theories of innovation: the disruptive innovation theory; the resources, processes, and values theory; and the value chain evolution theory. The third book, “Seeing What’s Next” illustrates how to use the theories from the two books to predict how innovation will change an industry. A number of case studies covering differing industries are provided in the book.
Disruptive & Sustaining innovation
According to the disruptive innovation theory, new organizations can use relatively
simple, convenient, low-cost innovations to displace powerful incumbents. Existing
companies can retaliate effectively when sustaining innovations, which improve existing
products, are involved. Airplanes that fly longer distances, computers that process faster,
cellular phone batteries that last longer, and televisions with better picture clarity are all
examples of sustaining innovations. But established companies almost always lose out to
Disruptive innovations, which introduce a new value proposition are of two types: lowend and new-market. Low-end disruptive innovations typically happen when existing products and services are “too good” and hence overpriced relative to the value existing customers can use. Nucor’s steel minimill, Wal-Mart’s discount retail store, Vanguard’s index mutual funds, and Dell’s direct-to-customer business model are good examples of low-end disruptive innovations. Such innovations begin by offering existing customers a low-priced, relatively straightforward product.
New-market disruptive innovations, occur when the characteristics of existing products
limit the number of potential consumers or force consumption to take place in
inconvenient, centralized settings. The Kodak camera, Bell telephone, Sony transistor
radio, Xerox photocopier, Apple personal computer and eBay online marketplace made it
easier for people to do something that otherwise required deep expertise or lots of money.
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