Business

‘Disruptive innovation’ theory comes under scrutiny

James Yang for the Boston Globe

For Harvard Business School professor Clay Christensen, the hits keep coming. But they’re not the type that Christensen has grown accustomed to since the publication in 1997 of his mega-bestseller “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.”

The widely acclaimed book detailed Christensen’s theory of “disruptive innovation” to explain why big, successful companies often lose out to industry upstarts. That theory vaulted Christensen to rock-star status in business and academic worlds, allowed him to command lucrative speaking and consulting fees, and launched a cottage industry preaching the Christensen-inspired gospel of how firms perish by not adapting fast enough to new innovations and competitors.

But over the past 15 months, the hits have been of a decidedly different nature. The soundness of “disruptive innovation” has come under attack from several quarters, with the most serious criticisms lobbed at Harvard Business School’s Allston campus from across the river in Cambridge. Some of Christensen’s findings and conclusions have been questioned in both popular and academic publications, most recently the MIT Sloan Management Review.

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Critics don’t dispute that new technologies and innovations emerge to sometimes overwhelm companies and even entire industries. But they argue that the disrupters rarely win, and the legion of executives — from startup founders to venture capitalists — who have enthusiastically embraced Christensen’s theory and built strategies around it might be in for a rude shock.

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“People are going to fail,” said Brent Goldfarb, an associate professor at the University of Maryland’s Smith School of Business and a past critic of some of Christensen’s findings. “The problem is that the theory is used as gospel and then it gets in the way of true critical thinking.”

The MIT Sloan Management Review article — “How Useful is the Theory of Disruptive Innovation?” — was written by Andrew King, a business professor at the Tuck School of Business at Dartmouth College, and Baljir Baatartogtokh, a graduate student at the University of British Columbia.

Their article doesn’t just question Christensen’s past findings and assertions. It goes to the very heart of Christensen’s early work on disruptive innovation, claiming that only about seven of the 77 business case studies covered in “The Innovator’s Dilemma” and Christensen’s later, coauthored book “The Innovator’s Solution” (2003) actually fit Christensen’s own criteria of what constitutes disruptive innovation.

The authors surveyed and interviewed 79 experts, both in and out of academia, about the business examples cited in Christensen’s two books, from an overview of the beef processing industry to online booksellers such as Amazon.com.

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Among other things, the authors note that nearly one-third of the 77 business cases examined in Christensen’s books show no evidence of embattled firms engaging in “sustaining innovation” when confronted by young rivals with new technologies and business approaches.

“Sustaining innovation” — the technologies and services developed by companies to maintain and expand existing markets — is a critical element of Christensen’s theory. Christensen argues that established companies often do an excellent job coming up with innovations to please their best customers, but those efforts come at the expense of responding to “disruptive innovations” by upstarts targeting different market niches with new products.

The authors’ bottom line: Some companies are displaced by disruptive innovations, but it’s not nearly as common as Christensen has laid out. As a result, they conclude, the theory of disruptive innovation is not always a reliable guide on how companies fare — and should react — when confronted with new rivals.

“The overall story that Christensen tells sort of doesn’t hold water,” King said.

In an e-mail interview, Christensen fired back at Baatartogtokh and King, who has previously sniped at Christensen’s theory in little-read academic papers and at conferences. Their article, Christensen said, “doesn’t demonstrate a thorough understanding of how disruption plays out in different industries.”

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As examples, he noted how some disruptions occur very fast, such the rapid changes within the computer industry, while other disruptions take decades to play out, such as decline of big steel as smaller, more efficient steel “minimills” gradually gained bigger and bigger shares of the market.

‘The article had great ambitions for what it initially set out to achieve, but due to a number of flaws it ultimately fell short of those goals and the potentially useful contribution it could have made.’

Clay Christensen, Harvard Business School professor and creator of “disruptive innovation” theory, on a critical MIT Sloan Management Review article 

“I felt the rigor of their research was greatly lacking,” Christensen said. “The article had great ambitions for what it initially set out to achieve, but due to a number of flaws it ultimately fell short of those goals and the potentially useful contribution it could have made.”

The MIT Sloan Management Review piece comes as adherents and admirers of the disruptive innovation theory celebrate the 20th anniversary of Christensen’s coauthoring of a Harvard Business Review article that first explored the concept of “disruptive technologies.” Christensen’s “Innovator’s Dilemma” greatly expanded on that HBR article and ultimately propelled him and his theory into mainstream fame.

Martha Mangelsdorf, editorial director of the MIT quarterly magazine, said the article’s timing and content had nothing to do with any perceived rivalry between MIT and Harvard. Before the article was published, she said she met with and offered Christensen a chance to respond to King and Baatartogtokh’s findings, but he declined.

King and Baatartogtokh’s article added academic weight to a New Yorker magazine article published last year that also cast doubt on Christensen’s theory. The Chronicle of Higher Education, a weekly publication covering the higher-ed industry, also recently published an article looking at the growing criticisms of disruptive innovation among business professors and researchers.

The New Yorker article — “The Disruption Machine: What the gospel of innovation gets wrong” — was written by another Harvard faculty member, Jill Lepore, a historian and staff writer at the New Yorker. In a breezy and distinctly nonacademic writing style, Lepore lambasted Christensen’s theory and some of his findings in “Innovator’s Dilemma,” most notably pointing out that a disk-drive firm that Christensen portrayed as a faltering victim of disruptive innovation actually survived and thrived after heated competition with upstart rivals.

She also questioned Christensen’s expansive application of the theory to fields beyond for-profit companies, such as higher education (as covered in Christensen’s coauthored 2008 book “Disrupting Class”) and health care (Christensen’s coauthored 2008 book “The Innovator’s Prescription”).

In an interview with Bloomberg-Businessweek after Lepore’s New Yorker piece, Christensen dismissed her criticisms and acknowledged he was “mad that a woman of her stature could perform such a criminal act of dishonesty — at Harvard, of all places.”

Today, Lepore only expresses regret that closer academic scrutiny of Christensen’s theory hadn’t been conducted before King and Baatartogtokh’s recent article.

“That evaluation has been a long time in coming,” she said. “For years, people who’ve pointed out the theory’s flaws, inconsistencies, and inadequacies have been shouted down or ignored, as if belief in disruption were a matter of faith and to question it on evidentiary grounds amounted to heresy.”

Christensen’s career has been one of success and high praise. Born in Salt Lake City, he holds a bachelor’s degree in economics from Brigham Young University (1975) and a master’s degree in applied econometrics from Oxford University (1977), where he studied as a Rhodes Scholar. He earned his MBA from Harvard Business School in 1979.

In the 1980s, he was named a White House Fellow and served as an assistant to US Transportation secretaries Drew Lewis and Elizabeth Dole. He also was a management consultant with Boston Consulting Group and helped cofound Ceramics Process Systems, a Massachusetts advanced materials company. In 1992, he was awarded his doctorate in business administration from Harvard Business School and joined its faculty the same year. He’s been at HBS ever since.

Friends and colleagues of Christensen say he’s distressed about what he sees as unfair criticism. In recent years, Christensen, 63, has also been struggling with his health, diagnosed with follicular lymphoma (a type of blood cancer) and suffering a stroke, both in 2010.

Christensen has said he always welcomes evidence of proven anomalies to his theory, saying many theories are actually strengthened when they undergo scrutiny. He acknowledged that his theory, and its findings, are constantly undergoing changes.

“As a result the theory has become even more detailed and precise,” he said. “For example, we’ve spent a lot of time thinking about what types of technology are required to enable disruption. This has helped us understand why disruption has occurred in some industries but not others.”

He added, “At the end of the day, the test of a theory is its usefulness, and many companies and executives have found disruption a powerful lens to help them respond to shifts in their industries.”

Jay Fitzgerald can be reached at jayfitzmedia@gmail.com.