Clayton Christensen on disruptive innovation and growth

About the event

Professor of Business Administration at Harvard Business School, Christensen delivered lectures on Management Studies at Saïd Business School.

Christensen is a leading authority on innovation in commercial enterprises and gave a detailed insight into his theory of disruptive innovation - which he originally proposed in his first book, The Innovator’s Dilemma, published in 1997 – creating a foundation for the comments and insights throughout the three lectures.

In the first of his lectures, Christensen illustrated his theory of disruption by using a real-life example from the steel industry, describing the process by which mini mills were able to enter the steel market in the 1960s and force long-established integrated steel companies out of business by gradually offering customers a wider range of lower cost steel products at a cheaper price.
Christensen gave examples of how disruptive innovation has contributed to the success of leading companies such as Toyota, Sony, Walmart and Indian refrigerator manufacturer, Godrej.  He explained how Godrej have enabled India’s economy to grow through the introduction of the disruptive innovation of low cost fridges.

Christensen shed light on the widespread effects that this kind of innovation can have on an economy - not only have Godrej created jobs in the production, distribution, selling and servicing of fridges, but they have also enabled smaller retailers to sell chilled products that they would not have been able to sell before. Conversely, Christensen showed how a recent lack of disruptive innovations may explain why the economies of America, England and Japan have stagnated. “There are micro-economic causes for macro-economic prosperity or stagnation and it’s something you would only see if you watch how companies do their work as oppose to analysing it from the level of government policies,” Christensen commented.

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In the second of his lectures, Christensen gave an insight into the “panda’s thumbs” of management thinking – dated practices that hinder management decision-making, thus limiting the profitability of companies. He gave the examples of managers focusing too heavily on gross margins rather than on net profit and refusing to reduce their production costs as a way of avoiding disruption by smaller companies. He showed how silicon manufacturers, Dow Corning, avoided disruption by lower cost Chinese competitors by reducing their production costs by 15% and by changing the way they measured profitability.
Christensen explained his ‘Job to be Done’ theory, showing how companies can improve their efficiency by changing their focus. He used a real-life example of how a fast-food restaurant increased their milkshake sales through a detailed examination of the need behind the customer’s decision to buy a milkshake, i.e. the ‘job to be done’, rather than by simply examining at the customer profile or the quality of the product itself.

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In his final lecture, Christensen examined the process of research and the complexities involved in developing a theory. He drew particular attention to the importance of finding anomalies in the research process and the potential that they can have to shed light and give greater insight into phenomena. “If, in fact, you see what you predicted you’d see you might feel like a good researcher. But if what you are trying to do as a researcher is develop a good theory, you hope that you don’t see what you expect to see because it’s only with stuff that this cannot account for that you can improve the theory,” Christensen commented. He gave examples of how examining anomalies has helped researchers gain a deeper understanding of issues throughout history such as why mankind cannot fly and explained how they have helped him develop his theory of disruption.

Watch the third lecture

Clay Christensen is Professor of Business Administration at Harvard Business School and a Visiting Professor at Saïd Business School, University of Oxford.

The Clarendon Lectures in Management Studies, jointly organised by Oxford University Press and the Said Business School,  have been given annually since 1997 by a leading international scholar. The work from Clayton Christensen will be published as a book by Oxford University Press.