June 2002

The Rules of Innovation

Continued from page 4

By Clayton M. Christensen

Disrupt Competitors, Not Customers

The fourth factor in successful innovation is minimizing the need for customers to reorder their lives. If an innovation helps customers do things they are already trying to do more simply and conveniently, it has a higher probability of success. If it makes it easier for customers to do something they weren't trying to do anyway, it will fail. Put differently, innovators should try to disrupt their competitors, never their customers.

The best way to understand what customers are actually trying to do, as opposed to what they say they want to do, is to watch them. For example, when interviewed by the college textbook industry, students say they would welcome the ability to probe more deeply into topics of interest that textbooks just touch on. In response, publishers have invested substantial sums to make richer information available on CDs and Web sites. But few students actually use these innovations, and little growth has resulted. Why? Because what most students really are trying to do is avoid reading textbooks at all. They say they would like to delve more deeply into their subjects. But what they really do is put off reading until the last possible minute-and then cram.

To make it simpler and more convenient for students to do what they already are trying to do, a publisher could create an online facility called Cramming. Like all disruptive technologies, it would take root in a low-end market: the least conscientious students. Semester after semester, Cramming would then improve as a new "cramming-aid" growth business, without affecting textbook sales. Conscientious students would continue to purchase textbooks. At some point, however, learning the material online would be so much easier and less expensive that, tier by tier, students would stop buying texts. This path of innovation has a much higher chance of success than a direct assault that pits digital texts against conventional textbooks.

The observed probabilities of success in innovation are low. But these statistics stem from the sum of sustaining and disruptive strategies, many of which are attempted in organizations whose resources, processes and values render them incapable of succeeding. Many innovators draw lessons from observing other successful companies in very different circumstances and attempt to succeed with just one or a few links in a chain of interdependent values. And many fail after assuming that what customers say they want to do is what they actually would do.

Hence, the observed probabilities of success don't necessarily reflect what the true likelihood of success can be, if the critical variables in the complex and dynamic process of innovation are understood and managed effectively. Indeed, success may not be as difficult to achieve as it has seemed.