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Take risks to be a successful innovator: Prof Clay Christensen

Last Updated: Mon, Sep 24, 2012 05:29 hrs

How does one best introduce Prof Clayton Christensen? Actually, does one have to!

For one, he is the Kim B. Clark Professor of Business Administration at the Harvard Business School, where he teaches Building and Sustaining a Successful Enterprise to second year students, Two, he is one of world's top experts on ideas concering innovation and growth, his ideas being used extensively in active operations in companies all over the world.

Three, he is the best-seller author of nine books and over a 100 articles. His book The Innovators Dilemma bagged the Global Business Book Award in 1997 and fourteen years later The Economist named it as one of the six most important books about business ever written. In the same year, (according to his own website), in a poll of thousands of executives, consultants and business school professors, Christensen was named as the most influential business thinker in the world.

What is little known about Professor Christensen is that he is a very religious person who worked as a missionary for his church in the Republic of Korea in the 1970s. He still serves the church. Clay, as his friends call him was also a Boy Scouts of America for 25 years as a scoutmaster, cubmaster, den leader, troop and pack committee chairman.

The Harvard professor answers some questions on his recently released book - How Will You Measure Your Life?. Unlike his earlier books, this one is about 'experiences that have shaped Prof Christense's life and personal faith and in the church.'

Rakhi's swayamvar in this year's MBA induction programmes

What's your new book about?

I have been pleased that people of all ages and stages of life have responded to this book because I wrote it -- with the help of my co-authors James Allworth and Karen Dillon -- at the request of my students. It's written for them and it's the culmination of years of discussions in my classroom. I desperately want them to leave business school with not just plan to have a great career, but also a plan to have a great personal life. I've watched too many people leave business school with great hopes and intentions, only to find themselves deeply disappointed with their lives years down the line. The book shares the theories my students and I have discussed throughout our semester for how to think about making good decisions in both your career and your life to ensure a better chance of leading a truly fulfilling life.

Have innovator's landscapes changed since you first wrote your books Innovator's Dilemma?

The Innovator's Dilemma was published just over 15 years ago, in 1997, and a lot has changed in the world of innovation since then. The biggest change, clearly, has been the advent of the internet. It introduced a huge opportunity for successful disruptive innovations and business models. Now some of the largest and most influential companies in the world Amazon, Google, Facebook, Yahoo! are internet companies. So this is a huge change. And the rise of the internet also illustrates something very important about disruptive innovation: a given technology, per se, is not inherently disruptive or sustaining. Rather, it is the way the technology is used within a business model that makes it disruptive or not. Thus some internet companies have been highly successful because they are disruptive, while other internet companies have been very successful and are sustaining innovations in their industries.

Another huge change, related to the internet, is the rise of mobile telephony and smart phones, enabling even more disruptors and also bringing communications services to hundreds of millions of people who didn't have access to a telephone 10-15 years ago.

One of the latest changes in the innovation landscape which we're still trying to understand is the idea of 'open innovation' where companies crowd-source innovation to outside experts, innovators, and entrepreneurs. There are a number of terrific scholars researching open innovation right now and trying to understand it better, so I'm excited to see what it can do and how it will affect the world of innovation.

You seem to be having a high regards for managers in companies. You believe they are more focused on their customers and work hard to create returns for shareholders.

I do have a high regard for the practice of management. Management, if practiced well, will have a huge, positive impact on the lives of a company's employees, customers, and shareholders. This is something I have written about in my most recent book, How Will You Measure Your Life . But the key is that management needs to be practiced well, which doesn't happen everywhere. It seems there are always stories in the news about how managers abused their power or acted negligently, which actions ended up hurting many people. But from my personal experience and that of many others, I do believe that good managers can have a tremendous positive impact on those around them.

Why haven't internet companies found the answer to the Innovators Dilemma? Why aren't there longer-lasting enduring internet companies?

First, let me say that a number of internet companies are incredible innovators and have become huge disruptors to all kinds of businesses. Amazon.com, for example, has had a very disruptive influence on many brick-and-mortar retailers here in the United States and elsewhere. And companies like Amazon, because they've been disruptive, have performed remarkably well over the past 10-15 years.

It is true that there are a number of internet companies that haven't been disruptive and have struggled to remain competitive. Part of this, I would argue, is because some of these internet companies weren't actually disruptive and didn't provide real value to their customers. Particularly in the early days of the internet, there were many companies whose businesses were purely speculative and didn't end up holding any water. Other industries, such as clothing retail, have helped stall disruption by jumping into the internet early and making it difficult for new disruptive competitors to enter.

How do public companies quit focus on quarterly results and focus on enduring long lasting innovation and changes?

That's a very good question, and certainly a challenging problem for many, many businesses. Really the only way that a company can quit focusing on quarterly results and focus on long-lasting innovation and changes is that they need to change the way they look at future investment opportunities and also change the ways they assess the risks of new venture models. I co-authored an article in the Harvard Business Review with Stephen Kaufman and Willy Shih in 2008 called " Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things" that describes many of these ideas. In short, businesses need to use a very different set of metrics and tools when evaluating and managing new innovation opportunities than they do when managing their existing portfolio of products on the market.

B-schools should pool resources to conduct placements collectively

You had predicted that the iPhone would not meet too much success. Any comments?

The iPhone has met significant success over the past 5 years, and Apple is a rare example of a firm that was able to enter a market with strong incumbents (Samsung, RIM, Nokia, Motorola) and beat those incumbents. In my research on disruptive innovation and technology competition, we found that in almost every single case with sustaining innovations, incumbent firms beat new entrants. When the iPhone was introduced, it was very much a sustaining innovation, not a disruptive innovation. The iPhone was (and Apple products are, generally) targeted at customers at the very top of the market who could pay the high price to afford it. It was not positioned disruptively at the bottom of the market or targeting an entirely new market. So based on the characteristics of the iPhone and the observation derived from a careful study of many industries that with sustaining innovations, entrants rarely beat incumbents, it seemed unlikely that the iPhone would succeed as a sustaining innovation, given the strength of the competitors it was up against.

One of my current areas of research, focusing on "jobs to be done," that was not very developed when I made my prediction back in 2007, sheds some light on why the iPhone was and has been so successful since its launch. In short, our 'jobs to be done' theory suggests that consumers don't look to buy products from specific categories but instead want to buy products fulfill a specific "job," or need, that they have. When we, as consumers, have multiple jobs or needs that arise simultaneously (i.e. at the same place and time) in our lives, if there is one product that can fill all of those jobs, that is the product we will choose. In designing the iPhone, Apple was able to identify multiple jobs that arose in consumers lives at the same time, such as listening to music, taking pictures, sending emails and text messages, all while looking intelligent and sophisticated, and figured out how to design a product that would allow customers to fulfill all of those jobs simultaneously. And that's why the iPhone has been so successful.

Compared to the US, in India the entrepreneurial spirit is not as energetic among MBA students. Is there something you would like to tell our students?

Having started a number of businesses, I know how difficult and time-consuming starting a business can be, but I also know how incredibly rewarding and fulfilling it can be at the same time. I look at some of the firms I've helped start, such as Ceramics Processing Systems, Innosight, Rose Park Advisors, and Innosight Institute, and I feel such pride at what each of them have been able to achieve. It's really been great, so even though it's difficult, I think it's very worthwhile.

I would also add that there are incredible opportunities for innovation and entrepreneurship in India. It's important to know that many of India's biggest successes in business, such as Infosys, and other enterprises like the world-renowned Aravind Eye Hospital, were started by entrepreneurs less than 1-2 generations ago. And there are still many opportunities to build and grow successful businesses. As you look around the country, there are clearly many needs in the market, and each of those needs represents a potential opportunity for an aspiring entrepreneur. It might be scary at first, but if you think you have a really good idea for a business, it might be an idea that could change the world.

You have not really touched upon health care in your work, any particular reason.

Healthcare is a significant interest of mine and is an industry with incredible opportunities for innovation on many levels. Back in 2008, I co-authored a book with Jerome Grossman and Jason Hwang called The Innovator's Prescription that discusses the many challenges facing the healthcare industry in the United States and elsewhere, as well as describes potential solutions for these challenges. It's a long book, but I believe it's very worthwhile, and it has won a number of awards for its insights and contributions. Because of the book's success, I've had the opportunity to meet and speak with many government leaders about opportunities to improve their healthcare system here in the U.S. and other countries. The think-tank I helped found, the Innosight Institute, has an entire practice devoted to healthcare policy innovation, and the consulting firm I helped co-found, Innosight, also does a significant amount of work for clients in the healthcare industry.

In India, businesses are often family. Deviation is usually looked upon negatively and as a divergent. Does the innovator's theory work in such businesses?

Whether you are pursuing sustaining or disruptive innovations, to be an innovator means that you need to take a risk and do something different, something better than your competition. Firms that are not willing to take those risks will not be successful innovators and will also be the most likely to be disrupted first. So if you want to be a disruptor or avoid being disrupted, you will have to take a risk and innovate.

Some of the most notable disruptive companies in the world right now are family-oriented and family-grown firms. Wal-Mart, which has caused a huge disruption in the U.S. retail world, and Tata, some of whose various businesses are major disruptors, are both family-grown firms. In other words, being a family-grown firm will not make you more or less likely to be an innovator or take risks. You just have to do it.

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