Clayton Christensen – the author of “disruptive innovation”

You may have seen the sad news last week that Clayton Christensen, author of “The Innovator’s Dilemma” that laid out the theory of “disruptive innovation” had passed away at the age of only 67.  Within the business world, we all use words like “disruptor” and “innovation” as if they have only a single meaning, and we generally take them as positive things that stir up the status quo and make us think about the future.

In his book Christensen wrote about disruptive innovation in a very specific way – that companies who had identified a customer need, then satisfied this by investing to develop a solution, were then victims of the same process being applied by smaller, nimbler companies.  In automotive distribution, ICDP and others tend to talk about disruptors in a slightly different sense – that the traditional model will be forced to change because a new player enters the market in some way with a product or service that offers customer benefit that we are unable to deliver with the old model.  It is not about “Mini-Mes” coming up with a different solution through a different evolutionary process, unless you include the effect of Tesla and possibly one or two Chinese players entering the market with a new product combined with a new type of sales approach.

The disruptors that tend to get mentioned most often such as Amazon and carwow are only disruptors in the narrow sense that they insert themselves into today’s business processes in a way that disrupts the flow, or more precisely they offer something to customers that the customers use to disrupt the flow.  If we did not have excess supply, then there would not be the pressure on pricing that creates the opportunity for retailers on Amazon to offer huge discounts directly, or dealers to sign up with carwow to find customers for the last few cars that will allow them to hit their monthly sales targets.  Without meaning to cause offence, the disruptors that we all talk about are actually parasites on the inefficiencies in the current business model – they depend on those inefficiencies for their lifeblood.  If the inefficiencies were removed, their lifeblood would be removed, and they would be disrupted rather than be the disruptor.

There is a parallel with the tech companies that Christensen considered, as a newcomer that offered a product or service that relied on the Apple or Microsoft ecosystems was in a similar parasitical position – they could win some business from the official Apple or Microsoft channels, but only as long as the ecosystems themselves continued.  To some extent Apple and Microsoft supported a number of these players by sharing technical information, sometimes ahead of new product launches.  They brought them into the fold because they could see that they filled a gap, and would attract more customers to their ecosystem.  Other newcomers who directly challenged the ecosystems themselves were the true disruptors and Apple and Microsoft have both had to adapt or in some cases give up, for example with the rise of Android phones that challenge iPhone supremacy and knocked Microsoft out of the race.

Looking back to automotive disruption, that leaves the question of whether we will see any true disruptors who directly attack the existing ecosystems of the major manufacturers, or whether disruption will instead be of the lesser variety that causes some local irritation, but leaves the underlying ecosystem still viable?  Or is the emphasis on the wrong part of the phrase “disruptive innovation” and that we should instead be focusing on innovation to together develop better ways of running the business in the interests of customers and other stakeholders, and in doing so cut off the lifeblood for those who profit today from the inefficiencies?