The Innovator's Solution

Clayton Christensen has a new book out: The Innovator's Solution: Creating and Sustaining Successful Growth. Co-authored with Michael Raynor, "this is a book about how to create new growth in business".

From the Boston Globe review (via Emergic):

Christensen and Raynor set out to demystify innovation so that established companies can capitalize on changes and deliberately create disruptions.

Among the tactics they recommend:
- Target only customers and markets that are unappealing to established competitors.
- Pursue customers at the low end of a market or, even better, "nonconsumers" who don't even use a product.
- Help customers find simpler, more cost-effective solutions, rather than inventing new problems for them to solve.
- Be impatient for profits, but patient for growth.
- Work on new ways to keep your company growing while it is still robust .

"A dearth of good ideas is rarely the core problem" for established companies, Christensen and Raynor write. "Potentially innovative new ideas seem inexorably to be recast into attempts to make existing customers still happier. We believe that many of the ideas that emerge from this packaging and shaping process as me-too innovations could just as readily be shaped into business plans that create truly disruptive growth."

From the jacket:

Innovation fails ... because organizations unwittingly strip the disruptive potential from new ideas before they ever see the light of day

None of this is very surprising news, if you've read 'The Innovator's Dilemma' - more an extension of the underlying theoretical model coupled with some prescriptive suggestions. That said, I'm going to get the book and give it a read because I read the interesting excerpt that Rajesh Jain also linked to. The excerpt (in addition to featuring the nice Theodore Levitt quote: "People don't want to buy a quarter-inch drill. They want a quarter-inch hole.") presents a couple of interesting case examples and underlines the importance and limitations of product category definition:

Competing with nonconsumption often offers the biggest source of growth in a world of one-size-fits-all products... RIM got its disruptive foothold competing with nonconsumption by bringing the ability to receive and send e-mail to new contexts such as waiting lines, public transit and conference rooms. But what's next?

One option would be for RIM to believe its market is structured by product categories, as in: "We compete in handheld wireless devices." If so, they'd see the BlackBerry competing with the Palm handheld, Sony's Clié, mobile-telephone handsets made by Nokia, Motorola and Samsung, and Microsoft Pocket-PC-based devices such as Hewlett-Packard's iPAQ.

In order to get ahead of these competitors RIM would need to develop better products faster than the competition. Sony's Clié, for example, has a digital camera. Nokia's phones offer short text messaging. If it defines these as the competition, RIM would need to build some of these features into its next-generation BlackBerry device. RIM's competitors, of course, would be thinking just the same thing. Which would create a headlong, arms-race-like rush toward undifferentiated, one-size-fits-all products that perform poorly any specific jobs that customers might hire them to do. Such products are likely to end up more like the Swiss Army knife: a pretty good knife, terrible scissors, a marginal bottle opener and a crummy screwdriver.

But what if RIM structured the segments of this market according to the jobs that people are trying to get done? Just from watching people who pull out their BlackBerrys, it seems to us that most of them are hiring it to help them be productive in small snippets of time that otherwise would be wasted, like reading e-mails while waiting in line at airports.

What's the BlackBerry competing with? When not using a BlackBerry, people often pick up a wireless phone. Sometimes they pick up the Wall Street Journal. Sometimes they make notes to themselves. Sometimes they stare mindlessly at the CNN Airport Network or sit with glazed eyes in a boring meeting. From the customer's point of view, these are the BlackBerry's most direct competitors.

So in addition to adding wireless telephony, BlackBerry could add financial news headlines and stock quotes to help compete more effectively with the Wall Street Journal. And mindless, single-player games or automatically downloaded Letterman-like top-ten lists might help the BlackBerry gain share against boredom. Features that do not help customers do the job that they hire the BlackBerry for wouldn't be viewed as improvements at all.

My takeaway, though, is not that product categories are, in themselves, a bad way to think but rather that product categories need to be structured around what the customer is trying to get done. Narrow and obvious definitions of the product category can limit the market potential of a new product as well as its usefulness to its intended customers - thinking about the customer's needs and usage scenarios will lead to a better and more valuable reformulation of the product and its features and functionality. In the Blackberry case, substitute the more function-centric definition "on-the-road productivity enhancement tool" for the what-it-is-centric "handheld wireless device".