Clay Christensen: 5 observations on innovation

Five innovation observations from author and Harvard Business School professor Clayton Christensen.
Written by Larry Dignan, Contributor

ORLANDO, Fla. -- Clayton Christensen, author and Harvard Business School professor, is a big thinker when it comes to innovation.

On Wednesday, Christensen delivered a keynote here at the Gartner Symposium that left a lot to think about.

Here are five innovation takeaways worth pondering:

  1. Disruption comes from below. "If you're worried about what may kill you, look down," he said. For example, Toyota came into the U.S. auto market with cars that were low-end. GM and Ford answered with the Chevette and Pinto, but the low margin businesses weren't really worth the effort to the incumbents. Over the years, Toyota became more popular than domestic automakers and simultaneously moved upmarket with its Lexus brand. Now Kia and Hyundai are moving up the auto food chain to take on Toyota.
  2. Universities are on the verge of being disrupted. Christensen said that colleges are being disrupted by online learning. "We [Harvard and other top universities] measure goodness by the research that the faculty do. The universities that have the most research published in best journals judged to be best schools," he said. "Online learning institutions measure success by how good teachers they are. When you compare the quality of teaching at online schools vs. quality we have at Harvard, they are so much better than us even as we turn down our noses because they don't do research."
  3. Decentralization can reinvent health care. "Rather than expecting our hospitals to become cheap, we send people out to clinics," he said. "We bring technology to doctor offices and then homes to begin doing the things you do in a clinic. Drive the technology to the practice, nurses and pharmacists. There are tremendous opportunities for IT in health care."
  4. Pursuit of profit ratios distorts innovation. Companies are driven by profits and various margin ratios -- leading to the phenomenon where companies outsource low-margin businesses and ultimately entire businesses until nothing is left. That focus on profit percentages -- return on assets, for instance -- means we manipulate ratios instead of investing in things that grow the economy.
  5. If you organize product strategy around a job, the business can be defended. "Products are easy to copy, but integration around a job creates defensible differentiation," he said. One easy example: Ikea, a company built around "furnishing an apartment by tomorrow," he said. "Everything about Ikea is about organization and making things easy and simple." Christensen's big worry: America has lost focus on doing truly disruptive innovations by making products that are simple and affordable.

This post was originally published on Smartplanet.com

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