Resources: Clayton Christensen on disruptive innovation

Clayton Christensen’s The Innovators Dilemma is a business classic, providing a framework for understanding how technological or business model innovations (or more usually, both) allow new businesses to gain a foothold in markets or to create new ones.

It’s been hugely influential – and has come in for its share of criticism.

This post contains links to a range of resources for getting up to speed with disruptive innovation, as well as some of Christensen’s other theories – particularly his ‘jobs to be done’ view of markets and product development, and modularity theory.

The Christensen Institute:

Brief introductions to:

… and some decent blog posts illustrating some of these topics in different fields

Talk at Google

This is my favourite overview – Christensen covers most of his key ideas clearly and with humour.

At Startup Grind

On how to build a disruptive business…

And talking with Marc Andreessen about his ideas:

On the a16z Podcast

Highly recommend these episodes:

  1. Beyond Disruption Theory: Marc Andreessen and Ben Horowitz talking about how disruption theory has been important to them, with other insights into entrepreneurship in general:

2. Competing Against Luck: Another conversation with Marc Andreessen about how the Christensen’s understanding of disruption theory has evolved

At Said Business School, Oxford

I’ve just discovered these while writing this post – will add a note later once I’ve watched them.

Lecture 1: Disruptive Innovation:

Lecture 2: Management

Lecture 3: The Process of Research

The innovation in your head…

… isn’t an innovation yet.

Our definition of innovation refers to something rather specific:

A change in the processes by which an organization transforms labor, capital, materials and information into products and services of greater value.

Clayton Christensen, Efosa Ojomo and Karen DillonThe Prosperity Paradox

It’s simply an idea.

It’s an innovation when you’ve done the hard work of making it, trying it in the real world, built the wrapper, and made something the right number of people will pay* to use.

*They might pay in money. They’ll definitely pay in time, attention and effort.

Value: more of more?

  • Make something useful
  • For lots of people
  • Capture some of that value so that you can do it again

The more useful what you do is, for more people*, the greater the potential is for your organisation to be sustainable and successful.**

BUT you probably need to start by building something small first: the minimum viable product for the minimum viable audience.

*An resource or innovation that only exists in your head isn’t useful… yet.
**That is, if you get the wrapper – structure, systems, money flows – in the right alignment.

Podcast recommendation: Mark Andreessen on Software Eating the World (2019)

Here’s Mark Andreessen on the A16z podcast summarising what it means for software to eat the world:

[In the original 2011 essay] I made three claims, which I would say increase as you go in audacity or arrogance, depending on your point of view. Or just flat out hubris, which is another possibility.

The first claim is that any product or service in any field that can become a software product will become a software product.

So if you’re used to doing something on the phone, that’ll go to software, if you’re used to doing something on paper, that’ll go to software. If you’re used to doing something in person that can go to software, it will go to software. If you’ve had a physical product – think about things like… telephone answering machines, tape players, boom-boxes, all the things Radio Shack used to sell, now they’re all just apps on a phone… There used to be a physical product called a camera, you know, that got vaporised. And by the way, physical newspapers, physical magazines.

If it can become bits, it becomes bits. So why does it become bits? Well, if it’s bits it’s better in a lot of ways. Bits have zero marginal cost, so they’re easier to replicate at scale and become much more cost effective. A lot of bits just drop to free. And by the way they’re much more environmentally friendly, which is an increasing thing for a lot of people. You can change bits much more quickly, you can innovate much more quickly, add new features, add new capabilities. So there’s just lots and lots of reasons why it’s good to get things from physical form into software if you can. And so anything that can get into software will get into software.

The next claim… is that every company in the world that is in any of these markets in which this process is happening therefore has to become a software company.

So companies that historically either did not have a technology component to what they did – or maybe had the classic conception of technology in business which is sort of like, IT, we’ve got these gnomes in the back office and they’ve got their labcoats and they’ve got their mainframes and they kind of do their thing … – there’s that, but then there’s modern software development – especially things like customer experiences: what’s the actual interface with the customer? Any company that deals with customers, especially consumers, is going to have to radically up its game in terms of its ability to build the kind of user interfaces and experiences that people expect these days.

So every company becomes a software company.

And then the most audacious claim is that as a consequence of [claims] one and two, is that in the long run, in every market, the best software company will win.

That doesn’t mean necessarily that it will be a new company that starts as a software company that enters an existing market that wins, but it also doesn’t necessarily mean that an incumbent that adapts to being a software company will win… And you see this in many industries including healthcare and insurance where you see these new pure-play software companies entering these incumbent markets and – usually from a position of youthful naivety, or maybe they’re wrong and maybe the ideas stupid, or maybe it’s Uber and Lyft entering the taxi market and maybe they just have a fundamentally better software driven approach. – and then you’ve got incumbents scrambling to try to figure out how to become software companies.

Marc Andreessen – a16z podcast

Andreesen goes on to outline some of the challenges to incumbents of adapting to the world of software – he argues that it’s a very different type of product and successful software companies usually have different types of workers…

The rest of the podcast is great too – highly recommend.

Resources about setting prices

A high enough price

If you want to help a lot of people, you’ll need to do your job well and for a long time – something that won’t be possible if you don’t have any money.

Charging a reasonable price is a key part of this – but how do you know what’s reasonable? Here a some resources I’ve found helpful for thinking about prices:

Resources on setting prices

By Seth Godin: Here (read this one first), here, and here. Also, Episodes 1, 2 and 9 of Startup School (audio) – or see the page 29 of the transcript here… actually, open the transcript and search ‘price’ and go from there. Lastly, the Money Flows episode of Akimbo.

Profit First by Mike Michalowicz is good on this too (and not as grasping as it sounds) – here it is on the Read to Lead podcast.

It’s worth checking out resources for Freelancers too – even if you’re working on pricing in an organisation.

I highly recommend the thinking explored by Robert McGuire in ep.154 of Ed Gandia’s High Income Business Writing: What’s the Bare MINIMUM you Should be Charging Clients?

Also, try Book Yourself Solid on Read to Lead

This is recommended by Sharky: Price Communicates your Value on The Art of Value

No shortage of money

There is no money shortage.

It might not be where you’d like it, and there might not be people lining up to give it to you for whatever you think it would be well used for… but there’s plenty of money.

Whose money?

It’s usually best if the money comes directly from the people you’re serving – call them customers, clients, partners, or even beneficiaries. This gives you one set of people to focus on*, one main audience to talk with and listen to, one set of incentives driving what you do: meeting their needs and serving them better.

Changing the market

It may be – especially if you’re running a non-profit – that the direct consumers of what you offer don’t have the money to buy it in its current form. In this case you have a few options:

  • Do a better job of convincing your users of the value that you offer
  • Find ways to make it cheaper – strip your product down to the smallest possible offering that makes a difference to your customers, and sell that.
  • Work out the scale at which your original product becomes cheap enough for your target clients to buy. Then sell to people who can afford it now, and gradually move down the market as the product gets better and cheaper.
  • Develop a two-tier business model where one set of customers pays a high price for your product (possibly for a premium version) , covering enough costs to enable you to subsidise it for another set of customers. This subsidy can be direct (you sell the same product to beneficiaries for a lower price) or indirect (the premium product covers enough of your running costs that you can afford to sell a lower-spec product for a lower price. In the case of direct subsidies it can be difficult to draw clear lines about who gets a discount, and who pays full price.
  • Look for the other side of a two-sided market – this means that one set of customers is in some sense ‘buying’ the other set: donors ‘buy’ impact and transformation; advertisers ‘buy’ access to the attention of customers (see Google and Facebook); corporate-social responsibility departments ‘buy’ reputation and visibility. If the sound of this makes you uneasy, good – we need to be clear-eyed about this, even in the world of well-intentioned charity.

*Okay, your product might several distinct groups of people – but they’re all ‘customers’

Seth Godin on good teachers

Here’s the secret, I think: teaching is empathy.
If you have a bad teacher, who is strict for no reason, who says “there will be a test,” who is strict for no reason, who glosses over things that the class doesn’t understand, or spends time on things the class does – that teacher is a bad teacher because they are selfish.

What it means to be a good teacher is to see the world through the eyes of other people.

This is frustrating… So if we’re in an airport and you get to a door and you can’t figure out how to open it, the person who designed the door has lacked empathy. They said, “I know how to open the door, I just need to don’t make it obvious.”

No. You do.

So empathy is where it all lives, for me, and the only way I know how to develop that as a teacher is to teach, is to figure out how to find a human and get them to be able to ride a bicycle. Or to write a letter. Or to juggle. If you can teach someone how to juggle, you can teach somebody almost anything.

Seth Godin – Instagram live 8/28

Zen Hae on cross-pollination, imitation and innovation in Indonesian Peranakan literature

The pattern of hybridity, imitation and innovation we talk about under the label “combinatorial innovation” isn’t limited to cars and computers – it’s central to (and has been discussed for far longer) in literature and the arts. In a paper from the Jakarta International Literary Festival 2019, Zen Hae unpacks the example of Indonesian-language writing by Peranakan* writers as a disruptive force in pre-Independence Indonesia.

Karya-karya mereka digolongkan sebagai “bacaan liar” oleh lembaga penerbitan kolonial Balai Pustaka. Mereka menerima novel atau roman sebagai buah modernitas bukan hanya dari Barat, tapi juga dari Cina Daratan. Dengan penuh semangat mereka menerjemahkan, cerita silat, roman sejarah, juga kitab-kitab keagamaan dan ajaran moral Konfusianisme dari negeri leluhur mereka. Pada tahap berikutnya mereka bukan lagi menerjemahkan, tetapi menyadur, kemudian lagi membikin karya asli, baik tentang kehidupan di Cina Daratan maupun di Nusantara – yang terakhir ini kerap terjadi dalam genre cerita silat. Bersama pengarang-pengarang nasionalis-Kiri di sisi lain, mereka menggunakan Bahasa Melayu Rendah secara politis untuk menandingi dominasi Bahasa Melayu Tinggi yang diinisiasi oleh linguis kolonia…

Zen Hae – Perihal Pagar dan Siasat Para Pengarang dalam Menafsir (Kembali) Batas, Jakarta International Literary Festival 2019

Their works were classified as “wild literature” by the colonial publishing house, Balai Pustaka. They received novels and stories as the fruit of modernity not only from the West, but also from Mainland China. They eagerly translated the silat (martial art) stories, historical romances, and also religious books and the moral teachings of Confucianism from the land of their ancestors. In the next stage they were no longer translators but adaptors, and later creators of original works about life in China or in [what would become] Indonesia – this last seen frequently in the genre of Silat stories. Along with nationalists of the left, they used Low Malay to challenge the domination of the High Malay used by colonial linguists…

Zen Hae – On the Fences and Strategies of Authors in (Re)Defining Borders, Jakarta International Literary Festival 2019

*Broadly speaking, ‘Peranakan’ means people of Chinese descent who have assimilated to varying degrees into the local cultures of the Malay Peninsula or the Indonesian archipelago. More here.

Canon: fences and trampolines

I’ve just spent a thoroughly enjoyable day at the first Jakarta International Literary Festival. I sat in on two Symposiums*: The Southern Common Themes Dilemma, moderated by Nukila Aman and featuring Legodile Seganabeng, Sharlene Teo, Intan Paramaditha, and Nukila Aman; and The Need for a Southern Canon, moderated by Stephanos Stephanides and featuring Ramon Guillermo, Hilmar Farid and Adania Shibli.

The atmosphere was friendly and inclusive, even if the themes were challenging, and the presentations were rich and thought-provoking.

Whose canon?

The idea of canon – the body of texts regarded as ‘core’ or ‘important’ – was central to the discussion:

  • Is a Southern Canon (in opposition to the Western one) even possible?
  • If possible, is it desirable?
  • Who shapes the canon?
  • Who gains from the canon, and who loses out?
  • What does a canon enable?
  • What are its dangers, and who might it exclude?

Who sets up the library of world literature?

Intan Paramaditha

Canon as emergent network

Ramon Guillermo shared some interesting research about networks of production and reception of South-East Asian literature between major cities, and I think this idea is fruitful with respect to the canon itself: canon as a dynamic network of texts and readers. Books gain prominence (‘become more canonical’) in the network through connection to readers and other books. Readers and writers draw themselves into the conversation by latching onto books, pulling themselves in and re-configuring the network as they go by drawing new connections between books and readers – often by the simple act of saying “you should read this – it’s great.”

No-one makes the canon. We can take a snapshot of it in time, but we can’t freeze it or control it (though people have tried, even succeeded – for a while).

Canon as fence

From the edge of the network, the canon looks like a fence. Connections – or rather, connections involving you – are few and tentative. It’s hard to be heard. There may even be influential voices talking over you, directing attention elsewhere, unpicking your connections.

There isn’t a way to ‘fix’ these voices – the very fact of their being so wrong from where we’re standing means that they don’t matter. The answer to being on the edge of the network is to strengthen the parts of the network that matter to you – your conversations, your books… talk to the people who get it, and not worry about the rest. If your contribution resonates – if it speaks to enough books and people in the net – it will route itself around points of resistance (like packet-switched data), tie you closer into the network and – either quickly, or slowly (it may be that someone else makes the connections for you after you’ve died in obscurity) – you’ll find yourself somewhere in the canon.** Other people may not like you being there, but that’s fine – it’s not for them (and they’re probably not for you).

It’s not for you.

Seth Godin***

Canon as trampoline

If the canon is simply the most visible part of the network of readers and books (and writers), its existence is inevitable for as long as we read and talk about books.

Stephanos Stephanides suggested that the advantage of a canon is that it gives us something to point at – a way of seeing the network, of drawing attention to how it operates that allows us to critique and deconstruct it.

He’s right: this is canon as trampoline, a net(of)work we jump on and push against, launching ourselves to places we wouldn’t – couldn’t – go in its absence. The harder we jump – diving head-first into what we love, stomping two-footed on what we object to – the further we fly.

Foundation. Launchpad. Cannon.

*The plural for this may be symposia, but it sounds ridiculous

**It’s worth remembering, though, that the canon excludes almost everyone – including most of those at the center

***Seth Godin has a lot of good stuff to say about getting books and ideas into the world.

Seth Godin on listening to feedback

The most important thing to remember now a simple sentence: “It’s not for you.”

So you run an Indian restaurant on 6th Street in New York and you have a $24 spicy vindaloo, if you finish it you get it for free, it’s that spicy.

And someone comes to the restaurant and says, “I hate spicy food,” it’s really obvious what you should do, and it’s not take it off the menu.

It’s saying to that person “Vaselka, Ukrainian food, is two blocks away, nothing in the restaurant is spicy, here’s their phone number, thanks for stopping by.”

“What I sell is not for you.”

Being able to do that is hugely powerful.

So I look at the 100 most loved books ever written, all of them have more one-star reviews on Amazon than any book I’ve ever written – all of them. Because if you’re going to write To Kill A Mockingbird or Harry Potter a lot people are going to read it, and if a lot of people are going to read it, some of them are going to need to say, “It’s not for me.” And the way they do that is by writing a one-star review.
But Harper Lee shouldn’t have read her one-star reviews because it’s not going to make her a better writer tomorrow. All it says is “I don’t like spicy food.”

Seth Godin on The Jordan Harbinger Show Ep 234.