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How Useful Is the

Theory of
Disruptive
Innovation?
FALL 2015 Few academic management theories have had as much
influence in the business world as Clayton M. Christensens
theory of disruptive innovation. But how well does the theory
describe what actually happens in business?

Andrew A. King
Baljir Baatartogtokh

Vol. 57, No. 1 Reprint #57114 http://mitsmr.com/1LezH20


I N N O VAT I O N S T R AT E G Y

How Useful Is the Theory


of Disruptive Innovation?
Few academic management theories have had as much influence THE LEADING
in the business world as Clayton M. Christensens theory of QUESTION

disruptive innovation. But how well does the theory describe How widely
applicable is
what actually happens in business? the theory of
BY ANDREW A. KING AND BALJIR BAATARTOGTOKH disruptive
innovation?
FINDINGS
The theorys essen-

tial validity and
THE TURMOIL OF BUSINESS COMPETITION has often been likened to a stormy sea. generalizability have
seldom been tested
Gales of creative destruction, economist Joseph Schumpeter wrote, periodically sweep through in the academic
industries, sinking weak and outdated companies.1 In the mid-1990s, the winds of change appeared literature.
Many of the theorys

especially powerful, threatening even some of the strongest businesses. Enter Clayton M. Chris- exemplary cases
tensen, a professor at Harvard Business School who is now considered one of the worlds leading did not fit all its
conditions and
experts on innovation and growth. In his 1997 book, The Innovators Dilemma, Christensen pro- predictions well.
vided an explanation for the failure of respected and well-managed companies.2 Good managers Theories can pro-

vide warnings of
face a dilemma, he argued, because by doing the very things they need to do to succeed listen to what may happen,
customers, invest in the business, and build distinctive capabilities they run the risk of ignoring but they are no
substitute for
rivals with disruptive innovations.3 thoughtful analysis.

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Christensens theory of disruptive innovation has connotations in the English language, that people
gripped the business consciousness like few other would then flexibly take an idea, twist it, and use it to
ideas. In a review of enduring business books, The justify whatever they wanted to do in the first place.7
Economist called the theory one of the most influen- So, what is the right way to use the theory of disrup-
tial modern business ideas.4 Other commentators tive innovation? What are its core elements, and how
have noted that the theory is so widely accepted that predictive is it? We decided to examine these ques-
its predictive power is rarely questioned.5 The theo- tions by taking a closer look at the theory.
rys influence has spread far beyond the business Our first discovery was that, despite the theorys
world. Christensen and his associates have proposed widespread use and appeal, its essential validity and
disruption as a framework for thinking about vexing generalizability have been seldom tested in the aca-
social problems such as poverty, lack of access to demic literature. Christensens initial research,
health care, illiteracy, and unemployment.6 The the- which formed the kernel of the theory, was based
ory, or variations thereof, has been used in so many mainly on the hard disk drive industry in the 1970s
settings that Christensen himself has expressed un- and 1980s.8 He then published a few peer-reviewed
ease with some of the ways the theory is being articles on the industry.9 Other scholars have pub-
applied. In an interview with the editor-in-chief of lished discussions of related case examples (notably
the Harvard Business Review, he said, I never about Polaroid Corp., Smith Corona, and the disk
thought that the word disruption has so many drive industry),10 but few quantitative tests have
been performed.11 The ones that have been pub-
lished fail to provide confirmatory evidence for the
SAMPLE OF 77 DISRUPTIVE INNOVATIONS
This sample of disruptive innovations corresponds to the 75 cases listed in The theory, suggesting instead that full-blown disrup-
Innovators Solution and two cases discussed at length in The Innovators Dilemma. tions of the type that Christensen describes are rare
and that most managers respond effectively to
802.11 (Wi-Fi) Endoscopic surgery Oracle
Amazon.com Fidelity Management Palm Pilot,
potentially disruptive threats. 12 In his defense,
Barnes & Noble Flat panel displays RIM BlackBerry Christensen has said that the lack of numerical
Beef processing (Sharp and others) Personal computers support is the result of the blunt measures used in
Bell Telephone Ford Plastics statistical analysis.13 More nuanced case analysis, he
Black & Decker Galanz Portable blood argues, shows that the theory of disruptive innova-
GE Capital glucose meters
Blended plastics tion explains the failure of leading businesses, time
Google Salesforce.com
Bloomberg
Seiko watches after time and industry after industry.
Boxed beef Honda motorcycles
Hydraulic excavators SonoSite Spurred on by this argument, we decided that to
Canon photocopiers
Catalog retailing Inkjet printers Sony understand how to apply the theory of disruptive inno-
Intel microprocessor Southwest Airlines vation, we needed to delve into the case histories of
Charles Schwab
Intuits QuickBooks SQL database software dozens of disruptions identified by Christensen and his
Circuit City, Best Buy
Intuits TurboTax Staples
Cisco coauthor, Michael E. Raynor.14 In order to examine the
Japanese steelmakers Steel mini-mills
Community colleges numerous examples and appreciate their nuances, we
JetBlue Sun Microsystems
Concord School of Law surveyed and interviewed one or more experts on each
Kodak Toyota
Credit scoring
Toys-R-Us of 77 cases discussed in The Innovators Dilemma and
Dell Kodak Fun Saver
Korean auto Ultrasound The Innovators Solution, where Christensen and
Department stores
Digital animation manufacturers University of Phoenix Raynor lay out the elements of the theory.15 (See
Linux Unmanned aircraft Sample of 77 Disruptive Innovations.) To encour-
Digital printing
MBNA Vanguard age unbiased responses, we granted all respondents
Discount department
stores McDonalds Veritas and Network
anonymity. (See About the Research.)
MCI, Sprint Appliance
Disk drives After interviewing experts on each case, we had a
Merrill Lynch Wireless telephony
eBay
Xerox further discovery: Many of the theorys exemplary
ECNs Microsoft DOS
Minicomputers cases did not fit four of its key conditions and predic-
Email
Embraer and Canadair Online stockbrokers tions well. A handful corresponded well with all four
regional jets Online travel agencies elements (notably, for example, the disruptions by

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Salesforce.com, Intuits QuickBooks, and Amazon. ABOUT THE RESEARCH
com). However, a majority of the 77 cases were We surveyed and interviewed 79 experts on 77 proposed examples of disrup-
tion identified by Christensen and Raynor. To identify suitable experts, we
found to include different motivating forces or dis-
scoured academic publications and reached out to industry associations, pub-
played unpredicted outcomes. Among them were lishers, authors, and academic librarians. In all, we contacted 138 people; of
cases involving legacy costs, the effect of numerous those, 82 agreed to participate in our study, and 79 finished one or more sur-
competitors, changing economies of scale, and shift- veys about a specific case. Fifty-eight percent of the surveyed respondents
were academics; 18% were nonacademic authors of book-length historical
ing social conditions. Discussions with our industry
analyses; 10% were financial analysts of the industries involved; and 14% were
experts also helped us to identify the most generally participants in the industries. Of the academics, 63% were from business
applicable elements of the theory of disruptive inno- schools, with 46% of the academics from business schools ranked in the top
vation as well as to define other ways managers can 20 in 2015 by Bloomberg Businessweek. For consistency across the samples
guide businesses through stormy times. and to maintain objectivity, we created survey questions to test the four main
elements of the theory: that there existed incumbents with sustained innova-
tion; that they overshot customer needs; that they retained the capability to
Four Key Elements of the Theory respond; and that they floundered as a result of the disruption.i
of Disruptive Innovation To prevent bias, we explained the survey as a study of industry transitions.
Before surveying and interviewing experts on each A minority of experts (11%) responded to our request to answer a written ques-
tionnaire. The majority preferred to answer the questionnaire over the phone
of the 77 cases, we identified four key elements of the
(85%) or in person (4%). Following live surveys, we informed people of the topic
theory of disruption: (1) that incumbents in a mar- of our study and engaged in open discussions about how the case matched the
ket are improving along a trajectory of sustaining theory. Of our live interviews, 87% of the people agreed to be recorded.
innovation, (2) that they overshoot customer needs,
(3) that they possess the capability to respond to dis- use it. Thus, a company whose products are
ruptive threats, and (4) that incumbents end up squarely positioned on mainstream customers cur-
floundering as a result of the disruption. rent needs will probably overshoot what those
1. Incumbents are improving along a trajectory customers are able to utilize in the future.19 To
of innovation. In The Innovators Solution, Chris- illustrate their point, Christensen and Raynor use an
tensen and Raynor argue that one of the key elements example from the 1983 computer industry, when
of disruptive innovation is that in every market people first started using personal computers for
there is a distinctly different trajectory of improve- word processing. Typists often had to stop their fin-
ment that innovating companies provide as they gers to let the Intel 286 chip inside catch up. But
introduce new and improved products.16 An in- todays processors offer much more speed than
cumbent businesss improvement trajectory results mainstream customers can use.20
from what they call sustaining innovation the 3. Incumbents have the capability to respond
year-by-year improvements that all good compa- but fail to exploit it. Christensen and Raynor claim
nies grind out.17 (See Four Elements of the Theory that incumbent companies frequently possess the
of Disruptive Innovation, p. 80.) Usually, the sus- capabilities needed to succeed, but managers fail to
taining innovations improve the products in a few employ them effectively to combat potential disrup-
established value areas. For example, auto compa- tors. 21 Disruption has a paralyzing effect on
nies might continue improving the horsepower or industry leaders, they write. With resource alloca-
torque of their engines. As Christensen and Raynor tion processes designed and perfected to support
explain, good managers strive to make better prod- sustaining innovations, they are constitutionally un-
ucts that they can sell for higher profit margins to able to respond.22 Competitors with disruptive
not-yet-satisfied customers in more demanding innovations lull incumbent companies into com-
tiers of the market.18 placency by avoiding a head-to-head competition
2. The pace of sustaining innovation over- for the incumbents best customers. They target in-
shoots customer needs. A second element of stead new and low-end customers, Christensen and
Christensen and Raynors theory is that the pace of Raynor note, with products and services that are
sustaining innovation along the trajectory of partic- not as good as [those] currently available. 23
ular value propositions almost always outstrips the Although inferior when measured against the value
ability of customers in any given tier of the market to propositions on which sustaining innovation has

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been focused, these disruptive products have other gains a foothold in new or low-end markets, Chris-
attributes: They are simpler, more convenient, and tensen and Raynor write, the disruptors are on a
less expensive. Because an incumbent companys path that will ultimately crush the incumbents.29
existing activities determine its perceptions of the
economic value of an innovation [and] shape the What the Experts Reported
rewards and threats, Christensen and Raynor We intentionally did not mention disruptive inno-
argue, managers fail to appreciate and address the vation until the end of our discussions with experts
potential threat.24 If the disruption appears in a in order to elicit unbiased responses. For many of the
new market, incumbent businesses ignore the cases, experts reported historical evidence that cor-
attackers; if among low-end customers, they flee responded with some elements of the theory. For
the attack.25 example, consistent with Christensen and Raynors
4. Incumbents flounder as a result of the dis- claim that managers tend to ignore low-end dis-
ruption. Christensen writes that his original ruption, an author of a book on the history of book
research goal was the development of a failure retailing told us that higher-end bookstores had ini-
framework for why and under what circumstances tially discounted the threat of mall-based stores.30
Similarly, a historian of publishing told us that man-
FOUR ELEMENTS OF THE THEORY OF agers of photo-offset printing companies had
DISRUPTIVE INNOVATION doubted that digital printing would ever deliver the
This illustration shows four important elements of the theory of disruptive innovation: speed and quality needed to compete.31 In many
(1) sustaining innovation, (2) overshoot of customer needs, (3) the emergence of a
other interviews, however, the experts pointed out
disruptive innovation to which incumbents have the ability to respond, and (4) incum-
bent firms floundering as they are disrupted. Following Christensen and Raynor, we noteworthy discrepancies between case facts and
collapse the multiple value dimensions of existing products to just one dimension elements of the theory.
labeled performance. We also show customer needs as a line, although in fact Not all cases included sustaining innovation.
there is a distribution of needs.
In 24 cases (31% of the total), our experts were
4 skeptical of the existence of any meaningful tra-
Incumbents
are disrupted jectory of sustaining innovation prior to the
Incumbents improving and flounder
along a trajectory of emergence of a presumably disruptive innovation
sustaining innovation (for instance, market retailing before department
1 Customer stores, bazaars before eBay, and four-year colleges
needs
before community colleges).32 The case of large-
Performance
2 Disruptive scale meatpacking provides a good example of such
3
Sustaining innovation to an exception. Christensen and Raynor write that
innovation which incumbents
overshoots have ability to in the 1880s, Swift and Armour began huge cen-
customer needs respond tralized operations that transported large sides of
beef by refrigerated railcars. They further claim
Time that this disrupted local slaughter operations.33
But our experts, both book authors on the history
new technologies have caused great firms to fail.26 of meatpacking, were skeptical that sustaining
He does not specify the exact probability of failure, innovation was, as implied by the theory, a mean-
but he leaves little doubt it is very high. Perfor- ingful part of the story. Local butchers, they pointed
mance oversupply, he writes in The Innovators out, were not on a trajectory of innovation.34 To
Dilemma, opens the door for simpler, less expen- the contrary, they relied on tools and artisanal
sive, and more convenient and almost practices that hadnt changed for decades. Local
always disruptive technologies to enter. 27 slaughter operations were replaced, the experts
Companies with these disruptive technologies, argued, because of broader changes: the Union
he writes, will always improve their products per- Armys demand for beef during the American Civil
formance and in so doing eventually take over the War, the expansion of the railroads, the scale econ-
older markets. 28 Once the disruptive product omies provided by the use of a disassembly line,35

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and opposition by local communities that wished Many incumbents were incapable of respond-
to see noxious slaughter operations closed.36 ing to the potential disruption. In 30 cases (39%
Not all incumbent companies overshot cus- of the total), our experts disputed Christensens
tomers needs. In 60 cases (78% of the total), and contention that incumbent businesses were capa-
contrary to the expectations of the theory, our ex- ble of responding to the disruptive innovation. In
perts thought that incumbent companies were not some cases, experts argued, incumbents were re-
producing, or likely to produce, products or ser- stricted, even barred, from using their capabilities
vices that exceeded customer needs. For example, to respond. For example, in legal education, Chris-
hand animation was replaced by computer anima- tensen points to the weak response of incumbent
tion not because it outstripped what customers law schools to online legal training. But there are
wanted, but because it was too expensive. In the clear limits to how far incumbent law schools can
case of local area networks, data rates increased go in exploring potentially disruptive online legal
rapidly, but customers kept pace by developing education. In the United States, the American Bar
ways to use the increased bandwidth. In the cases of Association restricts the number of hours of on-
Internet search engines replacement of print direc- line courses law schools can offer without losing
tories, two professors at top-ranked business their accreditation and jeopardizing the ability of
schools were skeptical that print directories such as their graduates to take the bar exam.42 Similarly,
the Yellow Pages had surpassed anyones needs.37 until 1978, U.S. airlines were restricted from com-
Rather, the print directories were displaced, one peting on price.43
expert noted, because companies producing them In other cases, our experts doubted that incum-
simply didnt have the ability to respond: There bent organizations possessed the capabilities
are certain situations where the economics just needed to compete with a disruptive entrant.
dont let reasonable managers respond in a way that Christensen and Raynor imply that national postal
would disrupt the disruptor.38 In other cases, ex- services (for example, the U.S. Postal Service and
perts noted that overshoot was difficult to achieve. Canada Post) could have and should have
For example, when discussing whether surgery had protected their positions in mail delivery from the
overshot customer needs, thereby enabling disrup- likes of AOL Inc. by offering their own email ser-
tion by endoscopy, an M.D. and expert on the vices.44 However, an expert was skeptical about the
business of health care asked, What would such practicality of this plan, pointing out that, for the
overshoot look like: too little risk of death?39 most part, executives running the postal services
Prior to initiating our study, we anticipated that had very little control over labor practices and price
overshoot would be common in cases involving the structures.45 Moreover, beating AOL would have
computing industry, such as computer software or required accessing new capabilities and resources
hardware. But our experts (made up of computer sci- that public post offices didnt have. A similar argu-
entists, historians, and business professors) suggested ment can be made concerning the wood-products
that even here overshoot was infrequent.40 They ac- industry, many of whose products have been
knowledged rapid growth in computing power driven disrupted by plastics. Christensen suggests that
by Moores law (the observation by former Intel co- wood-product companies should have anticipated
founder Gordon E. Moore that the number of the threat from plastic producers. However, a pro-
transistors on an integrated circuit doubles approxi- fessor at a leading engineering school told us it was
mately every two years). But they were doubtful that unreasonable to assume that companies with skills
this led to neglect of average or low-end consumers. in silviculture and sawmill technology had the ca-
Incumbent companies, one expert noted, often use pability to compete effectively against disrupting
computing power to serve the needs of new, less-savvy producers of plastics.46
customers not to overshoot customer needs.41 Approximately one-third of incumbents were
Apple Inc., for example, launched its original Macin- not displaced by a new technology. Christensen
tosh in 1984 with a powerful central processing unit to says that disruptive innovators displace incumbent
enable a user-friendly graphical interface. leaders nearly every time. Our experts were not as

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convinced. They agreed that in about 62% of the assumed that the objective function of management
cases, incumbents floundered as a result of a disrup- should be to maximize shareholder value.50 This
tive competitor. However, in the remaining 29 cases clarified objective is problematic for the 9% of cases
(38%), there were a range of outcomes. In some we examined that represent nonprofit organiza-
cases (for example, credit scoring and business tions or publicly regulated utilities. For example, an
lending),47 disruptions complemented incumbent author and expert on higher education noted that
businesses by supporting their existing actions. In the access mission of community colleges often
other cases, disruptions coexisted with incumbent runs counter to what presidents or other leaders
businesses or allowed them to reach untapped cus- might do to cut costs or improve completion out-
tomers (for instance, catalog sales and department comes. This expert adds: That makes it not such a
stores). In still others, disruptions have continued to great example for the theory [because] as a mission-
serve different markets (for example, physical and driven institution, they are responsible to the public
online law schools).48 and a higher calling.51
In summary, although Christensen and Raynor
selected the 77 cases as examples of the theory of Relative Rates of Improvement and Utilization
disruptive innovation, our survey of experts reveals Christensens theory of disruption involves critical
that many of the cases do not correspond closely assumptions about the rate of sustaining innova-
with the theory. In fact, their responses suggest that tion. As described by Christensen and Raynor, the
only seven of the cases (9%) contained all four ele- theory assumes that in almost every industry,
ments of the theory that we asked about. (See How sustaining innovation outstrips the ability of cus-
Well Do the Cases Match the Theory?) How can tomers in any given tier of the market to use it.52
we account for this discrepancy? Clearly, analysis of The resulting overshoot of what customers can
the cases is open to interpretation, and one or more utilize, they write, opens the door for a disrup-
of our experts may be mistaken in their judgment tive innovation.53 Many of our experts identified
of a particular case. But even several random problems with this assumption.
errors, given the large number of experts surveyed, Sustaining innovation can be too slow to keep
would not significantly change our main findings. up with growing customer needs. For example, new
At least, our findings suggest, we should consider improvements in wood materials failed to keep
what else could be going on. pace with growing construction requirements.
Likewise, even with the development of new pro-
Problematic Assumptions cessing technologies, many postal services failed to
We concluded each of our interviews by disclosing satisfy growing customer demands for speedy
the subject of our study and asking the expert to re- home delivery. In addition, customer needs often
flect on the theorys usefulness in understanding respond to better performance, altering behavior
the case at hand. These conversations highlighted and, in turn, ones perception of needs. Today, for
several assumptions that limit the application or example, many of us feel we need to carry around
predictive power of the theory of disruptive what are in effect supercomputers that take pic-
innovation. tures and allow us to chat with our friends. 54 In
some cases, one expert pointed out to us, user needs
The Goal Some of our experts noted confusion seem to be insatiable.55 What would it mean, she
about the presumed goal of a business or organiza- asked, if food was too healthy, shelter too available,
tion. Christensens early work seems to imply that or education too effective?
companies should try to maintain market share. Ex-
perts familiar with this work noted that such an Relative Rates of Improvement of Sustaining
assumption could lead to strategies that maintained and Disruptive Technologies When both disrup-
market share while harming profits. In response to tive and sustaining innovations compete to satisfy
such criticism,49 Christensen clarified his position ever-increasing customer demands, the relative
in a 2006 publication, writing that he had simply rate of improvement may be important. Our

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experts noted several cases where disruptive inno- HOW WELL DO THE CASES MATCH THE THEORY?
vation had sputtered or where older technologies This Venn diagram maps the 77 examples listed in The Innovators Dilemma
and The Innovators Solution and shows the extent to which, in the opinion of
had improved so quickly that new technologies
industry experts, they exhibit each of four key elements of the theory. Using
were eclipsed. For example, in 2003, Christensen the industry experts assessments, only seven of the cases (9%) exhibited all
and Raynor predicted that ultrasound technology four elements of the theory.
would disrupt radiation imaging.56 However, the
1
opposite has occurred. Innovations in radiation Incumbents engaged in
imaging (for instance, X-ray tomography), fol- sustaining innovation
69%
lowed by nuclear magnetic resonance imaging 2
(MRI), have relegated the use of ultrasound to spe- 4 Match Sustaining
Incumbents all four innovations
cialized applications such as prenatal care. Our elements overshoot
disrupted and
expert, the head of medical imaging at a major U.S. flounder 9% customer needs
62% 22%
hospital, claimed that in the foreseeable future
there was no chance ultrasound would displace Incumbents had
radiation technologies.57 3 capability to respond
61%
Indeed, the assumption that disruptive innova-
tions always beat sustaining ones has led
Christensen to make a number of erroneous pre- transition from analog to digital technologies (for
dictions. For example, in an early publication, instance, from vacuum tubes to liquid crystal dis-
Christensen and Joseph L. Bower claimed that disk plays, physical mail to email, hand drawing to
drive companies were ignoring the 1.8-inch disk digital animation). These technological shifts can
drives in a manner eerily familiar to what had hap- be treacherous, because they involve different engi-
pened following the emergence of previous formats. neering skills, new product designs, and new
They suggested that companies sticking with the production facilities.61
larger 2.5-inch format would be displaced by new
competitors. 58 When Gary Marks, then vice Managers Satisfying Existing Customers
president for disk drive marketing at hard drive Christensen and his collaborators argue that man-
manufacturer Conner Peripherals, publicly dis- agers are doing an excellent job satisfying their
agreed, Christensen and Bower replied that Marks high-margin customers in their existing business
was making exactly the mistake we warn against.59 but are myopic about the threats posed by low-end
Eventually, though, Marks was proven right: Today, customers or new markets. In fact, in several of the
2.5-inch and 3.5-inch disk drives dominate the in- cases we examined, poor management left even
dustry, and 1.8-inch drives are no longer produced. high-end customers dissatisfied. For example, by
the time Honda Motor Co. entered the United
Incumbents Ability to Respond Joseph Schum- States with a line of inexpensive offerings for the
peter argued that waves of creative destruction U.S. motorcycle market, Harley-Davidson Motor
were a vital part of any economy because they Co. was already being criticized by some of its cus-
washed away businesses with obsolete capabilities. tomers for poor reliability. 62 Likewise, before
By contrast, Christensen argues that leading com- slaughterhouses were disrupted by boxed beef, they
panies often have the resources and abilities needed already had been criticized for being unsanitary.63
to succeed but lack the values, modes of interac- And many people complain about the post office.
tion, and decision making to do so.60 However, such Christensen assumes that managers are myopic
confidence is belied by the trials encountered by when it comes to making good choices about new
many of the 77 cases we studied. Several of the markets created by disruptive innovations. Not so,
companies had to navigate fundamental transi- the director of a research program on corporate
tions in technology (for example, from flat-glass to strategy and innovation told us. His own research
roll-film photography, or travel agents to online and that of others showed that most managers made
services), and others had to make the difficult choices that were aligned with their capabilities.

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Businesses with the capabilities needed to compete postmortem of Bethlehem Steel Corp., Fortune
tended to adopt disruptive innovations. Weaker writer Carol Loomis explained the deadly spiral as a
businesses tended to play out their hands by maxi- demographic nightmare, in which an ever-shrinking
mizing their returns in declining existing markets. number of active employees were charged with mak-
On average, he said, managers make the right ing profits sufficient to support the present and
choices.64 future of an ever-growing number of retirees and
In several cases, the right choice for an incumbent dependents.68 Managers faced a nearly impossible
may have been to avoid competing with a disruptive task. When Loomis asked former General Electric
innovation. Speaking of the airline industry, for ex- Co. CEO Jack Welch if he could have saved Bethle-
ample, one expert said, The biggest contrast between hem Steel, he replied, I dont think Christ could
the Christensen model and what happened with the have done it.69 Our experts told us that such legacy
airlines is that [Christensen says] the barrier is some- costs played a similarly critical role in several other
how cognitive. [In fact] there are fundamental cases, including automobiles, motorcycles, food
structural barriers.65 Switching to a low-cost, point- processing, and transportation.70
to-point airline business model would have required
a dramatically different fleet of airplanes, new work- Changing Scale Economies In at least 40% of the
ers, new airports, and new gates. Sometimes [stuff] 77 cases, changing business conditions increased the
happens, he argued, and the best response is to economic advantages of scale and thereby limited
adapt but not dramatically change the business the number of businesses that could profitably serve
model.66 A business professor and expert on digital the market. The resulting disruption was really a
electronics made a similar point about the transition well-known economic process that selected for a few
from television tubes to digital displays. He noted well-placed businesses, incumbents and entrants
Sony Corp.s losses in the display market and argued alike, that could best leverage scale economies. For
that managers should have recognized their lack of example, we mentioned earlier that the expansion of
advantages and prepared to exit rather than fight- national railroads allowed a few meatpacking plants
ing to defend Sonys position.67 to harness economies of scale and drive down costs.
Previously, such scale advantages had been con-
Other Factors at Work strained by the inability to ship meat long distances,
Is there a better explanation than the theory of disrup- but the expansion of railroads and the availability of
tion for the patterns of success and failure across the railcars with ice removed these barriers. These devel-
77 cases Christensen and Raynor cite? Having argued opments allowed meatpackers near major rail hubs
that one theory is not adequate for explaining so many to harness massive scale economies and distribute
diverse cases, we are cautious about overreaching. inexpensive meat to broad regions of the country.71
Nevertheless, from our conversations with academics In recent decades, the development of the Inter-
and industry experts, we have identified some rough net and reliable parcel delivery has created similar
patterns that could provide a starting point. These scale challenges for brick-and-mortar bookstores.
patterns revolve around legacy costs, changing scale Before the tremendous growth of e-commerce,
economies, and the laws of probability. Borders Group Inc. and Barnes & Noble Inc. lever-
aged economies created by the superstore format
Legacy Costs Several companies that Christensen to gain a competitive advantage over smaller
and his collaborators say were disrupted by new in- bookstores and mall-based chains.72 Online tech-
novations were already severely weakened by legacy nologies meant that the assets represented by
costs in the form of investments and contracts. For superstores could be trumped by an enormous,
example, U.S. steel company managers, protected largely centralized distribution system. Because
from foreign competition by trade legislation, online sales costs continually fell with volume,
agreed to labor contracts that included expensive whoever gained an initial advantage was likely to
health care and pension provisions. When trade bar- take the entire market; it didnt matter whether it
riers fell, the costs became unsupportable. In a was a startup or an incumbent. Changing scale

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economies turned legacy investments in super- service chains to enter the market with different of-
stores into a liability. A professor at a leading U.S. ferings and business models.77 So many investors
business school told us, [T]he problem for Bor- rushed in that speculators even created financial
ders was that they needed all of their customers, instruments for investing in franchise models. As
and so when Amazon started to siphon them off with any gold rush, fundamental economics even-
they simply couldnt cover fixed costs.73 tually forced a shakeout. Although many of the old
When network externalities provide a broad chains (such as Howard Johnsons and Dairy
scale advantage, some businesses are faced with a Queen) managed to survive, some of the new com-
winner-take-all competition. Economist W. Brian panies (such as McDonalds and Burger King)
Arthur has demonstrated that in such competi- proved to have selected better franchise models and
tions, a few early sales can initiate a feedback loop eventually emerged as the biggest winners.
of network advantage that tips all customers to one The same pattern was repeated with the rise of the
supplier.74 Microsoft DOS became the dominant Internet. Because online business required little in-
operating system for personal computers because vestment in physical assets, almost anyone could start
IBMs imprimatur suggested that others would an online company. Thousands of entrepreneurs
adopt the operating system.75 To gain future scale rushed in to explore every imaginable idea. Existing
economies, customers joined the DOS standard, businesses once again explored promising new busi-
further entrenching Microsofts position. Eventu- ness models, but because they were fewer in number,
ally, the scale benefits became so great that even they couldnt stake as many claims as the swarms of
superior operating systems such as Apples MacOS entrepreneurs. Although the majority of online start-
could not gain significant market share. ups would ultimately fail, their sheer numbers meant
that some of them would strike it rich.78
The Laws of Probability Sometimes incumbents
are simply outnumbered by the sheer quantity of Using the Theory of
new competitors. In at least 30% of the 77 cases we Disruptive Innovation
considered, new infrastructure and changing de- The threats faced by the companies in our sample
mographics caused an expansion of business were deeply challenging, and they cannot be under-
opportunities and a gold rush search for the best stood from a single viewpoint or solved by a single
business models. Incumbent companies partici- prescription. Instead, managers need to evaluate
pated in this rush just as readily as new entrants, difficult problems from a number of different per-
and they often picked what appeared to be good spectives. In that spirit, we do not advocate discarding
claims. Because of their numbers, however, new the theory of disruption. Rather, we recommend
entrants were able to cover more ground in the using its best parts in addition to classical approaches
aggregate. The laws of probability thus said that in to strategic analysis.
most cases new entrants would stake the best claims The theory of disruptive innovation provides a
and be the biggest winners. generally useful warning about managerial myopia.
For example, the construction of highways Many of our experts noted examples of managers
following World War II greatly stimulated the who overlooked or misunderstood the importance
development of roadside America.76 New forms of an emerging threat. A professor of business inno-
of service franchising inspired hundreds of food vation told us, for example, that managers working

The threats faced by the companies in our sample were


deeply challenging, and they cannot be understood from
a single viewpoint.

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in relationship management software had over- faster than the consumers ability to absorb those
looked the threat posed by Salesforce.com. In many improvements.82 This assumption is critical, the
other cases, managers in incumbent companies mis- professor explained, because it drives vital parts of
understood the value of innovations by rivals. the theory of disruption, such as the expectation
Suppliers such as Swift and Armour discounted that disruptive threats will emerge among low-end,
boxed beef because the meat was frozen, and they overserved customers.
had previously failed in their own attempts at frozen Even when there is a rapid improvement curve
beef. Later, according to an industry historian who and potential for the improvement to exceed cus-
has chronicled this story, they all slapped their fore- tomer needs, the theory of disruptive innovation
heads and said, Oh man, we really screwed up should be considered a warning rather than a pre-
back then.79 Similarly, although managers at Xerox diction. The theory describes case examples of
didnt completely neglect the market for self-service dysfunction and failure, not what the average busi-
copiers, they do seem to have misunderstood the ness may do. For example, an expert in a top-rated
value of Canons dry-toner innovation in reducing technical school told us that his research on the disk
service costs and customer inconvenience.80 In sum- drive industry suggested that the case of one disk
mary, we believe that the theory of disruptive drive company, Seagate Technology Inc., indeed
innovation provides a useful reminder of the impor- matched the theory of disruption. Seagate does
tance of testing assumptions, seeking outside seem to have overlooked the value of emerging 3.5-
information, and other means of reducing myopic inch disk drives, and as a result, it was temporarily
thinking. displaced from leadership in the industry. Yet most
Yet our discussions with experts suggest that the of the time, Seagate and other companies re-
full theory of disruptive innovation should only be sponded effectively to presumably disruptive
applied when specific conditions are met. Chris- threats. 83 Thus, the theory provides a good re-
tensens theory was inspired by an industry that he minder of potential pitfalls, he argued, but in no
admits is highly unusual; as he wrote, nowhere in the way does it predict what most companies will do.
history of business has there been an industry like disk A telling example of how risky it can be to use
drives, where changes in technology, market struc- the theory to predict the behaviors of incumbent
ture, global scope, and vertical integration have been companies can be found in a teaching case, coau-
so pervasive, rapid, and unrelenting. He suggests that thored by Christensen himself, describing a startup
few other industries offer researchers the same op- company with an idea for developing a very thin
portunities for developing theories.81 Perhaps so, camera. The companys management knew it could
but the theorys unusual birthplace suggests the not compete with established companies if they
need for an evaluation of similarities between the chose to make a similar product. However, man-
disk drive industry and any setting where theory is agement hoped that the disruptive nature of the
to be applied. One business school professor told us, companys credit card camera would cause big
Here is what I tell my students who label every- players to ignore them. Unfortunately, an estab-
thing a disruption. Where is the improvement lished competitor noticed the product and jumped
curve? Because the fundamental assumption of the into the market with a superior offering.84 Con-
theory is that the improvement curve [the rate of trary to what the theory predicted, the startup, not
sustaining innovation by incumbents] is going up the incumbent, was driven from the market.

Our discussions with experts suggest that the full theory


of disruptive innovation should only be applied when certain
conditions are met.

86 MIT SLOAN MANAGEMENT REVIEW FALL 2015 SLOANREVIEW.MIT.EDU


What Should Managers Do? need to pay attention to the potential synergies be-
Given the evidence that the theory has limited pre- tween existing and new businesses.
dictive power, how should managers react to the Sometimes choosing the right way to use capa-
appearance of potential new rivals? We propose a bilities means reconsidering the existing identity of
fairly straightforward diagnostic based on authen- the organization.88 Consider the case of Eastman
ticated modes of analysis. First, managers should Kodak Co. According to popular opinion, Kodak
calculate the value of winning. Second, they should failed because it didnt move aggressively and effec-
find ways to leverage existing capabilities. And tively enough into digital imaging. Fujifilm
finally, where practical, they should work collabor- Holdings Corp., according to this view, succeeded
atively with other companies. because it developed a successful line of digital
Calculate the value of winning. Christensen cameras. However, the reality is that this version of
and his collaborators seem to assume that no mat- the story is a myth. Fujifilm survived not because it
ter what industry or market a company is in, it developed a new line of digital cameras but because
should fight to maintain control. But this is folly. In it used its capabilities in chemicals and information
many of the 77 cases, factors such as low barriers to technology to develop successful products and
entry, the emergence of substitutes, and an increase services in coatings, cosmetics, and document pro-
in the number and aggressiveness of rivals turned cessing. Fujifilm continues to make a few cameras,
once-profitable industries into profitless deserts. but it barely recoups its operating costs.89 It is pros-
Indeed, choosing to fight without studying the op- pering not because it defended its position in
tions violates a basic principle of strategy: The first imaging, but because it expanded into other areas.
step in responding to any major innovation is as- Work collaboratively with other companies.
sessing whether the industry continues to be an The prospect of an entrepreneur with new technol-
attractive place to compete. When industries be- ogy potentially disrupting incumbent businesses
come structurally unattractive, it may be time to can make managers wary of cooperating with en-
plan an organized retreat. trants. In several of the cases we explored, however,
Harvard Business School professor Willy C. Shih incumbents recognized the potential for working
has studied the challenges that businesses with ana- with new entrants. The Walt Disney Co., for exam-
log technologies faced in responding to new digital ple, responded to the emergence of computer
technologies. Such transitions are competency- animation by cooperating with and eventually
destroying, he writes, because the capabilities, tacit acquiring Pixar Animation Studios. Disney could
knowledge, and experience base of the incumbent have continued to compete with Pixar and tried to
analog firms are rendered irrelevant.85 He adds, drive it from the market, but Disney managers
While the firms may still possess valuable comple- wisely recognized that their companys strengths
ments like brands or sales and distribution channels, were in marketing, distribution, and creating posi-
such transitions are immensely challenging because tive experiences at parks, cruise ships, and resorts;
of the exposure to commoditization.86 Digital tech- Pixar, by contrast, was a content developer.90 Many
nologies often cause barriers to entry to fall and pharmaceutical companies routinely use a range of
competition to become cutthroat. As a result, Shih approaches, including cooperation, when facing
argues, companies should evaluate the potential for competition from biotech startups. Rather than
profits in a new market before they jump in. seeing every biotech company as a potential dis-
Leverage existing capabilities. Managers rupter, pharmaceutical company executives often
should analyze how their existing capabilities can cooperate with biotech startups to leverage their
be deployed most profitably.87 If current capabili- own strengths.
ties can be used or extended, it may make sense to There is nothing radical about employing such
expand into a new market. Amazon.com Inc., for classic approaches to strategic analysis. Indeed, good
example, expanded from books to other vertical analysis often is based on old-fashioned spadework
markets where it was able to command some ad- and careful consideration. Assessing new threats re-
vantage from online sales. However, companies quires considering multiple perspectives, reflecting

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I N N O VAT I O N S T R AT E G Y

on ones own biases, and a willingness, if necessary, to How to Heal the Health Care System, Forbes, October
jump into the unknown. Faced with the prospect of 31, 2008, 81-85; C.M. Christensen and D. van Bever,
The Capitalists Dilemma, Harvard Business Review
this leap, managers may be tempted to turn to the 92, no. 6 (June 2014): 60-68; S.L. Hart and C.M. Chris-
theory of disruption, as Christensen himself says, tensen, The Great Leap: Driving Innovation From the
Base of the Pyramid, MIT Sloan Management Review
to justify whatever they wanted to do in the first
44, no. 1 (fall 2002): 51-56; and C.M. Christensen, M.B.
place.91 But doing so is an excellent way to cede Horn, and C.W. Johnson, Disrupting Class: How Disrup-
your businesss competitive advantage to more com- tive Innovation Will Change the Way the World Learns
(New York: McGraw-Hill, 2008).
petent competitors.
In summary, stories about disruptive innova- 7. Clay Christensen on the Recent Debate Surrounding
His Theory of Disruptive Innovation, interviewed by
tion can provide warnings of what may happen, Adi Ignatius, June 27, 2014, www.youtube.com.
but they are no substitute for critical thinking. 8. C.M. Christensen and J.L. Bower, Customer Power,
High-level theories can give managers encourage- Strategic Investment, and the Failure of Leading Firms,
ment, but they are no replacement for careful Strategic Management Journal 17, no. 3 (March 1996):
197-218.
analysis and difficult choices. Should a company
9. C.M. Christensen, The Rigid Disk-Drive Industry:
stay in the fight in a particular market and incur the A History of Commercial and Technological Turbulence,
cost of doing so, or should it exit the market and see Business History Review 67, no. 4 (winter 1993): 531-588;
those revenues vanish? Should a company invest in Christensen and Bower, Customer Power; and C.M.
Christensen, F.F. Suarez, and J.M. Utterback, Strategies
a profitable but declining business, or should it for Survival in Fast-Changing Industries, Management
turn away? Is the best course to maximize returns Science 44, no. 12, part 2 (December 1998): S207-S220.
by letting the business slowly die? These are heart- 10. M. Tripsas and G. Gavetti, Capabilities, Cognition,
wrenching choices. Following simple theories or and Inertia: Evidence From Digital Imaging, Strategic
Management Journal 21, no. 10-11 (October-November
using quick analogies may provide a sense of cer- 2000): 1147-1161; E. Danneels, Trying To Become a Dif-
tainty, but they are no substitutes for careful, ferent Type of Company: Dynamic Capability at Smith
fundamental analysis of the nature of competition Corona, Strategic Management Journal 32, no. 1 (Janu-
ary 2011): 1-31; and D.G. McKendrick, R.F. Doner, and S.
and the sources of competitive advantage. Haggard, From Silicon Valley to Singapore: Location and
Competitive Advantage in the Hard Disk Drive Industry
Andrew A. King is a professor of business administra- (Stanford, California: Stanford University Press, 2000).
tion at Tuck School of Business at Dartmouth College,
11. E. Danneels, Disruptive Technology Reconsidered:
in Hanover, New Hampshire. Baljir Baatartogtokh is a
A Critique and Research Agenda, Journal of Product
graduate student at the University of British Columbia
Innovation Management 21, no. 4 (July 2004): 246-258.
in Vancouver, British Columbia. Comment on this arti-
cle at http://sloanreview.mit.edu/x/57114, or contact 12. McKendrick, Doner, and Haggard, From Silicon
the authors at smrfeedback@mit.edu. Valley; A.A. King and C.L. Tucci, Incumbent Entry Into
New Market Niches: The Role of Experience and Mana-
gerial Choice in the Creation of Dynamic Capabilities,
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G.J. Tellis, Disruptive Technology or Visionary Leader-
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New Technologies Cause Great Firms to Fail (New York:
HarperCollins, 2003, first published in 1997 by Harvard 14. Christensen, Innovators Dilemma; and C.M. Chris-
Business Review Press). tensen and M.E. Raynor, The Innovators Solution:
Creating and Sustaining Successful Growth (Boston:
3. Ibid. Harvard Business School Press, 2003).
4. Aiming High, June 30, 2011, www.economist.com. 15. Christensen, Innovators Dilemma; Christensen and
5. J. Lepore, The Disruption Machine: What the Gospel Raynor, Innovators Solution.
of Innovation Gets Wrong, New Yorker, June 23, 2014;
16. Christensen and Raynor, Innovators Solution, 33.
and A. Saunders, Is Disruptive Innovation Dead?
September 29, 2014, www.managementtoday.co.uk. 17. Ibid, 34.
6. C.M. Christensen, J.H. Grossman, and J. Hwang, 18. Ibid., 33.

88 MIT SLOAN MANAGEMENT REVIEW FALL 2015 SLOANREVIEW.MIT.EDU


19. Ibid., 33. 43. Anonymous expert, discount airline (Southwest)
interview, November 3, 2014.
20. Ibid., 34.
44. Christensen and Raynor, Innovators Solution.
21. This distinguished disruption from previous theories.
Scholars had long argued that companies are displaced 45. Anonymous expert, email interview, October 15, 2014.
when their capabilities become obsolete or surpassed by 46. Anonymous expert, plastics interview, November 14,
those of competitors. Christensen broke from this tradi- 2014.
tion by arguing that companies are displaced despite
possessing the capabilities needed to succeed. 47. W. Scott Frame, A. Srinivasan, and L. Woosley, The
Effect of Credit Scoring on Small-Business Lending,
22. Christensen and Raynor, Innovators Solution, 35. Journal of Money, Credit and Banking 33, no. 3 (August
23. Ibid., 34. 2001): 813-825.

24. Ibid., 44. 48. N. Wecker, Weigh the Benefits, Disadvantages of


Attending a Non-ABA Law School, December 17, 2012,
25. Ibid., 46. www.usnews.com.
26. Christensen, Innovators Dilemma, viii. 49. C. Markides, Disruptive Innovation: In Need of Better
27. Ibid., 213. Theory, Journal of Product Innovation Management 23,
no. 1 (January 2006): 19-25.
28. Ibid., 232.
50. Christensen, Ongoing Process, 50.
29. Christensen and Raynor, Innovators Solution, 34.
51. Anonymous expert, community colleges interviews,
30. Anonymous expert, Barnes & Noble interview, October 6, 2014, and August 26, 2015.
July 28, 2015.
52. Christensen and Raynor, Innovators Solution, 33.
31. Anonymous expert, digital printing interview,
July 28, 2015. 53. Ibid., 213.

32. This might seem surprising, but our expert told us that 54. This rapid expansion in consumer needs may ex-
for many years colleges focused on opening doors to plain why Christensen predicted the iPhone wouldnt
new types of students: GIs after wars, underrepresented succeed. See J. McGregor, Clayton Christensens Inno-
minorities, low-income students. The expert noted that vation Brain, June 15, 2007, www.bloomberg.com.
for many years there was not any discussion of perfor- 55. Anonymous expert, centralized beef slaughtering
mance. Some scholars, the expert noted, were of course operations interview, October 21, 2014.
focused on improving research.
56. Christensen and Raynor, Innovators Solution.
33. Christensen and Raynor, Innovators Solution, 56.
57. Anonymous expert, ultrasound imaging interview,
34. Anonymous expert, boxed beef interview, October October 28, 2014.
22, 2014; and anonymous expert, centralized beef slaugh-
58. J.L. Bower and C.M. Christensen, Disruptive Tech-
tering operations interview, October 21, 2014.
nologies: Catching the Wave, Harvard Business Review
35. D. Hounshell, From the American System to Mass 73, no. 1 (January-February 1995): 51.
Production, 1800-1932: The Development of Manufactur-
59. G. Marks, Letters to the Editor: Disruptive Technolo-
ing Technology in the United States (Baltimore,
gies, Harvard Business Review 73, no. 2 (March-April
Maryland: Johns Hopkins University Press, 1985).
1995): 8-9; and C.M. Christensen and J.L. Bower, Dis-
36. Anonymous expert, boxed beef interview, October ruptive Technologies: Reply, Harvard Business Review
22, 2014; and anonymous expert, centralized beef 73, no. 3 (May-June 1995): 17.
slaughtering operations interview, October 21, 2014. 60. For example, Christensen and Bower write: Our con-
37. Anonymous experts, Internet search engines clusion is that a primary reason why such firms lose their
interviews, October 9, 2014 and October 22, 2014. positions of industry leadership when faced with certain
types of technological change has little to do with technol-
38. Anonymous expert, Internet search engine interview,
ogy itself with its degree of newness or difficulty,
October 24, 2014.
relative to the skills and experience of the firm. We find
39. Anonymous expert, endoscopic surgery interview, that firms possessing the capacity and capability to inno-
October 1, 2014. vate may fail when the innovation does not address the
foreseeable needs of their current customers. See
40. Anonymous expert, computers based on reduced
Christensen and Bower, Customer Power, 198.
instruction set computing microprocessors interview,
November 24, 2014; anonymous expert, direct sales 61. Anonymous expert, LCDs interview, November 12,
computer retailing interview, February 18, 2015; and 2014.
anonymous expert, minicomputers interview,
62. H.S. Thompson, Hells Angels: The Strange and Terri-
October 27, 2014.
ble Saga of the Outlaw Motorcycle Gangs (New York:
41. Anonymous expert, Microsoft DOS interview, Random House, 1966).
October 22, 2014. 63. M. Ogle, In Meat We Trust: An Unexpected History
42. Anonymous expert, online law schools interview, of Carnivore America (New York: Houghton Mifflin Har-
October 10, 2014. court, 2013).

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64. Anonymous expert, small-format disk drives inter- 87. C.E. Helfat, S. Finkelstein, W. Mitchell, M. Peteraf,
view, October 15, 2014. H. Singh, D. Teece, and S.G. Winter, Dynamic Capabili-
65. Anonymous expert, discount airline (Southwest) ties: Understanding Strategic Change in Organizations
interview, November 3, 2014. (Malden, Massachusetts: Wiley-Blackwell, 2007); and
M.E. Porter, The Five Competitive Forces That Shape
66. Anonymous expert, discount airline (Southwest) Strategy, Harvard Business Review 86, no. 1 (January
interview, August 22, 2015. 2008): 78-93.
67. Anonymous expert, LCDs interview,
88. R. Adner and D.C. Snow, Bold Retreat: A New Strat-
November 12, 2014.
egy for Old Technologies, Harvard Business Review 88,
68. C.J. Loomis, The Sinking of Bethlehem Steel, no. 3 (March 2010): 76-81.
Fortune, April 5, 2004, http://archive.fortune.com.
89. FujiFilm Holdings Corp., Annual Report 2014,
69. Ibid. www.fujifilmholdings.com.
70. As this article was undergoing review, Harvard Busi- 90. J. Alcacer, D.J. Collis, and M. Furey, The Walt Disney
ness School professor Willy C. Shih published a blog post Company and Pixar Inc.: To Acquire or Not to Acquire?
on Harvard Business Reviews website on the importance Harvard Business School case no. 709-462 (Boston:
of legacy costs in explaining the failure of U.S. steel mills. Harvard Business School Publishing, 2009).
See W.C. Shih, Breaking the Death Grip of Legacy Tech-
nologies, May 28, 2015, https://hbr.org. 91. Clay Christensen on the Recent Debate,
June 27, 2014.
71. Ogle, In Meat We Trust.
i. Specifically, our survey asked experts the following
72. Anonymous expert, online book sales interview,
questions:
October 24, 2014; and P. Ghemawat, B. Baird, and
G. Friedman, Leadership Online: Barnes & Noble vs. Part A) Please think back prior to the advent of [NAME
Amazon.com (Boston: Harvard Business School Case OF DISRUPTIVE INNOVATION] (e.g., [EXAMPLE OF DIS-
Services, 1998). RUPTIVE INNOVATION NAMED]) in the [BASE YEAR].
73. Anonymous expert, online book sales interview, (1) Prior to that, were there firms engaged in [NAME OF
October 24, 2014. INDUSTRY] with significant market share (e.g., > 5%)?
(2) Prior to the advent of [NAME OF DISRUPTIVE INNO-
74. W.B. Arthur, Competing Technologies, Increasing VATION], were firms in [NAME OF INDUSTRY] improving
Returns, and Lock-In By Historical Events, Economic in performance? (3) Did this improvement rate exceed
Journal 99, no. 394 (March 1989): 116-131. what most customers could absorb (e.g., some say that
75. M. Campbell-Kelly and W. Aspray, Computer: word-processing software added features faster than
A History of the Information Machine, 2nd ed. most consumers could learn them)? (4) Prior to the ad-
(Boulder, Colorado: Westview Press, 2004). vent of [NAME OF DISRUPTIVE INNOVATION], did firms
76. J.A. Jakle and K.A. Sculle, Fast Food: Roadside Res- in [NAME OF INDUSTRY] have the ability to create a sim-
taurants in the Automobile Age (Baltimore, Maryland: pler, lower cost, but profitable product that would appeal
Johns Hopkins University Press, 2002). to current non-customers? Part B) Please now think
about how older companies in [NAME OF INDUSTRY] re-
77. Anonymous expert, interview on the rise of fast food, sponded to the emergence of [NAME OF DISRUPTIVE
October 30, 2014. INNOVATION] (e.g., [EXAMPLE OF DISRUPTIVE INNO-
78. B. Goldfarb, D. Kirsch, and D.A. Miller, Was There VATION NAMED]). (1) Did legal or contractual barriers
Too Little Entry During the Dot Com Era? Journal of prevent these incumbent companies from developing or
Financial Economics 86, no. 1 (October 2007): 100-144. adopting [NAME OF DISRUPTIVE INNOVATION]? (2) Did
79. Anonymous expert, boxed beef interview, leading firms in [NAME OF INDUSTRY] flounder as a re-
October 22, 2014. sult of [NAME OF DISRUPTIVE INNOVATION]?

80. Anonymous expert, countertop photocopiers Coding: If any expert on a case responded to A1 or A2
interview, September 17, 2014. yes, then we concluded leading companies with a tra-
jectory of sustaining innovations existed. If the response
81. Christensen, Innovators Dilemma, 3.
to A3 was yes, then we concluded overshoot had
82. Anonymous expert, telecommunications (circuit occurred. If experts answered yes to A4 and there were
and packet switched), July 30, 2015. no legal barriers (B1), then we judged that incumbents had
83. Anonymous expert, disk drive industry interview, the capability to respond. If experts responded yes to
October 15, 2014. B2, we judged that incumbents had been disrupted. Note:
In phone interviews, we explained that floundered
84. C.M. Christensen and S.D. Anthony, Making SMaL
could be interpreted as having lost significant market
Big: SMaL Camera Technologies, Harvard Business
share. If multiple experts on the same case disagreed on
School case no. 603-116 (Boston: Harvard Business
the answer to a question, we gave the benefit of the doubt
School Publishing, 2003).
to the theory of disruption, and agreement with that ele-
85. W.C. Shih, Competency-Destroying Technology ment of the theory of disruption was judged confirmed.
Transitions: Why the Transition to Digital Is Particularly
Challenging, Harvard Business School background note Reprint 57114.
613-024, August 2012, 9. Copyright Massachusetts Institute of Technology, 2015.
86. Ibid., 9. All rights reserved.

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