Critiquing Disruption Theory

Much of the Internet has been abuzz about The Disruption Machine, an essay by Jill Lepore in the New Yorker that seeks to refute Clayton Christensen’s Theory of Disruptive Innovation. From the article:

Most big ideas have loud critics. Not disruption. Disruptive innovation as the explanation for how change happens has been subject to little serious criticism, partly because it’s headlong, while critical inquiry is unhurried; partly because disrupters ridicule doubters by charging them with fogyism, as if to criticize a theory of change were identical to decrying change; and partly because, in its modern usage, innovation is the idea of progress jammed into a criticism-proof jack-in-the-box.

Sadly, Lepore’s criticism applies just as well to her own essay. While Lepore fairly points out problems with some of the studies underpinning Christensen’s work, much of the essay is filled with her own hand-picked examples, ridicule of theory adherents, and most troubling, a total conflation of not only the different types of disruption (new market versus low-end), but also of the theory as laid out by Christensen with the overuse of the word by all manner of commentators, consultants, and marketing executives.

In response there have been several good critiques of Lepore’s article, including:

  • “The Easy Target that is the Theory of Disruption” by Joshua Gans (link), which distinguishes between disruption as descriptor and disruption as predictor
  • “Disruption is a dumb buzzword. It’s also an important concept” by Timothy Lee (link), which takes Lepore to task for attempting to suggest journalism isn’t subject to disruption (which is where Lepore’s essay really lost its way)
  • “The New Yorker Thinks Disruptive Innovation Is a Myth” by Will Oremus (link), which is a bit more irreverent, but rightly calls out the other hand-waving aspects of Lepore’s essay

Still, though, Lepore is on to something; there is a critique to be made that avoids cheap lines like “Disruption is a theory of change founded on panic, anxiety, and shaky evidence” and instead carefully considers where the theory falls short and seeks to understand why. In fact, I made such a critique here on this blog, in a post entitled What Clayton Christensen Got Wrong:

Christensen has two theories of disruption.

The original theory of disruption, now known as new market disruption, was detailed in Christensen’s seminal paper Disruptive Technologies: Catching the Wave and expanded on in the classic book The Innovator’s Dilemma.1 Based primarily on a detailed study of the disk drive industry, the theory of new market disruption describes how incumbent companies ignore new technologies that don’t serve the needs of their customers or fit within their existing business models. However, as the new technology, which excels on completely different attributes than the incumbent’s product, continues to mature, it eventually takes over the market.

This remains an incredibly elegant and powerful theory, and I fully subscribe to it. We are, in fact, seeing it in action with Windows – the incumbent – and the iPad and other tablets; new technology that is inferior on attributes that matter to Windows’ best customers, but superior on other attributes that matter to many others. (My belief in this theory is why I have been, to my own personal surprise, more sympathetic to Steve Ballmer – here and here – than most).

It is Christensen’s second theory of disruption – low-end disruption – that I believe is flawed. Christensen first described this theory in Disruption, Disintegration and the dissipation of differentiability, and expanded on it in The Innovator’s Solution. It is this theory that is at the basis of Christensen’s critique of Apple.

Briefly, an integrated approach wins at the beginning of a new market, because it produces a superior product that customers are willing to pay for. However, as a product category matures, even modular products become “good enough” – customers may know that the integrated product has superior features or specs, but they aren’t willing to pay more, and thus the low-priced providers, who build a product from parts with prices ground down by competition, come to own the market. Christensen was sure this would happen with the iPod, and he – and his many adherents – are sure it will happen to the iPhone.

In other words, it’s not enough to say the iPhone has saturated the high end market and that growth will slow; rather, the iPhone will soon overshoot customers completely, and will in fact plummet in total sales in the face of good-enough Androids available for hundreds of dollars less than the overpriced iPhone 5C.

The Flaw in the Theory

Interestingly, Christensen himself laid out his theory’s primary flaw in the first quote excerpted above (from 2006):

You also see it in aircrafts and software, and medical devices, and over and over.

That is the problem: Consumers don’t buy aircraft, software, or medical devices. Businesses do.

Christensen’s theory is based on examples drawn from buying decisions made by businesses, not consumers.2 The reason this matters is that the theory of low-end disruption presumes:

  • Buyers are rational
  • Every attribute that matters can be documented and measured
  • Modular providers can become “good enough” on all the attributes that matter to the buyers

All three of the assumptions fail in the consumer market, and this, ultimately, is why Christensen’s theory fails as well. Let me take each one in turn:

You can read the entire critique here.

  1. Disclosure: Amazon Associate link
  2. The original article looked at disk drives, PCs (more on those in a moment), mortgage banking, microprocessors, and software