Table Of ContentHARVARD BUSINESS StlHtDOL R R E S S
MORE FROM QWERTY on KAT.PH
H E
CREATING AND
SUSTAIN! N G
S U G C E S S F U l_
GROWTH
CLAYTON M.CHIISTENSIN
AUTHOR Or THE INNOVATORS DILEMMA
$29.95
The Growth Paradox
Atbest one company inten isable to sustain
profitablegrowth.Yet capital markets demand
that all companies seek it relentlessly and
mercilessly punish those who fail. Why is
consistent, persistent growth so difficult to
achieve? Surprisingly,it's notforlackofgreat
ideas or capable managers, nor is itbecause
customers are too fickle or innovation too
unpredictable. Innovation fails, say Clayton
M. Christensen and Michael E. Raynor, be
cause organizations unwittingly strip the dis
ruptive potential from new ideas before they
ever see the lightofday.
In his worldwide bestseller The Innovator's
Dilemma, Christensen explained how industry
leaders get blindsided bydisruptiveinnova
tionsprecisely becausetheyfocus too closely
on their most profitable customers and busi
nesses. The Innovator's Solution shows how
companies get to the other side ofthis dilem
ma, creating disruptions rather than being
destroyed bythem.
Drawing on years ofin-depth research and
illustrated bycompany examples across many
industries, Christensen and Raynorargue that
innovation can be a predictable process that
delivers sustainable, profitable growth. They
identify the forces that cause managers to
make bad decisions as they package and
shape new ideas-and offer new frameworks
to help managers create the right conditions,
at the right time, for a disruption to succeed.
The Innovator's Solution addresses a wide
range of issues, including:
• How can we tell ifan idea has disruptive
potential?
•Which competitive situationsfavorincum
bents, and which favor entrants?
• Which customer segments are primed to
embrace a new offering?
• Which activities should we outsource,
and which should we keep in-house?
(Continuedonbackflap)
THE INNOVATOR'S SOLUTION
THE
INNOVATOR'S
SOLUTION
CREATING AND SUSTAINING
SUCCESSFUL GROWTH
CLAYTON M. CHRISTENSEN
MICHAEL E. RAYNOR
HARVARD BUSINESS SCHOOL PRESS
BDSTDN, MASSACHUSETTS
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Christensen,ClaytonM.
Theinnovatorssolution:creatingandsustainingsuccessfulgrowth/ClaytonM.
Christensen,MichaelE.Raynor.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN1-57851-852-0(alk.paper)
1.Creativeabilityinbusiness. 2.Industrialmanagement. 3.Customerservice.
4.Succcessinbusiness. I.Raynor,MichaelE. II.Title.
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CONTENTS
In Gratitude vii
1. The GrowthImperative 1
2. How CanWeBeat OurMostPowerful Competitors? 31
3. WhatProductsWill CustomersWantto Buy? 73
4. WhoArethe BestCustomersfor OurProducts? 101
5. GettingtheScopeoftheBusinessRight 125
6. Howto Avoid Commoditization 149
7. IsYourOrganizationCapableofDisruptive Growth? 177
8. Managingthe StrategyDevelopmentProcess 213
9. There IsGoodMoney and There IsBadMoney 235
10. The Role of Senior Executives in Leading NewGrowth 267
Epilogue Passingthe Baton 285
Index 293
AbouttheAuthors 303
IN GRATITUDE
I have spent much ofthepastdecade puzzling over two questions.
The first: It iseasy to explain why poorly runcompanies fail; but
many ofhistory's most successful and best-run firms have lost their
positionsofleadership, too. Whyis itso hard tosustainsuccess? The
Innovator's Dilemmasummarized what I learned about this puzzle.
It'snotjustmanagementmistakesthatcausefailure. Certainpractices
thatareessentialtoacompany'ssuccess—likecateringtotheneedsof
your best customers and focusing investments where profitability is
most attractive—cancause failure too.
Thesecondcenteredontheopportunityinthedilemma:IfIwanted
tostart acompany thatcould become significant and successful and
ultimatelytopple the firms thatnowlead anindustry, howcouldIdo
it? Ifindeedthere are predictablereasonswhybusinesses stumble,we
mightthenhelpmanagers avoidthosecausesoffailure andhelpthem
makedecisionsthatpredictablyleadtosuccessfulgrowth. ThisisThe
Innovator'sSolution.
The challenge of this research quickly outstripped my abilities;
andI have relied uponsome extraordinary people to help mecom
pleteit. MichaelRaynor,who hastutoredmefrom thedayhe arrived
as a doctoral student at Harvard, has beenan exceptionalcolleague.
Todescribe Michael's integrated grasp ofarts,letters, philosophical
discourse, and history as "incisive" would understate his intellect.
vili IN GRATITUDE
ConfidentthatIcouldexposeandrectifythegapsinmyevidenceand
logic byexamining my rough ideas through thelenses ofthevaried
academicdisciplinesthatMichael'smindhasmastered,Iaskedhimto
join me as coauthor. Michael has balanced this work with his duties
as ahusband, father, and director ofresearch atDeloitte Consulting,
all thewhileshuttling betweenTorontoandBoston. Ideeplyappreci
ate his selfless, humble, and persistent hammering toget these ideas
shapedright.Hehasbecome agreatfriend.
Scott Anthony, MarkJohnson, and Matt Eyring each have for
sakenorpostponedfarmorelucrativecareerstojoinmeinthiseffort.
As my primary research associate, Scotthas managed ourstaffofre
searchers, written crucial case studies, helped me teach and explain
complicated concepts, and reviewed and refined every draft ofthis
book. Mark andMatt, through ourfirm Innosight, have translated
these concepts into practical tools and processes to help managers
build businesses that will be significant and successful—and in so
doinghavetaughtmehowourfindings caninterfacewithmanagerial
reality. My office manager, Christine Gaze, and research partners
Sally Aaron, Mick Bass, Will Clark, Jeremy Dann, Tara Donovan,
Taddy Hall, John Kenagy, Michael and Amy Overdorf, Nate Red
mond, Erik Roth, and David Sundahl each have helped me stay atop
the huge volume ofinteresting ideas, opportunities for inquiry and
authorship, and requests for assistance that flow into and out ofmy
office. Theyhave painstakinglyhelped us getthe data, logic, andlan
guagerightfor everypurpose.
Ihave aprofound debt toHarvard Business School and my col
leagues here.Theinsightful research ofProfessors Clark Gilbertand
Steve Spear has been exceptionallyvaluable. Otherfaculty, including
KentBowen,JosephBower,HankChesbrough,KimClark,TomEisen-
mann, Lee Fleming, Frances Frei, Alan MacCormack, Gary Pisano,
RichardRosenbloom,BillSahlman,DonSull,RichardTedlow,Stefan
Thomke,MichaelTushman,andSteveWheelwrighthavealsoshaped
what wehavecometo understand—ashaveProfessorsRebeccaHen
derson, Paul Carlile, James Utterback, and Eric von Hippel ofMIT,
Robert Burgelmanof Stanford, and Stuart Hart ofUNC. The extra
ordinary benefit of Harvard's case method of teaching is that the
teachers can carry issues they don't understand into the classroom,
IN GRATITUDE |
askquestions ofthestudents inthecontext ofacase, andthenlisten
to andlearnfromsomeofthebrightestpeopleintheworld. Iexpress
my love andmy gratitude tomy students for preparingsohardevery
dayto teacheach other and theirteacher in so manyways. It is a
learningsystemwithout parallel.
I alsohave soughttheadvice ofsome themostcapable business
thinkers and executives in the world. MattVerlinden and Steve King
of Integral, Geoffrey Moore ofthe Chasm Group, Tony Ulwick of
Strategyn,CrawforddelPreteofIDC,AndyGroveofIntel,KenDobler
ofJohnson &Johnson, Dan Carp andWilly Shih ofKodak, Dennis
Hunter ofApplied Materials, MichaelPutzofCisco, Chris Rowen of
Tensilica,BillGeorgeofMedtronic,MeirWeinsteinofEMC,Michael
Packer and Kelly Martin of Merrill Lynch, Mark Ross of Cypress
Semiconductor, andRonDoUens, Ginger Graham, andRodNashof
Guidant have all tutored me.
Iowe thedeepest debttomy family. Mychildren, Matthew, Ann,
Michael, Spencer, and Katie, each have discussed, used, and bettered
my understanding through their own work and schooling. My wife,
Christine,isthesmartestpersonIhaveknown.Herstandardsforclar
ityandcompletenessareuncompromising,andherlanguageandintel
lectareimprintedoneveryconceptinthisbook—whichisremarkable,
given thatmuch ofher advice came atthe end oflong days thatwere
filledwiththepressuresofmotherhoodandherselflessservicetooth
ers. Shebringsloveandlighttomeandeveryoneshemeets,everyday.
Academiafor somecan bean enterpriseofsolitary pursuits. I am
blessed in contrast to work within a communityof selfless, humble,
smart,andintellectuallycourageousmenandwomenwhoasagroup
have made thesubstantialprogress thatissummarizedinthisbook. I
amgratefultohave been able toplaymy role inthis effort.
ClaytonM. Christensen
Boston, Massachusetts
Like Clayton, Ioffer my thanks tothe many peoplewho have shared
their experiences and talents with us. Without their willingness to
bepartofourlearningprocesses, neitherthis booknorourrespective
careers would bepossible.
IN GRATITUDE
ThelatitudeIhave enjoyedwithinDeloitte Research is,asfarasI
know, unparalleled inthe consulting industry. The firm has gone be
yond simply tolerating myidiosyncratic undertakings—ofwhich this
bookiscertainlyone—toactivelyencouragingthem, makingpossible
the exploration ofadifferent way tocreate and share knowledge. I
amespecially grateful toAnn Baxter, thehead ofDeloitte Research,
and Larry Scott, global leader ofDeloitte Consulting's Strategy and
Operationspractice,formakingitpossiblefortheballtostartrolling,
and to innumerable others in Deloitte Consulting and Deloitte &
Touchefortheirenthusiasmandsupportthathasmaintainedandac
celerated thatmomentum.
These few sentences areone ofthefew opportunities Ishall have
toacknowledgefor posteritymyintellectualdebttoClayton.Myfirst
contact with Clayton's work was as a doctoral student at Harvard
Business School. In hiswritings I founda rare combinationof theo
reticalelegance,intellectualrigor,creativedataanalysis, andmanage
rialrelevance. WhenIread TheInnovator'sDilemma, I, likesomany
others,feltthatamotehadbeenremovedfrommyeye,andthatwhat
Ihad previously seen onlydimly, ifatall, was suddenly broughtinto
the light. Clayton'swork has become for mea standard to whichI
continue toaspire, and so itis truly aprivilege tohave had the op
portunity tocontribute toand be part ofthe continued development
and elaboration ofthose ideas. During the course ofmy doctoral
studies,IwasluckyenoughtohaveClaytonasateacher.Inthecourse
ofour work together onthis book, he has become a mentor, col
league, andfriend.
Isavefor lastthe onetowhomIowethe most: mywife, Annabel.
Her love and support have been unconditional through the years of
doctoralstudies,throughtheinevitableabsencesattendanttoacareer
inconsulting, throughmypreoccupationwiththis and otherprojects
(but mostly this one!), and through the various other challenges re
sultingfrom thesomewhatoddballpathIhavechosen.Withouther,I
couldnotpursuemydreams. Withouther, andwithoutourdaughter,
Charlotte, Iwouldn'thave anyworthpursuing.
MichaelE.Raynor
Mississauga, Ontario
