Just as kids await the latest Harry Potter installment, so do business leaders look for Clayton M. Christensen's next offering. In Seeing What's Next, which is due out this month, the Harvard Business School professor and co-authors Scott D. Anthony and Erik A. Roth explain how to spot industry-changing innovation. We recently asked Christensen about the great, good fun that is creative destruction.
Inc.: In the book, you tell companies to look at the most unsophisticated customers for ideas. Have early adopters lost their cachet?
Christensen: Really smart companies need to pay attention to all customer groups, but paying too much attention to early adopters can cause a company to miss disruptive developments occurring at the low end of the market or on the fringe. And they are what really drive industry change. That's why smart companies pay attention to the least demanding customers in their core market and to people outside the core market.
Q: Do successful, innovative companies have to worry about innovation too?
A: Innovative companies often create markets. EBay, for example, didn't really have much competition when it began offering services related to buying and selling collectibles. The challenge for companies like this is that staying in a small market doesn't meet the growth needs of managers and investors. So these companies have to figure out ways to keep innovating. For eBay, it was relatively easy: get new customers and make markets in higher-priced goods.
Q: Where does the opportunity usually lie?
A: Companies can think about what other markets they might serve as they improve their products. Or they can think about markets that may be overshot that might welcome a simple solution. They can try to create new markets as well. One important thing is that companies need to think beyond the artificial lines demarking their "industry." Understand the job for which customers are hiring your product or service. Then, look for other people who are struggling to get the same job done.