SmartPlanet: Closed Short-Term Systems Do Not Do Disruptive Innovation

Innovation

Clayton Christensen: why America’s innovation engine is sputtering

By | November 7, 2012, 2:17 PM PST

Clayton Christensen

Truly disruptive innovation — the kind that creates new markets, opens up new ways of looking at problems, and greatly expands wealth — is in short supply, and that is what is dragging the current economy. There isn’t enough innovation because business leaders and managers have become too focused on short-term gains.

That’s the view of disruptive innovation guru and Harvard professor Clayton Christensen, who, in a New York Times editorial,  explains why America’s innovation system has gone off the tracks.

Basically, the economy has long been driven by three types of innovation that all industries cycle through: empowering innovations, which transform complicated and costly products available to a few into simpler, cheaper products available to the many (think Ford’s Model T); sustaining innovations, in which old products are replaced with new models (think Toyota’s Prius); and efficiency innovations, which reduce the cost of making and distributing existing products and services (think Geico in online insurance underwriting).

The problem these days, Christensen says, is that instead of cycling through these three phases, businesses are stuck on efficiency innovations — streamlining, paring, cutting and squeezing. While efficiency innovations liberate capital, there isn’t enough energy and resources going to empowering innovations — which generates new wealth and opportunity within underserved or unserved parts of markets.

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