The Disruption Machine: What the Gospel of Innovation Gets Wrong
This article by Jill Leopre appeared in the June 23, 2014 issue of The New Yorker and critiques the theory of disruptive innovation proposed by Clayton Christensen in his book The Innovator’s Dilemma. This article sets the stage for Dr. Koplin’s lecture on the promise and perils of innovation in medicine by introducing a particular style of innovation. Although disruptive innovation was set forth as a business model, it is working its way into the management of such varied industries as education and healthcare.
The premise of Christensen’s novel is to discuss why companies fail, which according to him is a product of doing the right thing. In his mind, doing the right thing is actually the wrong thing. Most companies become successful and then remain profitable due to sustaining innovations, small improvements to existing products. However, he argues that successful fledgling companies use disruptive innovation to offer cheaper and inferior alternatives to products sold by established companies that initially reach less profitable customers, but eventually will take over an entire industry. Christensen writes as if this is how progress is and should be made in all industries, from technology to education to healthcare. This theory has been both espoused and decried by many, especially because of its reliance on a language of panic, fear, and disorder.
Lepore explains how over the years society has moved from the idea of progress, to evolution, to growth and innovation, and now to disruption. Replacing progress with the term innovation avoids question as to whether novelty is an improvement. This theory of change is meant to serve as an explanation for past progress and a model for future changes, but the basis of any model must be in historical proof, which it does not have.
The author goes on to pick apart the carefully selected case studies used by Christensen in The Innovator’s Dilemma, revealing how the theory of disruptive innovation rests on an arbitrary definition of success. Christensen also tends to twist facts to fit his theory: Long-term success was had by companies that were able to make incremental improvements regardless of their order in marketing new disruptive technologies, a stark revelation that contradicts everything about disruptive innovation. An in-depth review of each of his case studies reveals more and more evidence of how Christensen ignores any factors that don’t support his theory, in industries ranging from discount stores to steel.
Lepore goes even further in her critique of disruptive innovation, using Christensen’s method of hand-picked case studies against him. She highlights how companies ranging from Time, Inc. to those in the financial-services industry have espoused a business model of disruptive innovation and failed miserably. The author finally critiques recent efforts to apply disruptive innovation to institutions like hospitals, schools, and museums, which are not true industries. The author also notes that one feature of disruptive innovation, the wall of separation between business and public interests, has been a feature of journalism long before this theory was brought to market. The article finishes with a warning for all who may fall prey to this dubious gospel of disruption. It is nothing more than a theory of why businesses fail and it is definitely not a law of nature.
Lepore’s discussion of application of disruptive innovation to healthcare raises important questions regarding innovation in industries without true products, especially in medicine, where safety is a major concern. By understanding different theories of innovation and their nuances, one is better able to engage in an educated debate on contemporary concerns regarding innovation in medicine.
Discussion Questions and Answers
How is disruptive innovation defined, and can it be avoided?
Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then drastically moves up in the market to eventually displace established competitors. These innovations allow a whole new population at the bottom of the market to access a product or service that was formerly only available to high-end customers. Crudely put, disruptive innovation is the selling of a cheaper, poorer-quality product that initially reaches less profitable customers but eventually takes over and devours an entire industry, and therefore is a theory as to why some businesses fail. There are examples of companies that succeeded without deviating from their past business plan, but since disruption appears to be the economic theory of our time, there will always be startups trying to disrupt industry giants.
How does Lepore criticize Christensen’s methodology in his work on disruptive innovation?
Christensen tended to handpick cases that would support his argument, leaving out important facts that did not support his argument. Additionally, he failed to look at companies that succeeded as a result of not disrupting. The theory of disruptive innovation rests on an arbitrary definition of success and can only reliably be seen after the fact. Finally, Christensen attempts to apply a theory studied in business organizations to other branches of society, like education and government.
What is the Difference between sustaining and disruptive innovation, and why is this difference important?
Sustaining innovations are those that improve upon existing products, while disruptive innovation is a predictable patter across many industries where fledgling companies use new technology to offer cheaper and inferior alternatives to products sold by established companies, often undermining the principles upon which an industry is based. Disruptive innovation is a particularly dangerous theory when applied to industries without typical consumers and products.
What are some examples of disruptive innovation in society?
The iPhone is both a sustaining and disruptive innovation. It improved upon existing phones, but disrupts other companies through apps, like camera companies, travel agencies, weather services, etc. Buzzfeed is also a disruptive innovation in the newspaper world.
How do you think we should address the issue of disruptive innovation in spheres outside of standard industry (i.e. healthcare, higher education. etc.)?
In higher education, online colleges are “cheapening” the collegiate experience. Yes, University of Phoenix has allowed many people to obtain degrees that would not have had the opportunity otherwise, but what is the value of that degree? In fields such as healthcare, safety becomes an issue. If established practice is being replaced by cheaper alternatives, what’s to say those alternatives are just as safe and effective as the current methods?
This question sparked a lively discussion on recent developments in the field of medicine, much of which will be addressed in the Broader Impact section.
What are the differences between innovation and invention? How does Dr. Koplin look to innovate?
Innovation is a creative idea that approaches a problem in a different way to improve upon an existing product, process, or service. Invention is the actual first-time creation of the product or introduction of a process. Innovators like Dr. Koplin are able to identify things to improve in the world around them and capitalize on those ideas. He says that he always looks around himself and asks, “How can this be improved?” Dr. Koplin has had many successes with innovation, but things do not always go as planned. Innovation is not a straight line.
What are challenges innovators face in the field of medicine?
In medicine, innovators currently and have historically faced numerous challenges. A lack of structured education, not generally a current issue in the Western world, has been a challenge to innovators. Without a well educated body of practicing physicians, there really cannot be any medical innovation. Racial and religious prejudice are also issue innovators need to contend with. Finally, public suspicion, Creationism (by disruption the teaching of the scientific method), and other idiosyncratic notions impede inventive creativity.
What are several factors that can corrupt innovation?
There are numerous historical examples (discussed in part 1 of the video synopsis) that illustrate how self-serving considerations and peer jealousy can impede innovation. Especially, there are a multitude of examples of how corrupt financial incentives can limit access to innovation techniques, particularly in a competitive market.
Describe institutionalized conservatism and give an example of its effects on innovation.
Institutionalized conservatism is the refusal to see the value in innovations that come from outside of one’s own organization or culture. In the late 1800s, American rejection of germ theory and refusal to use aseptic technique led to the death of President Garfield from infection of a non-life-threatening gunshot wound. Posturing behind established methodologies, rules, and regulations creates an environment that is hostile to innovations.
What do you think the biggest challenges to innovation are today and why?
Today, there is a lot of controversy surrounding “fake” innovation and its consequences. A classic example of this is seen in the rise in popularity of robotic surgery, which lacks any efficacy data saying that it improves surgical outcomes. The most pressing question is are we innovating to improve, or innovating just for the sake of making something that is only perceived as new in order to make money.
This is another topic that sparked a lively discussion and is addressed in the Broader Impact section.
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