Is the Concept of Disruptive Innovation Still Relevant Today?

This article was published in Q4 Special Report on Innovation, Risk and Reward by the ICAEW Business and Management Faculty Dec 2018

The concept of disruptive innovation has become so much a part of our popular culture that it’s taken as gospel, taught at Universities as course work, and discussed at every start-up event. It seems as if every entrepreneur claims to have the latest “disruptive innovation” as if this is somehow the only thing that matters or at least the one that matters most. 

The beginning of this “Disruptor Generation” started long ago but was brought to life in modern popular culture largely from Clayton M. Christensen, who entered his doctoral program at the Harvard Business School in 1989 and joined the faculty in 1992. In his 1997 book, “The Innovator’s Dilemma,” he argued that, very often, companies failed not because their executives made bad decisions, but because they made good decisions. In many cases, the same kind of good decisions that had made those companies successful for decades. He described the “innovator’s dilemma” as what happened when “doing the right thing is the wrong thing” because companies lost sight of (or never saw at all) those “disruptive innovations” that took over their markets and customers.

In her June 2014 New Yorker article Jill Lepore suggested that Christensen had hand picked his case studies and that; “Disruptive innovation as a theory of change is meant to serve both as a chronicle of the past (this has happened) and as a model for the future (it will keep happening). The strength of a prediction made from a model depends on the quality of the historical evidence and on the reliability of the methods used to gather and interpret it. Historical analysis proceeds from certain conditions regarding proof. None of these conditions have been met.”

In other words, Lepore claimed that Christensen’s theory of Disruptive Innovation as it’s being played out today, is a deeply flawed theory, especially when it’s applied to the concepts of how things change in business rather than simply to why business fail.

Venture Investor and CEO of Data Analytics firm Growth Science, Thomas Thurston also weighed in with a compelling response to Lepore in TechCrunch where he wrote; “Whether or not Disruption Theory can predict the future isn’t a matter of opinion, it’s a matter of fact”. And he goes on to cite a plethora of research (his own and others), about the testing and results of Christensen’s original theory. He goes on to state; “the models have now made more predictions than all U.S. venture capital deals over the past five years combined, with a predictive accuracy more than 2.5X greater than the venture capital industry as a whole.”

I’ve heard too many pitches where an innovation is called disruptive when it is clearly not. It’s time for entrepreneurs to stop throwing the term “disruption” around as if it’s some kind of solution instead of a very narrow specific term that should be used analytically. It’s also time for Incubators, Accelerators and even Universities to start being specific about what Disruptive Innovation is and is not. As Thurston points out; “highly refined versions of these Disruption-based models had produced more than 3,400 blind, real-world predictions about business survival or failure.” So clearly it is not, as Lepore claimed, devoid of the scientific proof of it’s reliability.

Perhaps the problem is not that Christensen was wrong about the Theory of Disruption but that popular culture has so widely disseminated and so widely accepted blindly as a universal truth. The world of business and the science of predicting success or failure are full of subtleties and it’s entirely possible to be right about a lot of things and still be wrong on occasion. What we do in business is often as much art as science. But using science when we can will, over time, improve our outcomes. As Thurman points out, the model of disruptive innovation is disproportionately likely to be right for the biggest financial wins – and it has been even though it has also missed a few very visible winners like the iPhone and Tesla.

Recently, in their book Think Big, Start Small, Move Fast, three Health Care Innovation professionals from the Mayo Clinic also take a somewhat skeptical approach to the modern pop culture interpretations of Christensen’s disruption theory. Nicholas LaRusso, Barbara Spurrier, and Gianrico Farrugia three of the founding members of the Center for Innovation (CFI) at Mayo, discuss the concept of sustaining innovation—or, as it’s sometimes known, “transformational or disruptive” innovation—in health care. They argue that innovation in health care is (at best), an evolutionary form of development built on a focus on the patient and their experience. The key word here is “evolutionary” rather than “disruptive” – and it’s not a small distinction despite the acknowledgement of the authors of their relatively modest ambitions of their brand of innovation. I wondered as I read this if we’re missing the mark again. Medicine has many factors that can affect the potential for “disruption” from regulatory to financial to the human factors involved in adopting new methods and tools. Time will tell in this arena as the collision of consumer technologies like wearable devices and medical applications collide but I’m guessing now that some level of disruptive technology will upset even the most significant barriers imposed in the adoption of new technology in today’s practice of medicine. Even the largest health care delivery systems have “Innovators in Residence” and other leaders who are hard at work trying to understand the impacts of these new technologies and tools.

Disruptive innovation is an honorable goal for any product or business but as pop culture gospel, it’s been misused, over-hyped and definitely overrated. It’s not meant to be an answer in every entrepreneur’s pitch deck like some magic words to say during your pitch. And it’s certainly not meant to replace the drive, intelligence, energy and enthusiasm of those who pursue it. Whether you believe Lepore’s position that it is still unproven or Thurston’s body of scientific and financial evidence that says otherwise, in the next generation we’ll again see it played out on the largest stage that represents 21% of U.S. spending as new medical devices, imaging technologies, drug development and consumer technologies are integrated into our health care system. Chances are that disruption will again play a role whether we see it or not – and according to Thurston, there’s a 66% chance that disruption theory will accurately predict the answer.

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