If you haven’t already, go read Jill Lepore’s surgical evisceration of “disruptive innovation” theory. I can’t recommend it enough for anyone interested in startups, innovation, and business theory.
If you’re of the TL;DR persuasion, here’s the short version of Lepore’s analysis: Clayton Christensen’s theory of disruptive innovation—laid out in his best-selling 1997 book, The Innovator’s Dilemma—has little to no predictive power and is, in fact, a flawed reframing of what we have historically called “progress.” The theory is built on handpicked case studies, specious logic, and assumptions that fail the standards of historical analysis. At best, Lepore seems to be saying, disruptive innovation is mythical; at worst, it’s harmful. And those who accept it as dogma (a common view in startup circles) not only misunderstand business history but also risk getting things very wrong in the future.
Like Christensen, Lepore is a Harvard professor (he, of business administration; she, of American history), and she holds a PhD in American studies from Yale—all by way of saying she has the academic bona fides for this type of analysis, whether or not you agree with her. She’s also a staff writer at the New Yorker, meaning she has not only writing chops but a full team of editors and fact checkers behind her. The words cut quickly and gracefully, especially in the following paragraph, where she lays out the core of her argument.
The theory of disruption is meant to be predictive. On March 10, 2000, Christensen launched a $3.8-million Disruptive Growth Fund, which he managed with Neil Eisner, a broker in St. Louis. Christensen drew on his theory to select stocks. Less than a year later, the fund was quietly liquidated: during a stretch of time when the Nasdaq lost fifty per cent of its value, the Disruptive Growth Fund lost sixty-four per cent. In 2007, Christensen told Business Week that “the prediction of the theory would be that Apple won’t succeed with the iPhone,” adding, “History speaks pretty loudly on that.” In its first five years, the iPhone generated a hundred and fifty billion dollars of revenue. In the preface to the 2011 edition of “The Innovator’s Dilemma,” Christensen reports that, since the book’s publication, in 1997, “the theory of disruption continues to yield predictions that are quite accurate.” This is less because people have used his model to make accurate predictions about things that haven’t happened yet than because disruption has been sold as advice, and because much that happened between 1997 and 2011 looks, in retrospect, disruptive. Disruptive innovation can reliably be seen only after the fact. History speaks loudly, apparently, only when you can make it say what you want it to say. The popular incarnation of the theory tends to disavow history altogether. “Predicting the future based on the past is like betting on a football team simply because it won the Super Bowl a decade ago,” Josh Linkner writes in “The Road to Reinvention.” His first principle: “Let go of the past.” It has nothing to tell you. But, unless you already believe in disruption, many of the successes that have been labelled disruptive innovation look like something else, and many of the failures that are often seen to have resulted from failing to embrace disruptive innovation look like bad management.
It’s hard to read this piece without reconsidering everything you know—or thought you knew—about the past 40 years of tech history, from the personal computer up through Über. Lepore also points out that Christensen’s likening of his theory to the theory of evolution—nonstop upheaval and survival of the fittest—holds true only if one cherry picks the case studies. To keep with the evolutionary biology analogies, the nuanced reality that Lepore describes—fewer true disruptions and plenty of established companies that have not only survived but thrived increased competition—is perhaps more like the theory of punctuated equilibrium.
Most relevant to our work at Unreasonable, Lepore goes on to say that the theory of disruptive innovation risks breeding a sense of panic and selfishness that prevents entrepreneurs from doing good.
[Startup founders] are told that they should be reckless and ruthless. Their investors, if they’re like Josh Linkner, tell them that the world is a terrifying place, moving at a devastating pace. “Today I run a venture capital firm and back the next generation of innovators who are, as I was throughout my earlier career, dead-focused on eating your lunch,” Linkner writes. His job appears to be to convince a generation of people who want to do good and do well to learn, instead, remorselessness. Forget rules, obligations, your conscience, loyalty, a sense of the commonweal. If you start a business and it succeeds, Linkner advises, sell it and take the cash. Don’t look back. Never pause. Disrupt or be disrupted.
There’s already been a lot of discussion about this piece, and I’m sure there will be much more. Despite her exhaustive research into Christensen’s theories and writing, she allows herself to fall into some lazy characterizations of entrepreneurs and startup culture—missteps that will give her critics an easy opening. But we’re eager to hear your thoughts. Does fear of disruption—as described in The Innovator’s Dilemma—hinder social entrepreneurship? Or does a belief that entrepreneurs regularly upend even the most established of industries give you the confidence you need to tackle big problems you might otherwise shy away from? Let us know in the comments below.
UPDATE: Christensen forcefully responded to Lepore’s story today in an interview with Bloomberg Businessweek. Most interestingly, he says that Lepore seemed to have read only his first book and none of the followups and, thus, didn’t realize that he has already addressed the flaws in his theory that form the core of her article. “In fact, every one—every one—of those points that she attempted to make [about The Innovator’s Dilemma] has been addressed in a subsequent book or article,” Christensen tells Businessweek. “Every one!”