Professor Christensen explains why just pursuing efficiency is not enough..

Came across this video of Clayton Chistensen talking about disruptive innovation on ‘The Lean Thinker’.

His short talk hits upon a great example of systems-drive-behavior.

This idea is appropriate to teams. Teams need to consistently work & have system in place to reinforce the behavior of market creating innovations.

3 types of Innovations:
  1. Market Creating Innovations. Market Creating Disruptions
  2. Sustaining Innovations.
  3. Efficiency Innovations.

The idea of efficiency to grow (Six Sigma, Lean, TQM) creates a short-term win that opens cash flow. The hope is that efficiency and capital can be used to invest in market-creating innovations.

When efficiency innovations are not in balance with market creation innovations a spiral of continued efficiency happens until the market no longer exists or we find ourselves losing customers to disruptors in the field.

This panic may cause us to raise prices (without improving the quality) losing more customers leading to more challenges that may lead us to think we need more efficiency.

To break this (easier said than done) market-creating innovation will move us to a different level.

I hear this ‘market-creating innovation’ idea in many discussions with teams … and it requires growing product offering & taking some safe-to-fail risk in balance with efficiency.

You cannot cut your way to growth.

BTW – I am a fan of the author in the video Clayton Christensen – He co-wrote a book called “The Innovators Solution”