Seeing What's Next: Using Theories of Innovation to Predict Industry Change (book)

Seeing What's Next is one of the smartest books I've read.

I love the one observation made about this book as I can relate to the way my children and I have totally different tastes yet we share the same enthusiasm for certain passionate writers: 'Just as kids await the latest Harry Potter installment, so do business leaders look for Clayton M. Christensen's next offering'

Someone please shoot me if I stop being enthusiastic about story tellers and prophets of Christensen's caliber ...

This is the third book in a series on innovation, with Christensen as the lead author. The three books develop theories around the concepts of disruptive and sustaining innovation, and how to apply strategies based on these concepts and an understanding of the markets into which innovations are directed.

The first book, The Innovator's Dilemma, explains why established companies can often be successfully attacked by innovators introducing disruptive products, while The Innovator's Solution develops an approach to launching disruptions. Seeing What's Next changes focus somewhat to propose that the theories developed in the first two books can be used to analyse and predict industry change. In doing so, it also provides a useful summary of the theories put forward in the previous books and their application.

The analysis is undertaken essentially in the context of Porter's 'five forces' (competitors, potential entrants, buyers, substitutes and suppliers) but with the added dimensions of the nature of the innovation (disruptive or 'sustaining' - i.e. something that creates new markets or reshapes existing ones, or something that develops further on existing offerings) and the range of customers from 'overshot' (offered more than they really want) to 'undershot' (looking for more than they are offered) in terms of product characteristics.

It is a useful way of looking at markets - one that will keep analysts very occupied in collecting data and pondering alternative conclusions and strategies. The associated risk is that it appears to invite 'paralysis by analysis'.

While the coverage of the book extends to other industries, including airlines, education and the health industry, the methodology is built primarily around various elements of the telecommunications and computer industries. I suspect that choice of the fashion or food industries would have led to a different perspective on the same questions - one in which the ideas put forward by Gladwell in The Tipping Point might provide more useful clues to competitive challenges to established companies.

How reliable the authors' methodology is in actually predicting the future in a specific case is, of course, open to question, and it is not a question that the authors put to the test. Rather, they claim that the analytical process proposed will put both a potential attacker and a potential defendant into a better position to achieve their goals.

The three underlying theories round which the analysis in the book is built are
the disruptive innovation theory (briefly described above)
the resources, processes and values (RPV) theory, and
the value chain evolution theory (VCE).

The RPV theory argues that resources, processes and values define an incumbent's strengths, but also its weaknesses and blind spots - it is not easy to operate outside a well established arena.

The VCE theory argues that integration gives greater control over interdependent factors but reduces flexibility. The theory provides a tool for judging whether the right decisions about what should and should not be integrated have been made in particular circumstances.

Part 1 of the book elaborates on these theories and their application, while Part 2 essentially consists of extended case studies of five industries (education, aviation, semiconductors, health care, telecommunications) and an examination of innovation overseas. Of these industries, I am most familiar with health care and, while I found the analysis interesting, it did not seem to me to come to grips with the central dynamics of the challenge of health care into the future.

Para aquellos que hayan seguido los dos libros anteiores del profesor Christensen, esta última entrega no añade elementos claramente novedosos respecto a los anteriores.

El libro presenta dos partes claramente diferenciadas:
1. Una primera donde se formaliza el cuerpo de la teoría de la innovación y de cómo las ideas "disruptive" aparecen, cómo se fomentan y cómo se han de gestionar en una compañía que quiera sobrevivir a largo plazo.
2. En la segunda parte, como ya se hizo brevemente en la "Solución de los Innovadores" se analizan diferentes industrias desde la perspectiva de la teoría de la Innovación detallada en la primera parte.
Se analizan como en el futuro las siguientes industrias cambiarán completamente como consecuencia de las nuevas aproximaciones que nuevas empresas con ideas radicales ya están poniendo sobre la mesa (no siguen el orden del libro):

- El futuro de la industria del transporte aéreo de Pasajeros.
- El futuro de la industria de los Semiconductores.
- El futuro de la industria de la Educación.
- El futuro de la industria de la Sanidad.
- El futuro de la industria de las Telecomunicaciones.
- El futuro de la competitivad entre países a través de la Innovación.

Muchos de estos análisis coinciden con otros ya existentes cuando se estudian cada uno de estas industrias por separado. Por ejemplo Rifkin al analizar la educación ("The end of work"), Phrahalad ("The fortune at the end of the pyramid") calco del análisis incluido al analizar la competitivad entre países a través de la innovación, o artículos "Technology and economics of the Semiconductor Industry" (Scientific American - 10/01/1997).

En cualquier caso, la formulación del profesor Chrystensen me parece en estos instantes la única de las existentes que parece explicar de una manera razonable la efímera egemonía de las empresas y de cómo éstas pueden sobrevivir en el futuro.

The time to read Seeing What's Next is now!

Recently I was reading an article in Entrepreneur magazine * stating that "China ... now ranks third behind the U.S. and Japan in nanotechnology patents." And that "only 29 percent of papers published in top physics journals in 2004 were by Americans."

Christensen's done it again. Disruptive innovation is what separates the wheat from the chaff, the winners from the losers. It's not so much seeing the future, it's anticipating likely moves from competitors and then doing an end run around them to create something new.

Innovation, particularly disruptive innovation, is the future for America, and the world. I strongly urge any and all aspiring entrepreneurs to read and study Seeing What's Next - your future and our future depends on you.

* The Heat Is On, Entrepreneur, November 2005, pp. 17-20.

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Michael Davis, Editor - Byvation

"Business Success through Innovation"

Clayton M. Christensen's first book, 'The Innovator's Dilemma,' was a work of impressive insight and originality. His second, 'The Innovator's Solution,' was somewhat less insightful but added a necessary extension to the first by telling readers how they might begin to extricate themselves from the dilemma of industry disruption caused by an upstart innovation. The current book is a dense, harder to read compilation of the first two books, with added theoretical insights. Christensen and co-authors Scott D. Anthony and Erik A. Roth tell readers how to use theories of innovation to predict change. We applaud the effort. Don't miss the helpful appendix that summarizes the previous two books.