A Quote by Clayton Christensen
Disruptive innovations create jobs, efficiency innovations destroy them.
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There are three types of innovations that affect jobs and capital: empowering innovations, sustaining innovations and efficiency innovations.
Companies, in fact, are specifically organized to under-invest in disruptive innovations! This is one reason why we often suggest that companies set up separate teams or groups to commercialize disruptive innovations. When disruptive innovations have to fight with other innovations for resources, they tend to lose out.
The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption. Companies in fact are specifically organized to under-invest in disruptive innovations! This is one reason why we often suggest that companies set up separate teams or groups to commercialize disruptive innovations. When disruptive innovations have to fight with other innovations for resources, they tend to lose out.
If a company truly wants to resolve the innovator's dilemma, it does need to be able to create wave after wave of disruptive innovation. And those disruptive innovations will typically grow to the point where they do cause some pain for leading companies. But most disruptive innovations create substantial new growth before they cause that pain.
Efficiency innovations are a natural part of the economic cycle, but these are the innovations that streamline process and actually reduce the number of available jobs.
The Republicans are wrong in thinking that the rich create jobs. In reality, many of the richest Americans have been investing in efficiency innovations rather than to create jobs. And the Democrats are wrong, because growth won't happen if they distribute the wealth of the wealthy to everyone else.
Efficiency innovations provide return on investment in 12-18 months. Empowering innovations take 5-10 years to yield a return. We have ample capital - oceans of capital - that is being reinvested into efficiency innovation.
We love serious technology innovations, and there is a strong bias towards large technology innovations that are sort of disruptive to the current market.
Sustaining innovations are the key to consistent performance, whereas disruptive innovations are the key to dramatic changes in power.
The principles of disruptive innovation are indeed intended to be guidelines to assist managers both in introducing disruptive innovations as well as identifying disruptive developments in their market.
It is commonly believed that innovations create changes - but few ever do. Successful innovations exploit changes that have already happened.
It's very dangerous to invent something in our times; ostentatious men of the other world, who are hostile to innovations, roam about angrily. To live in peace, one has to stay away from innovations and new ideas. Innovations, like trees, attract the most destructive lightnings to themselves.
Empowering innovations require long-term investments, which tie up capital for years and years. So companies are using capital to create more capital, and consequently, the world is awash in capital, but the innovations we need to advance aren't there.
In a healthy economy, empowering, sustaining and efficiency innovations operate in balance. A healthy economy creates and sustains more jobs before squeezing out inefficiencies.
Disruption is a process, not an event, and innovations can only be disruptive relative to something else.
Efficiency innovations arise in industries that already exist. They provide existing goods and services at much lower costs. They are not empowering. Efficiency innovators become the low cost providers within an existing framework.
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