From the Archives: Innovation Fast and Slow

6:33 PM Wednesday August 8, 2012
by Clayton Christensen | Comments (2)

One of the great things about being an academic is that I get to explore new ideas and answer unanswered questions for a living.  It’s a real thrill – easily one of the most exciting parts of my job.  With this blog, I’m starting a new series of entries where I look back on research I’ve done earlier in my career and talk about how those ideas have evolved over time and why (if at all) they’re still relevant.  Hopefully we’ll get some great discussions out of it and spark new areas for research and exploration.

So to kick things off, I’d like to talk about my doctoral dissertation that I wrote as part of the DBA (Doctor of Business Administration) program at HBS, which I graduated from in 1992.  I just spilled my guts working hard as I could during that program.  My wife Christine and I had four children when I started the program in 1989 and had our fifth child in 1991, so we couldn’t afford for me to take my time in the program.  I needed to get through fast.

Luckily I had a pretty clear idea for what I wanted to focus my research on when I first started.  I wanted to answer the question “Why do successful companies fail?”  In my previous work as a consultant and entrepreneur, as well as just watching the business world around me, I had seen lots of companies that one year were incredibly successful and a couple years later were in absolute shambles.  Even more perplexing was the fact that the same managers and CEOs who helped make these companies successful were still running the same companies when they were doing poorly.  It just didn’t make sense.

Since I had a good question to answer with my research, all I needed was an industry to study.  One of my advisors in the doctoral program recommended that I study the disk drive industry because it was an industry with a significant amount of change and turnover.  It was an industry where the technology was evolving rapidly, with frequent new product introductions.  Furthermore, it was an industry where there were constantly new start-up companies who were growing rapidly and also lots of more established companies that had once done well but later declined in performance.  The disk drive industry was a place where things changed quickly and moved at a very fast pace.

The idea I want to focus here is that the disk drive industry was a good industry to study because of the fast pace of competition and innovation in the market.  Why are fast-moving / evolving markets good to study, and what should we study them for?

I’ll draw an analogy here.  When scientists want to run experiments on how changes in the environment affect living organisms, one of their favorite organisms to study is the fruit fly.  Why?  Fruit flies are excellent to study because of their extremely short life-cycles – they only live for 1-2 days.  As a consequence, fruit flies, as a population, are extremely sensitive to changes in their environment.  You can know very quickly how a specific change will affect them.  For example, if you experimentally change their food source, you can see within even a day how that one change will affect an entire population of creatures, and you can also be very confident that the observed effect was caused by the change in food source.

How does this relate to the study of innovation?  Fast-moving industries like the disk drive industry are like fruit flies.  They are very sensitive to changes in their industry, as well as changes affecting their customers and suppliers, so you can quickly see how changes to the industry environment affect firms, both on an individual and population level.  And you can also see the nature of the effect: which firms did this change benefitted, and which firms were hurt?  Why?  Who survived, and how did they do it?  Who couldn’t make it?  Fast-moving industries are great to study innovation because you can quickly see how one firm’s innovations impact their competitors.  Because of this, you can more accurately tell which innovations in a market are game-changers and which innovations fell flat.

There’s a lot to learn from fast-moving innovations like the disk drive industry when I studied it.  That’s also why many innovation scholars research fast-moving industries like integrated circuits, entertainment and media, tech start-ups, and medical devices.  It’s just a gold mine.

But what about industries where things move slowly?  Is there anything worthwhile studying there?  The answer is “yes”, but what we can best learn from slow-moving industries is very different from what we can learn from their speedier counterparts.

Slow-moving industries are often (but not always) capital-intensive industries like steel manufacturing or automobiles where introducing a new innovation requires a significant amount of advance design, significant capital outlays, and production planning.  Slow-moving industries can occur when the industry’s products are long-lived assets that customers may use frequently but nonetheless purchase infrequently.  Lastly, slow-moving industries can also occur when customer needs evolve slowly, limiting the value of frequent new product introductions.  In any case, though, the result is generally the same: there is less change in the composition of the market and significant product innovations are less frequent.

Because slow-moving industries present fewer opportunities to introduce significant innovations, they tend to have more protracted and deliberative innovation processes, as a single big product “miss” can quickly sink a firm since there may not be a chance to introduce an improved product for many years.  The length of these processes, as well as the high stakes inherent in them, allows us to more closely scrutinize firms’ innovation procedures and understand how those processes impacted the products that are eventually released.

In summary, fast-moving industries are terrific for understanding how changes in an industry affect firm performance, but the speed of innovation in those industries makes it more difficult for us to observe the real nuts and bolts of firms’ innovation processes.  Slow-moving industries, in contrast, provide less insight into questions of industry and environmental change, but they are excellent for understanding the ins and outs of successful and unsuccessful product development processes.  Thus as we study innovation, one of the questions we need to consider is whether the question is better answered in a fast- or slow-moving industry context and then proceed accordingly.


2 Responses to From the Archives: Innovation Fast and Slow

  1. Rebecca Billings says:

    Thank you for your work and research. My husband is in the process of applying for an MBA, and your books and ideas have influenced us as we prepare.

    Our family had an opportunity to meet you in Scranton, PA at a stake conference a few years ago, and we were so very impressed and touched by your words and the way you conduct your life.

    We have since moved to Utah but are considering returning to the east for school and/or work.

    As my husband was sailing in the east coast this summer for work, he came to your office to meet with you, but unfortunately, you were not in. We hope to someday be able to meet you again.

    Thank you again for your life and work.

  2. James says:

    Thanks for the research you made. That was really interesting read.

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