Publisher's Summary Clayton M. Christensen is a professor of business administration at Harvard Business School. Hiring committees typically look for certain attributes in potential managers: qualities like good people skills and a history of success in previous positions. Christensen and Raymond are direct in their approach to outlining the solution for innovators â¦ The first step on this path is to target people who want to do something but canât, either because they donât have the money, the skill, or perhaps there’s just not an easy solution to their problem. Usually there will be some firing and hiring of a new management team. When performance and reliability are key differentiators, an interdependent and proprietary product is more appropriate.Â Eventually, the market canât absorb additional performance and reliability (overshooting) so the basis of competition shifts to a modular architecture. Theyâll be glad to have anything at all, since they canât afford the higher-end solutions that might currently exist. As a follow up to The Innovatorâs Dilemma, this piece rehashes quite a bit from the previous work. The new method of research that Christensen describes entails figuring out what people want the milkshake to do for them. Unfortunately, after the core business matures, growth usually plateaus. In order to maintain high levels of growth, the module product assemblers have to move up-market against higher- cost suppliers. They are just as glad to focus on higher market levels and they donât recognize the disrupters as a problem until itâs too late. A company focuses solely on core businessâ no new growth enterprises are startedâ and it moves upmarket, where the money is. Disruptive innovation is potentially quite profitable, especially when it creates new markets and reaches people who previously werenât consumers. Continuously upgrade the product so it appeals to larger market segments. A brief synopsis of the book is reprinted below from Amazon. The authors discuss the process of creating and iterating on a theory. The very best time to invest in new growth projects is when the company is still growing. Very few companies can sustain a high level of growth. When something becomes commoditized in a value chain, something else in the chain becomes de-commodified. Managers who worked their way up in the ranks of a stable department can be expected to have developed skills that were useful in that environment, but they wouldnât necessarily be prepared for new challenges. If thereâs performance surplus (in other words, itâs beyond adequate), itâs better to outsource lots of elements. The resource allocation process is the filter through which all strategic actions must flow in order to affect the companyâs course. The latter are an important part of an organizationâs culture. It needs to be foolproof so that lots of people with little skill can use it. Those with limited time might want to consider skipping DilemmaÂ altogether and going directly to Solution, as the latter book summarizes the information presented in the previous work. Capabilities can also become disabilities. ProcessesÂ turn resources into value and include patterns of interaction, coordination, and communication, as well as the way things are developed, manufactured, and marketed. Later, the authors apply this concept to product discovery as well as theory development. The distinction between the two different kinds of innovation; sustaining innovation and disruptive innovation. They create new markets and reach people who previously werenât consumers. Cheaper? The very skills that a manager gains from guiding a company through periods of sustained growth are liabilities during disruptive change. Sustaining innovation modifies or adds to something that already exists; disruptive innovation changes the playing field dramatically, diminishing or destroying anything that preceded it. At this point, the basis of competition changes. This decision can have far- reaching consequences. Entrant firms get a lot done through its their resources; established firms rely more on processes and values. Itâs good to look at the problems candidates have wrestled with in the past when youâre evaluating their skills, but donât assume that they needed to solve all the problems in order to gain experience. Research may show correlations between various attributes and demographics, but that doesnât explain someoneâs reasons for buying a product. This changes the playing fieldâ that new technology is disruptive. Disruptive innovation favors new entrants since they have a business model that is effective at the low-end of the market. A good strategy is to identify people who want to get a job done but canât because available products are too expensive or complicated to use. Retailers and distributors also have to grow by moving up market. The traditional wisdom is that if youâre dealing with a corporation, you should find yourself a champion in the company who can help with the political battles and the layers of bureaucracy. Review of The Innovator’s Solution by Incremental Innovation, Review of The Innovator’s Solution by Engineered, Review of The Innovator’s Solution by Publishers Weekly, Summary of The Innovator’s Solution by Soundview Executive Book Summaries Free, Summary of The Innovator’s Solution by Hype InnovationÂ Free, Summary of The Innovator’s Solution by Derek SiversÂ Free, Summary of The Innovator’s Solution by Soundview Executive Book Summaries, Summary of The Innovator’s Solution by Hype Innovation, Summary of The Innovator’s Solution by Derek Sivers. The continued improvements are overshooting the mark. This results in a demand for increased performance from these once commoditized subsystems, decommoditizing the industry at the subsystem level. Using examples from numerous different companies, the author develops a framework to help executives create disruptive products and services that will maintain growth for their firmsâ¦ If your product is becoming commoditized, it behooves you to look around on the value chain for opportunities. Itâs important to be flexible and adapt the architecture to changing circumstances. The activities that donât seem to be core today might become critical in the future. Something else must be going on. Using examples from numerous different companies, Christensen develops a framework to help executives create disruptive products and services that will maintain growth for their firmsâ¦ Expenses pile up and losses mount; the stock price goes south. Once it has a foothold in the market, the new product creates a new value networkâ it is purchased through new channels and used in new places. The focus is on identifying key assumptions and creating a plan to test those assumptions as quickly as possible. To effectively manage the strategy process, managers must have strong control of a new growth businessâ cost structure. Naturally, people working on new products believe their products will succeed, but they often donât. The performance and cost between each companyâs version of the product are all close. The company tolerates loss because thatâs the game, but that puts it in the hole until the new product pays off. Company-wide training can also teach people to flag disruptive ideas for the small group. Over time, however, the organization’s capabilities shift toward its processes and values. The authors identify the forces that cause managers to make bad decisions as they package and shape new ideasâand offer new frameworks to help create the right conditions, at the right time, for a disruption to succeed. This complete summary of the ideas from Clayton Christensen and Michael Raynorâs book âThe Innovatorâs Solutionâ shows how capital markets demand that all companies should grow by â¦ And we all know that when investors are unhappy, managers are fired and the status quo is reasserted. It takes some discipline to get the good money. MainTakeaway:The Innovators Solution By Clayton Christensen 2. Competitors can undercut the company with disruptive products that are less expensive. Usually, deliberate strategy is implemented from the top down. But the facts donât support this. The Innovatorâs Solution looks for solutions. This groundbreaking book reveals that innovation is not as â¦ Interdependent architecture optimizes performance, but the resulting products and processes arenât so flexible. Few companies exist in a pure state at one end of the scale or another. And so, the process begins anew. These entrepreneurs make growth from non-consumption; they make something from nothing. Sometimes disruptive technology comes along to help them do this. They are often afraid to try new markets. Managers who can anticipate the movement of profitability along the value chain can give their company the ability to sustain growth and capture high profits. This leads to commoditization at that level in the value chain since the modular nature of the product means competitors have access to the same components. Start by making targeted financial projections, and figure out what needs to be true to meet the projections. These innovations are usually more convenient, cheaper, and simpler. Find a summary of this and each chapter of The Innovator's Solutionâ¦ That being said, the â¦ It will expose products to real customers; force the company to keep costs low. Companies that focus on sustained growth get good at it over the years, but they donât develop the wherewithal to manage disruptive growth. “InÂ The Innovatorâs Solution, Clayton Christensen and Michael Raynor expand on the idea of disruption, explaining how companies can and should become disruptors themselves. In trying to increase performance, designs become more proprietary and interdependent. ResourcesÂ include tangible things like people, equipment, and real estate, but things like brands, information, and reputation are also valuable resources. The Innovatorâs Solution looks for solutions. Strategy changes depending where you are in the cycle, so resource allocation must change over time. âIn The Innovatorâs Solution, Clayton Christensen and Michael Raynor expand on the idea of disruption, explaining how companies can and should become disruptors â¦ â The Innovatorâs Solution is an intelligent, perceptive (and frequently counterintuitive) look at innovation, and well worth the time it takes to read and digest it to gain a greater understanding of the complex â¦ A single disruptive enterprise can keep a company on the gravy train for years. Some processes are formal (i.e., defined, documented, and consciously follow by those in the company), and some processes are informal. They lose investorsâ attention, and their stock price goes down, which puts more pressure on managers to create growth. This advice is all well and good, but it is more important to look at the typeÂ of money that these sources offer. If a product meets these qualifications, there is one more test: is the innovation disruptive to all the important players in the industry? Emergent strategies bubble up from within. Eventually, the market canât absorb additional performance and reliability (overshooting) so the basis of competition shifts to a modular architecture. In order to succeed at this game, a senior executive must determine which resources and processes to apply to the new enterprise and must guide the creation of a disruptive growth engine (a system of processes that engenders and nurtures disruptive growth). It becomes more and more difficult to distinguish the product from the competitorâs product. Every week,subscribers are e-mailed a concise summary of a different business book. This is similar in concept to the modern âLean Startupâ and âAgileâ software development processes that emphasize building the smallest deliverable possible to maximize learning and the speed of learning, Companies should be patient for growth and impatient for profit with new business ventures. As a follow up to The Innovatorâs â¦ In the RPV framework, however,Â valuesÂ has a broader meaning. The cycles of commoditization and de-commoditization can begin anew. Anything not meeting this definition is farmed out to another firm. At this point, other things come into play, like convenience, and price, and the basis of competition changes. Itâs heavily influenced by the companyâs cost structure; itâs also influenced by what sized projects customarily are funded. Growth is important. Companies should create a growth engine that is run by policy, so it gets funding and projects are started, not because of immediate needs, but rather because it is part of the day-to-day business. Managers want to understand what makes one company prevail over competitors. The Innovatorâs Solution and Christensenâs other book The Innovatorâs Dilemma complement each other very nicely. The Innovators Solution by Clayton Christensen 1. The Innovator's Solution: Creating and Sustaining Successful Growth provides solutions to that dilemma. In "The Innovator's Solution," Clayton Christensen and Michael Raynor expand on the idea of disruption, explaining how companies can and should become disruptors themselves. Then, convene a focus group and ask them about milkshakes: Are they better when theyâre chunky? But the stock market still isnât endeared to the stock. Youâve got to understand your market. Christensen explains that looking at things as threats rather than opportunities affects how people respond to them, and you can use peopleâs responses to your strategic advantage. In other words, the potential for profits shifts over time through the value chain. It can be very hard for investors to watch an enterprise go through these awkward stages, and itâs very hard for a publicly traded company to ignore its shareholders who are looking for evidence of growth. And itâs only useful in some circumstances, not all. Thicker? Focusing inward on core competencies can be dangerous. Breakfast sandwiches, by comparison, are greasy and hard to eat while driving. These can be found in subsystems within the product or in improvements in speed, convenience, or other features. Innovators Solution Chapter Summary The Innovatorâs Solution looks for solutions. Instead, look at the circumstances people are in when they make a purchase decision. When performance and reliability are key differentiators, an interdependent and proprietary product is more appropriate.Â. Christensen and Raynor give advice on the business decisions crucial to achieving truly disruptive growth and propose guidelines for developing your own disruptive growth engine. The Innovatorâs Solution is an important addition to any innovation library. A traditional approach is to identify the activities that are part of your core competenceâ in other words, those that are central to your business and for which you should already have the equipment and labor to perform. Once it gets a foothold at the low end of the market, the product is improved and it gradually takes over more of the market. The astute manager will learn to understand not only where the money is, but also where it will be. Featured Review A Brilliant Analysis of the Fundamental Problems and Potential Solutions. Itâs a mistake is to spend substantial amounts of money at the beginning of a project, because you might not have enough when the strategy will havehas to change. This flags a plan to cram a disruptive technology into a sustaining role in an established market, Categorized in: Entrepreneurship, Product Management. Know that youâll probably have to change strategy more than once. The low-cost business model then moves upmarket as performance increases, towards higher margin markets, competing more directly with the incumbents. This process starts to happen at the bottom of the market and then it works its way up. The majority of new products never make it out of development. Once that foothold is gained, the process of product improvement can begin. By way of example, in the old way of doing things, if youâre trying to sell milkshakes, youâd identify existing milkshake customers. To reduce the continued loss, the team stops all spending except whatâs needed for the core business. These products often penetrate the lower ends of markets first, offering something that isnât perfect but at least itâs cheap. Chapter Summary for Clayton M. Christensen, Michael E. Raynor's The Innovator's Solution: Creating and Sustaining Successful Growth, chapter 4 summary. A disruptive technology might also enable people to do something that previously had to be done at a centralized location. These kinds of significant innovationsâcalled disruptive innovationsâdonât come along very often, â¦ There are three important elements of disruption: Sustaining innovations build on and improve existing technologies, making them faster, easier, and tastier. Using examples from numerous different companies, Christensen develops a framework to help executives create disruptive products and services that will maintain growth for their firms. Established firms nearly always try to sell disruptive products in mainstream markets. Itâs the executiveâs role to keep communication flowing across the company and across the boundaries between sustaining departments and disruptive ones. Most managers canât produce the needed growth, and blaming managers for low growth is pointless. Understanding these things helped researchers identify one of the shakeâs biggest morning rivals: the bagel. This person decides which processes should be borrowed from the parent company and which processes need to be created fresh. If the basis of competition starts to change, the executive needs to be prepared to lead the company to a new strategy and explain to others that changing circumstances are an opportunity for growth and not an occasion to turn inward. These early decisions determine the values that drive resource allocation down the line. A real study on these customers showed that many people drank shakes during their morning commute. (The effort wasnât successful because the targeted people didnât have a need for computers; computers didnât solve any particular problem for them.). Company’s values change as they get bigger and they require ever-increasing gross margins and markets before approving a new growth idea. Marketers put a lot of emphasis on market segments, dicing up the populace and finding the percentage that will need or want the product. Once a product is performing well and overshooting, the profitability goes to the parts of the chain that have room for performance improvements. Product architecture can be integrated (also referred to as âinterdependentâ), meaning that all interlocking parts are specialized and proprietary, or can be nonintegrated (also known as âmodularâ), meaning that all pieces can be standardized. At least until a new enterprise has developed stable processes, itâs also important to establish direct oversight by a senior executiveâ someone with the authority and the knowledge base to take care of a myriad of issues, from ethics to product development. These types of innovation thrive under circumstances that are considerably different from one another.Â Capabilities that guide a company through periods of sustained growth become disabilities during disruptive change. Modular architectures optimize flexibility at the cost of performance. Outsourcing is easier as things become standardized. It goes the other way, tooâ essential activities can become obsolete. The new product isnât greatâ perhaps it isnât even good enoughâ but it meets the customerâs needs better than any other product out there. The environment shifts to favor modular architecture. Often, managers donât understand the changes. This structure needs to be built so that target customers will appear profitable. The best place to be is where performance isnât quite good enough. Using examples from numerous different companies, Christensen develops a framework to help executives create disruptive products and services â¦ (Itâs best to avoid this.) This should be someone with experience managing a disruptive growth business. This approach allows components to be updated independently from each other. Theyâre usually tactical strategies that help manage day-to-day decisions, and they are the culmination of multitudes of decisions made by middle managers, engineers, sales staff, and other employees. If itâs sustaining to any important company, then it wonât likely be the basis for new growth. Christensen, Clayton M., and Michael E. Raynor. Summary This study guide for Clayton M. Christensen, Michael E. Raynor's The Innovator's Solution: Creating and Sustaining Successful Growth offers summary â¦ In the startup stages of a business, much of what gets done is attributed to its resources, particularly its people. Commoditization occurs when competition drives profits down to minimal levels. Many companies have value statements outlining the ethical playbook that the company follows. Not surprisingly, money affects every decision down the line, and Christensen examines how good money turns bad: To avoid this pitfall, start early and start small. It is as predictable and controllable as anything else, once you know how it works. Each summary is â¦ Finding customers for new-market disruptions is more difficult. What time of day are people buying shakes? Entrant firms are better at dealing with disruptive change. Sometimes they win,; sometimes they failâ but thereâs no evidence of executives shrinking from the big decisions and avoiding risk. Rank-and-file employees are often the ones with their ears to the ground. Investors donât seem to care so much about a companyâs assets or how much money it makes todayâthey want to see growth. Which processes should be kept in-house, and which should be outsourced? Interdependence and modularity can be thought of as existing on a continuum. Clayton M. Christensen, also the author of The Innovatorâs Dilemma, The Innovatorâs Solution and Disrupting Class, is a professor at the Harvard Business School. Employees can derail projects by assigning them low priority. A brief synopsis of the book is reprinted below from Amazon. This, however, is a mistake, as new products should start down-market. Finally, it is essential to create a team: a small group of people who develop a system for identifying disruptive opportunities and shepherding them through the process to launch. Once the products are differentiated and proprietary, the profits are good, bringing us back to where we started. The company has become impatient for growth but patient for profitâ this is bad money for a new growth business. Most firms have characteristics of both. Sometimes bouncing back from failure gives people their greatest learning experiences. But the new thing has to be convenient and easy to use. In Clayton M. Christensenâs prior work,Â The Innovatorâs Dilemma, he explores the paradox of successful companiesâ frequent failures when exposed to disruptive markets.Â The Innovatorâs SolutionÂ looks for solutions. A chain of disruptions can unlock profits for decades to come. The stock price bounces back up, which puts the executive in the position of needing to grow the company. The Innovator's Prescription - a disruptive and innovative solution for health care. These firms see disruption as inherently threatening. Customers âhireâ products to get specific âjobsâ done. For low-end disruptions, just find people who donât like to pay so much or donât even use a product because itâs too expensive. For technology to be disruptive, it has to serve a large population that previously couldnât do something for themselves. In this show you will learn the difference betweensustained and â¦ Sales people will make decisions based on how theyâre compensated. But doing so takes lots of marketing resources, and it isnât a very successful approach. To accurately segment the market, donât focus so much on the attributes of people and things. Once he brings readers up to speed on the last book, Christensen does a good job of bringing the theoretical work of the previous volume down to a practical level, with lots of advice and hints that managers can apply to their own companies. The late Jerome H. Grossman, M.D., â¦ In his international bestseller The Innovator's Dilemma, Clayton M. Christensen exposed this crushing paradox behind the failure of many industry leaders: by placing too much focus on â¦ Predictable forces guide the managerâs decision-making process. Nonintegrated firms can now outcompete the integrated ones, delivering on performance thatâs sufficient for their customersâ purposes. Certainly, to those that donât understand the causes of a phenomena, results will appear random, and impossible to predict or control. These experts should have a good grasp of theory to ensure that the teamâs actions fit the circumstances. Keywords:Â Innovation, Market, Marketing, Majority, Niche, Package, Pragmatist, Segment, Technology. This can be an impediment for managers who should be focusing on running the company. The company needs lots of money at this point, so they position their new product up-market. Disruptive products usually require disruptive channels, as well. To understand what works and what doesnât, Christensen offers his theory of innovation. Test whether the critical assumptions are reasonable, and then implement the strategy. This classic work shows just how timely and relevant these ideas continue to be in todayâs hyper-accelerated business environment. Disruptive innovation targets lower performance but at a price point that is appealing to the low end of the market. Christensen charts a path to successful disruption by looking at the histories of several innovative companies. When a process is used for the task for which it was invented, the results are usually good. Itâs essential to understand how to identify the customers that will constitute a good foundation for a disruptive business. Using processes developed for mainstream businesses and applying them to growth businesses is an exercise in futility. There are many other ways that money affects decision-making: Strategy should be matched to the stage of business development. He details two kinds of innovation: sustaining and disruptive. On the flip side, the process of de-commoditization starts when low- cost- module product assemblers drive higher- cost suppliers out of a market tier. Overfunding a project defines the sorts of customers and market segments that will and will not provide adequate revenues to cover these costs. It starts with success. Funding needs to be patient for growthâ enough time should be given for the thing to grow. Disruptive innovations shake up the whole paradigm with new products. âThe Innovatorâs Dilemma PDF Summaryâ ... Part two is dedicated to solutions to this problem. If you are interested in my detailed notes from this book, please email me. âOnly if managers define market segments that correspond to the circumstances in which customers find themselves when making purchasing decisions can they accurately theorize which products will connect with their customersâ, Sustaining innovation targets demanding, high-end customers with better performance. Processes relate to specific tasks. Deliberate strategy making is conscious and analytical; itâs based on research. Innovation, he promises, is predictable and controllable. Once you understand the underlying mechanics, however, you can understand the patterns. Cost structure is very influential in behavior and decision-making, more so than memos from the head office. Innovators who target these new markets are said to be competing against non-consumption. Some people think commoditization is inevitable, but itâs not. Never say yes to a strategy that targets customers and markets that look attractive to an established competitor. , or other features way up small, disruptive products in mainstream markets to funded... Managers: qualities like good people skills and a history of success in previous positions minimal levels sustaining and. Disruptive and innovative solution for health care the innovator's solution summary the money is thrown at the circumstances people in! Is farmed out to another firm organizations are leaner and meaner than those of their integrated.. Over competitors before, and figure out how to deal with a takeover from below ; they a! Meets the customerâs requirements most managers canât produce the needed growth, and they end up overshooting on.. 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