Clayton M. Christensen's Blog, page 13

How Singapore Became an Entrepreneurial Hub

“You are crazy.”

That was the predominant sentiment I heard a little more than five years ago when I told U.S.-based venture capitalists about my plans to move my family out to Singapore to oversee Innosight’s nascent investment and incubation arm. Since I had never done venture investing before, I was trying to get advice from as many people as I could. The conversations all went pretty much the same.

“Why Singapore? You’ll never find any interesting deals there.”

Sure, I would respond. At the time Singapore didn’t have a sizzling start-up scene. But the conditions seemed to be ripe for one to develop. Like Silicon Valley, Singapore has strong research institutions and limited enforcement of noncompete clauses, a condition that academics now suggest can be a major driver of innovation. Like Israel, Singapore is small, with limited natural resources, which means economic growth requires innovative macroeconomic approaches. Both Singapore and Israel have liberal immigration policies for skilled workers. Both also have mandatory military conscription for males (Israel also has mandatory conscription for females), and as Dan Senor and Saul Singer argue in Start-up Nation, the Israeli military has been a breeding ground of innovation.

“Yes, but Israelis and Americans are innovative by nature. Singaporeans are not,” critics would respond. “Name a Singapore start-up. I can’t think of a single one”

A fair point. If you had asked Singaporeans in 2010 to identify a successful local start-up, they might have paused for a few minutes before mentioning Creative Labs. That company was a pioneer in the audio component market, having entered the MP3 market before Apple. But it was founded in 1981 and hit its revenue peak about a decade ago before delisting from NASDAQ in 2007 and shrinking substantially.

Read the rest at Harvard Business Review.

Scott D. Anthony is the managing partner of Innosight.

Assessment: Should We Pursue This New Project?

Like aviators, experienced innovators use checklists. It’s how they make sure they haven’t left out any critical steps when assessing new ideas. This approach, described in our recent HBR article, also helps company strategists and innovation leaders evaluate investments and advise new-growth teams in a disciplined way.

We’ve created this brief interactive checklist to help you vet the possibilities in your innovation pipeline. Think of a project proposal you’re considering, and answer the questions below to determine whether it’s worth pursuing.

Take the assessment on Harvard Business Review online.

Disruption Is Not About Slaying Giants but about Serving New Customers

Mark W. Johnson, co-founder and senior partner at Innosight: You can go to a conference called Disrupt, get a degree in disruption from USC, and the word “disruptive” seems to appear in the mission statement of an accelerating number of startups. At the same time, the backlash against the ubiquity of the term has gotten so bad that there’s now a mobile app that replaces the term on every web page. Indeed, disruption has been so abused and misapplied that it sometimes seems that we’ve forgotten what the original theory of disruptive innovation really was about.

As someone who co-founded a company with Clay Christensen, the Harvard Business School professor who introduced the theory of disruptive innovation nearly 20 years ago, I offer a diagnosis and a way to get back to the real roots of the concept. As Professor Christensen says, a disruptive innovation isn’t synonymous with being better than what currently exists. Nor does it mean something that is cooler or faster or based around a more advanced technology or any new technology at all.

Rather, a disruptive innovation is one that “transforms a complicated, expensive product into one that is easier to use or is more affordable than the one most readily available,” according to Christensen. Therefore, you know an innovation is disruptive when a new population has access to products and services that previously were only affordable for the few or the wealthy.

Tesla Motors often gets called disruptive. The company makes innovative cars, for sure, but it isn’t disruptive in the classic sense, as its products are a more expensive alternative that targets people who already have cars. A truly disruptive electric car might look something like a golf cart and be used in new places or by new populations that don’t yet have cars.

Read the full article at the Wall Street Journal

When It Comes to Digital Innovation, Less Action, More Thought

A few years ago, we had an idea for a new business opportunity. One of our colleagues owned a restaurant and was complaining about the amount of money he lost because expensive bottles of liquor often went missing (the industry calls this “shrinkage”). This is a problem affecting tens of thousands of restaurants — an attractive target market. So, like good innovators, we began working on a solution to our colleague’s problem by building an automatic liquor inventory-management system.

We partnered with a company in a Singapore that had expertise in RFID technology, and began to put together a solution involving tags on bottles, a customized storage unit that could read the tags, and a software management system. The system would give owners real-time inventory information, which would help them to identify shrinkage early. Wall-mounted cameras near the storage locker would allow them to see precisely when a bottle left the locker, which would serve as a strong deterrent. A matching tag reader in the bar allowed the software to send out alerts when a bottle was removed from the storage locker but never showed up at the bar.

As we went through various iterations of the solution and spending mounted, it became increasingly clear that there were good reasons why no one had tackled what seemed like an obvious opportunity. The integration between the tags, the storage unit, and the software was technologically tough to pull off. What’s more it required busy bartenders, who weren’t particularly interested in making their jobs more complicated, to scan new bottles before putting them in the locker. Integrating our software into the myriad inventory systems used by restaurants across the United States was even trickier. When we finally had prototypes to show customers, they balked at the idea of investing in expensive hardware when they could simply hire an individual consultant to provide occasional advice about stopping shrinkage. In 2009, we decided to shut the business down.

Read the rest at Harvard Business Review.

Scott Anthony is the managing partner of Innosight.

Why Online Retailers Are Starting to Care About Your Feelings

When I was growing up in suburban Cleveland, the mall was everything.  It was where I hung out with friends, earned my first paycheck, and exercised my newfound independence. Now that mall is practically empty. Storefronts are vacant. You can hear the footsteps of the few shoppers echo down the hall.

We all know that shopping is not just about buying stuff, and that there are emotional and social reasons that drive us to choose certain shopping experiences over others. In the rush to get online, retailers focused on building lower-cost digital equivalents of their stores that left behind many of the human connections we once enjoyed. But in the latest wave of digital business models, e-tailers are seeking to satisfy not just functional needs but also those complex emotional and social “jobs to be done” that once made malls destinations.

This approach is typified by San Francisco-based Weddington Way, a start-up that aims to harness the group experience of shopping for bridesmaid dresses—keeping it social even when members of the wedding party live in different cities. By creating their own private virtual showrooms, brides and bridesmaids can discover, recommend, and vote on dresses and colors in a collaborative online space staffed by personal stylists available by chat session. With 25,000 dresses sold in just the first half of 2014, the company is approaching the $10 million revenue mark, a sum that includes fees from both purchasing and renting bridesmaid dresses (recognizing that lots of bridesmaids actually can’t wear it again, no matter what the bride says).

Read the rest at Harvard Business Review.

Robyn Bolton is a partner at Innosight.

A Few Ideas for Beleaguered Innovators

Keep the faith. That's what I said to a client who is going through a crisis of confidence. Over the summer he had put together the underpinnings of what on paper looked like a promising growth business. But — as is usually the case — the more he analyzes, the more he doubts; the more he shows the results of his analysis to senior leaders, the more questions they ask, and the more they doubt.

If you are doing something that hasn't been done before, careful analysis will by definition highlight reasons to not proceed. Market demand can't be validated. Experts dismiss technological assumptions. Partnership discussions stall. There is always something that causes this crisis of confidence. Harvard Professor Rosabeth Moss Kanter has seen this so frequently that she coined Kanter's Law: Everything can look like a failure in the middle. When you first formulate an idea, excitement peaks. But the more you study that idea, the more you realize the challenges that lie in front of you.

Innovators need a heavy dose of faith. They need to trust their intuition that they are working on a big idea. That faith need not be blind. For example, I combine well-grounded research that highlights patterns of successful innovation and my own field experience into a short checklist of factors that indicate whether or not an idea has potential (in a future post I'll provide more color about using this checklist). I make sure there's a good story behind the idea. Dissenters may poke holes in the story, but at least it's there.

Read the rest at Scott's Harvard Business Review blog.

The Persistence of the Innovator's Dilemma

In 1995, a young Harvard Business School Professor co-authored an article in Harvard Business Review, "Disruptive Technology: Catching the Wave." He and his co-author proposed a new causal mechanism that explained the surprising failure of highly-regarded companies. The most punishing innovations, they argued, were the ones that were easy to dismiss at first blush — simple, affordable solutions that took root outside the mainstream market. The authors called these "disruptive" solutions and provided a straightforward prescription for leaders looking to turn disruption into an opportunity. They suggested that companies should find a customer who loved the disruptive solution despite its limitations and create a separate organization to commercialize it.

Of course, that young HBS professor was Innosight co-founder Clayton Christensen. Since then, he has written over a half-dozen books and many more Harvard Business Review articles, almost all of which touch on disruption in some way. Academic journals have dissected the disruptive innovation theory and hundreds of thousands of students around the world have seen Christensen's famous model.

Yet, the innovator's dilemma persists. Just ask executives at Blockbuster Video, Sony, Nokia, Microsoft, Hertz, Kodak, Delta, and nearly all newspaper companies. That's not to say that there haven't been success stories. But they're notable because they are exceptions.

So, why has this dilemma persisted?

Read the rest at Scott's Harvard Business Review blog.

Ten Innovation Myths

Over the past year I've shifted my presentation materials so they include mostly pictures and 96 point font. That's good for audiences (at least, I think it is), but bad when I get the kind of request that landed in my in-box last week.

"I'm doing an innovation update at one of our meetings and I'm hoping you can assist me with some conversation starters," a senior leader said to one of our clients. "The main point of the presentation is to get the audience thinking proactively and positively about how they can contribute to innovation."

I had presented a slideshow on this exact topic in April. Unfortunately, my slides consisted of a big picture of a black box, a photo of Steve Jobs, headshots of eight academics, a screenshot of an Old Spice advertising campaign, and a picture of my favorite haircut place in Singapore. The slides are pretty, but they won't help a thirdparty who lacks the context.

So, my colleague Josh Suskewicz and I put our heads together and came up with the 10 innovation myths that we encounter most often in the field.

Myth


Reality



Innovation is random
Innovation is a discipline — it can be measured and managed. Consider how Procter & Gamble's structured approach to innovation allowed it to triple its innovation success rate and double the size of a typical initiative.


Only creative geniuses can innovate
Innovation is distinct from creativity. While creativity can help, people who aren't intrinsically creative can create high-impact innovation if they follow the right process.


You're either an innovator or you're not
Research recounted in The Innovator's DNA described how innovation is about 30 percent nature and 70 percent nurture.

Read the rest at Scott's Harvard Business Review blog.

Four Strategy Gurus to Avoid

About a year ago I miscalculated — badly — on the Microsoft Kinect. In terms of speed of adoption, only Apple's iPad has rivaled the Kinect. Aside from some tough comments on my blog, the long-term repercussions were low.

That's pretty much what happens to a pundit who gets it wrong — nothing.

Life is tougher for the strategist. A prescient call provides career rocket fuel, while the wrong one can be career limiting. So how to sift through the noise to evaluate the predictions that warrant the most careful attention? Watch out for the following four types of pundits.

The non-user. This pundit makes bold predictions about a product or service he's never used. Remember, a wide gulf separates a corporate press release or a carefully scripted demo and in-the-field reality. I ran into this trap when I started getting excited about Research in Motion's Playbook before the product had even been officially launched. The product's performance didn't live up to early press releases and has struggled in the market.

The projector. This pundit makes predictions about markets that she doesn't participate in. For example, in 2008 a company called Peek launched a seemingly game-changing device that made it simple for people to access their email on the go. Many tech savvy reviewers said the product would take off because its simplicity would appeal to everyday users. The reviews convinced me to buy a Peek for my wife, but watching her use the device for five minutes led me to believe that as simple as the device seemed, it just didn't fit into my wife's life. That Christmas present quickly turned into a paperweight.

Read the rest at Scott's Harvard Business Review blog.

Three Innovation Lessons from India's Titan Watches

"We were too busy being strategic to do something obvious," said Mr. Harish Bhat, the COO of the Time Products division of Titan Industries Limited.

That was just one of many choice lines I heard when listening to Bhat talk about Titan's efforts to create new growth businesses, including two new and successful watch lines: RAGA, for women, and Fastrack, for younger consumers.

Titan is about a $1.5 billion unit of The Tata Group, a massive Indian conglomerate. The world's fifth largest watchmaker, it owns 60% of the Indian market, and has been growing robustly. As Bhat went through his presentation, I wrote down the following lessons:

1. "Live" new markets. It would be easy for Titan to focus most of its efforts on deepening its penetration in its strongest market segments. But Titan consciously chose to go after markets in which it had significant growth potential. For example, Titan's research suggested that as few as 20% of Indian females owned watches. For both its RAGA and Fastrack lines, Titan put people who "looked" like the target consumer in key leadership roles, and spent a good deal of time trying to understand target customers in a deeper way. Importantly, senior leaders invested time in understanding the markets and consumers as well. "We didn't just sit and watch a presentation or engage in long-winded analytical debates. We did it." Involvement helped Titan make bold decisions later on. "When a leap of faith is shared by the senior leadership team, it is that much easier to take."

2. Rethink the offer. Titan found that potential female consumers were put off by relatively utilitarian watches, but they would happily wear multiple bracelets, rings, and chains. The team at Titan wondered what would happen if they turned a watch into an elegant piece of jewelry that a woman would happily wear. Growth exploded.

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When targeting the youth markets, Titan ran different types of advertisements and created very different looking watches, under the racy brand name, Fastrack. As Fastrack watches took off, Titan decided to stretch the brand into new categories such as sunglasses. In both cases Titan rethought key elements of its offer, and reaped the benefits.

Read the rest at Scott's Harvard Business Review blog.