Competing Against Luck: The Story of Innovation and Customer Choice

by Clayton M. Christensen

2. The Fallacy of Surface Growth When a company makes big investments in developing relationships with customers, natural incentives arise to find ways to sell more products to existing customers. The marginal cost of selling more products to existing customers is very small—and the profit is oh so alluring. We call this “surface growth.” Companies see products all around them made by other companies and decide to copy or acquire them. But in doing so, companies often end up trying to create many products for many customers—and lose focus on the job that brought them success in the first place.7 Worse, trying to do many jobs for many customers can confuse customers so they hire the wrong products for the wrong jobs and end up firing them in frustration instead. This makes companies vulnerable to disrupters who focus on a single job—and do it well. The same incentives and logic apply to investments in production capabilities, intellectual property, and talent. Once these costs are sunk, the pressure to “sweat the assets” is ever present and, especially with “what have you done for me lately” shareholders, relentless.