Seeing what's next: using the theories of innovation to predict industry change

Citation

Cavusgil, E. (2005), "Seeing what's next: using the theories of innovation to predict industry change", European Journal of Marketing, Vol. 39 No. 11/12, pp. 1389-1390. https://doi.org/10.1108/03090560510623316

An authority on innovation, Christensen is joined by two of his former MBA students at Harvard Business School in producing this book. Like his two previous books (Christensen, 1997, 2003), this one is aimed at senior executives, strategists, industry analysts, and academics who need a deeper appreciation of how innovation will change an industry. Christensen and his co‐authors position this book as a sequel to the earlier two: The Innovator's Dilemma elaborates on why launching new‐growth businesses is difficult, while The Innovator's Solution shows would‐be innovators how to use theory to make the process of launching growth businesses more predictable. Seeing What's Next intends to demonstrate how to gain insight by evaluating an industry segment through the theories of innovation.

The authors start out by acknowledging the limitations of predicting the future when data is only available about the past. One solution to this problem is to use theory to guide plans and actions. The authors describe and use three fundamental theories that help clarify the process of innovation. The first is the disruptive innovation theory. Disruptive innovations (as opposed to sustaining innovations) introduce a new value proposition by either creating new markets (Xerox copier, eBay online marketplace, etc.) or by reshaping existing markets (Wal‐Mart, Dell). The second theory is the resources, processes, and values (RPV) theory. The RPV theory argues that “organizations successfully tackle opportunities when they have the resources to succeed, when their processes facilitate what needs to get done, and when their values allow them to give adequate priority to that particular opportunity in the face of all other demands that compete for the company's resources” (p. 280). The third theory the authors consult is the value chain evolution theory (VCE). The VCE argues that firms should control critical activities within the value chain, while outsourcing activities that do not influence the characteristics of a product or service deemed important by customers.

Christensen, Anthony, and Roth then develop a three‐part framework to predict industry change. Spotting signals of industry change (Chapter 1) is the first step. New players use novel ways of reaching either nonconsumers, “undershot customers,” or “overshot customers”. Anticipating the likely result of head‐to‐head battles between industry attackers and incumbents is the next step (Chapter 2). Contemplating strategic choices that can influence the outcome of competitive battles is the third step (Chapter 3).

The authors then analyze six different sectors to show the theories of innovation in action (Chapters 5‐10). These sectors are: education, aviation, semiconductor, health care, telecommunications, and the international marketplace. In these chapters, the reader develops a better feel for the dynamics of the disruptive forces of innovation that reshape an industry. For example, online learning institutions such as the University of Phoenix have disrupted the education sector. Similarly, regional jet manufacturers have created growth in new markets.

Seeing What's Next is clearly written with the manager in mind. The authors offer much in the way of lessons learned, namely: what is considered a disruptive innovation to one company may be considered sustaining to another, radical technology is not necessarily disruptive, and disruptive innovations can occur in any product or service market. Through the industry case studies, readers should derive a better understanding of how to gain insights into their own business sectors. In addition, the reader should be in a better position to formulate strategies for taking action in response to fundamental changes.

A reader well‐versed in the innovation literature may find the book a bit redundant, especially if the reader has read Christensen's earlier two books. A theory‐based analytical framework, or the practice of making sense out of complexity by postulating how a certain set of attributes leads to certain results, is not necessarily a novel idea. Yet, Seeing What's Next is a well‐written book that should communicate well with its intended audiences. Christensen, Anthony, and Roth draw from their vast consulting experience and detailed secondary research. A summary appendix and a glossary of key terms offer an additional benefit to readers.