Customer Reviews

Seeing What's Next: Using Theories of Innovation to Predict Industry Change

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Seldom do I remember a book that totally replaces the old and popular business literature quite as effectively as Seeing What's Next does in superceding The Innovator's Dilemma and The Innovator's Solution. If you have not read either of those books, you can skip them now and read Seeing What's Next instead. If you have already read those books, you will be delighted to see how much more practical the advice is in Seeing What's Next than in the earlier two efforts.

Before going into the details of what the book covers, I want to especially compliment Professor Christensen for overcoming in Seeing What's Next two of the three most serious weaknesses of The Innovator's Solution -- the lack of discussing business model innovation and the omission of leading technology business model innovation examples.

In Seeing What's Next, the authors take on the challenge of helping executives and managers consider the likelihood of disruptive technology changes occurring and how they should evaluate their potential responses in light of current information. The analysis looks at both the perspective of the companies that will be disrupted and displaced as well as those who are leading the disruptions.

The book is a remarkable combination of theory, process suggestions and detailed case histories to explain the suggested process. As a result, this book will be the most practical guide available for technology executives until Professor Christensen brings out the next installment of his thinking in a future book.

In Part I, the authors use existing theories about disruptive innovations to suggest which signals to pay attention to as suggesting that opportunities exist, how to determine if competitors will be a factor in disruption, choosing an appropriate response and considering how government and other nonmarket influences can affect the result.

In Part II, the process of applying the Part I theories are exemplified in higher education, commercial aviation, semiconductor customer benefits, health care productivity, non-U.S.-based innovations and strategies, and the telecommunications industry.

The book also contains a stimulating conclusion and helpful summary of key concepts in the appendix.

As usual, Professor Christensen and his colleagues have provided many interesting and valuable footnotes. I usually found them to be as interesting as or more interesting than the text.

Having said so many nice things, you are probably wondering what the book's weaknesses are. I found a few that are worth considering before you start reading the book . . . which everyone should do.

1. The proposed analysis of signals and competitors is extremely elementary. It reminded me of the state-of-the-art in strategic thinking in 1971 when I first started as a strategy consultant at The Boston Consulting Group. Today, much better sources of information and means of analysis are available. I was surprised to see such primitive suggestions to such important questions.

2. In the competitive analysis, the book assumes rational competitors who understand where they are. In my experience, innovative situations have everyone confused and they mill about aimlessly . . . often acting against their own rational best interest.

3. The authors take the rationalist view that the future can be predicted well enough in one direction that you can plan and act based on that. Most experienced business people would not agree with that assessment. The opposing view is that you should develop scenarios of what might happen along a number of different extreme lines, and then look for directions that leave you better off regardless of which scenario occurs.

4. While the authors do a wonderful job of describing many disruptive innovations, they do a relatively poor job of discussing how to develop, nurture and accelerate the impact of such innovations. Hopefully, the next book will be much more of a "how to" effort in this direction.

5. Finally, while business model innovations are described in abundance, there's little connection in the book to a process for pursuing business model innovation along with technical innovation. As a result, the table is set . . . but no meal is served in this area.

How good is this book? Many people tell me that Good to Great is the most helpful business book they have ever read. I found Seeing What's Next to be a vastly better and more useful book. Try it.

Opinions are divided as to whether or not it is possible to "predict industry change" but it is certainly possible to maintain a system by which to rigorously monitor developments in relevant industries, measure the nature and extent of probabilities, and then formulate appropriate contingency plans in anticipation of them. (FYI, Peter Schwartz in The Art of the Long View: Planning for the Future in an Uncertain World and Kees van der Heijden in Scenarios: The Art of Strategic Conversation also have much of substantial value to say about that process.) Together with Erik A. Roth and Scott D. Anthony, Clayton M. Christensen offers in this volume further development of core concepts previously discussed in The Innovator's Dilemma and The Innovator's Solution. However, there is a substantial amount of new thinking and an abundance of new material. Although I strongly recommend that the two earlier works be read first, that is not a requirement to derive full benefit from Seeing What's Next.

According to Christensen, "While the two previous books were aimed at managers [in italics] inside firms who wanted to defend again or attack with a disruption, Seeing What's Next is written for those who watch industries from the [in italics] outside, and who must make important decisions based on what they see. It will help executives, analysts, investors, and others who have a stake in a specific industry to evaluate the impact of innovations, the outcomes of competitive battles, and the moves made by individual firms -- and to make smarter business decisions, forecasts, and stock recommendations based on those evaluations. The goal here [in Seeing What's Next] is to dramatically increase the odds of getting things right in the arena where wrong decisions could be devastating."

The authors carefully organize their material as follows:

In Part I, "How to Use Theory to Analyze," they identify the "signals of change" which indicate where the best opportunities are; explain how to size up competitors; how to identify which strategic choices are of greatest importance; and then explain how nonmarket factors influence innovation.

Then in Part II, "Illustrations of Theory-Based Analysis," they apply various TBA tools when examining the future of education, aviation, semiconductors, healthcare, and telecommunications; using the same tools, they also assess strategies for both corporations and countries. Then in the "Conclusions" section, they step back and recap where they have taken their reader, suggest areas for further investigation, and provide some final thoughts. I especially appreciate the Appendix in which the authors provide a summary of the book's key concepts.

All of the most important points made in this book help us to understand both the opportunities and (yes) the perils of disruptive innovation. They include: disruption is a process, NOT an event; disruption is a relative phenomenon in that what is disruptive to one company may be sustaining to another; different, even radical technology does NOT equal disruptive; disruptive innovations are NOT limited to high-tech markets. Re this last point, the authors carefully explain that disruption can occur in any product or service market and can even help to explain competition among national economies. (Please see Chapter Chapter 9, pages 207-223). Another substantial value-added benefit of this book is derived from the generously annotated "Notes" at the end of each chapter. Together, these sections (all by themselves) are worth far more the cost of this book.

Thus, in a single volume, the authors guide and inform decision-makers in all manner of organizations as they embark on the three-part process by which to (1) identify signals of change, (2) evaluate competitive, head-to-head battles between companies loosely classified as "attackers" and "incumbents" (please see the Glossary), (3) formulate appropriate strategic choices that can influence the outcome of competitive battles, and (4) meanwhile establish and then sustain an effective relationship between innovation and nonmarket forces such as government regulation. Christensen, Anthony, and Roth are to be congratulated for what I consider to be a brilliant achievement. Reluctant as I am to predict anything, I feel certain that Seeing What's Next will become a business book "classic."

Clayton M. Christensen's first book, 'The Innovator's Dilemma,' was a work of impressive insight and originality. His second, 'The Innovator's Solution,' was somewhat less insightful but added a necessary extension to the first by telling readers how they might begin to extricate themselves from the dilemma of industry disruption caused by an upstart innovation. The current book is a dense, harder to read compilation of the first two books, with added theoretical insights. Christensen and co-authors Scott D. Anthony and Erik A. Roth tell readers how to use theories of innovation to predict change. We applaud the effort. Don't miss the helpful appendix that summarizes the previous two books.

Christensen's two earlier books ("The Innovator's Dilemma," and "The Innovator's Solution") provided great new insights into business history and strategic thinking. "Seeing What's Next" goes on to attempt to demonstrate implementation of these two books' insights, unfortunately with less than total success.

Early in "Seeing What's Next," Christensen uses Dell Computer to illustrate the "Value Chain Evolution" theory's golden rule: Integrate to improve what is "not good enough" (speed, customization, and convenience of PC ordering and acquisition), and outsource what is "more than good enough" (the PC computer's architectural design) - certainly a potentially helpful insight.

"Seeing What's Next" eventually moves on to examining several sectors and making predictions for the future. 1)Education: Christensen sees on-line services from the University of Phoenix (UOP) as an innovation that is likely to disrupt the higher-education market. However, even the UOP has had limited success with this innovation - the vast majority of its services are still provided via bricks-and-mortar classrooms. (Another major UOP problem is that increasing questions are aimed at its credibility - especially the strength of its instructors, and its very low graduation rate.) On the other hand, Christensen probably has it right in seeing community-colleges provide a much greater challenge to pupils currently "over-served" by higher-cost state universities. (This applies to businesses and the general public as well - the vast majority of "research" undertaken at major universities offers very little or no concrete value to society.)

Aviation is another sector examined. Here Christensen sees low-cost Southwest Airlines as in danger of being over-ridden by major airlines - certainly about as far from the ensuing reality as one could get. As for the semiconductor sector - Christensen sees overshot customers (eg. word-processor and spreadsheet users) as becoming vulnerable targets for less expensive/capable processors; again, however, this has been little sign of this. (Christensen's "problem" may be failing to recognize that users want only one operating system/CPU, and that combination should be able to handle most/all existing PC applications. Regardless, it is also noteworthy that Andy Grove, an enthusiastic endorser of Christensen's first two books, does not have an endorsement on this book's back cover.

Healthcare: Christensen observes a "do-it-yourself" trend with home pregnancy tests and glucose monitors. However, both are small components of a relatively trivial healthcare market not likely to sustain major innovation. His third example - cheaper/easier angioplasty replacing cardiac surgery, is an unfortunate one because the latest findings are that angioplasty is not generally an acceptable substitute. Finally, Christensen is totally correct in concluding that many patients are overserved by M.D. providers vs. eg. nurse practitioners - unfortunately, legal constraints are not likely to relax soon in this area. (This also limits "off-shore" provision of X-ray readings, etc., though combining tourism with cheaper Asian healthcare may grow into a much greater market.)

Finally, "Seeing What's Next" considers the wireless communication sector. VOIP is seen as a major challenge - not likely, in my opinion, due to users being physically tied to an on-line computer, and existing wireless providers already able to offer long-distance quite cheaply via national service plans and/or offerings of free calling on weekends and after 7 P.M. during weekdays.

Bottom Line: "Seeing What's Next's" greatest contribution is probably through demonstrating how difficult seeing into the future actually can be.

This is the third book in a series on innovation, with Christensen as the lead author. The three books develop theories around the concepts of disruptive and sustaining innovation, and how to apply strategies based on these concepts and an understanding of the markets into which innovations are directed.

The first book, The Innovator's Dilemma, explains why established companies can often be successfully attacked by innovators introducing disruptive products, while The Innovator's Solution develops an approach to launching disruptions. Seeing What's Next changes focus somewhat to propose that the theories developed in the first two books can be used to analyse and predict industry change. In doing so, it also provides a useful summary of the theories put forward in the previous books and their application.

The analysis is undertaken essentially in the context of Porter's 'five forces' (competitors, potential entrants, buyers, substitutes and suppliers) but with the added dimensions of the nature of the innovation (disruptive or 'sustaining' - i.e. something that creates new markets or reshapes existing ones, or something that develops further on existing offerings) and the range of customers from 'overshot' (offered more than they really want) to 'undershot' (looking for more than they are offered) in terms of product characteristics.

It is a useful way of looking at markets - one that will keep analysts very occupied in collecting data and pondering alternative conclusions and strategies. The associated risk is that it appears to invite 'paralysis by analysis'.

While the coverage of the book extends to other industries, including airlines, education and the health industry, the methodology is built primarily around various elements of the telecommunications and computer industries. I suspect that choice of the fashion or food industries would have led to a different perspective on the same questions - one in which the ideas put forward by Gladwell in The Tipping Point might provide more useful clues to competitive challenges to established companies.

How reliable the authors' methodology is in actually predicting the future in a specific case is, of course, open to question, and it is not a question that the authors put to the test. Rather, they claim that the analytical process proposed will put both a potential attacker and a potential defendant into a better position to achieve their goals.

The three underlying theories round which the analysis in the book is built are
the disruptive innovation theory (briefly described above)
the resources, processes and values (RPV) theory, and
the value chain evolution theory (VCE).

The RPV theory argues that resources, processes and values define an incumbent's strengths, but also its weaknesses and blind spots - it is not easy to operate outside a well established arena.

The VCE theory argues that integration gives greater control over interdependent factors but reduces flexibility. The theory provides a tool for judging whether the right decisions about what should and should not be integrated have been made in particular circumstances.

Part 1 of the book elaborates on these theories and their application, while Part 2 essentially consists of extended case studies of five industries (education, aviation, semiconductors, health care, telecommunications) and an examination of innovation overseas. Of these industries, I am most familiar with health care and, while I found the analysis interesting, it did not seem to me to come to grips with the central dynamics of the challenge of health care into the future.

The Innovators Dilemma and Innovators Solution were two books that change the way people think about innovation, disruption, technology, products and markets. These two books are completed in this new work Seeing What's Next. This book is the practioners guide on how to apply these theories.

People who are new to these ideas should read the other two books first, or read the Innovators Solution if you have only time to read one book. Why? Well Seeing What's next has a subtle assumption that the reader is familiar with the concepts in the other "Innovators" books. That assumption is needed to move the focus from explaining the theory to providing insights into how to apply it.

Seeing What's Next quickly reviews the core theories from the other "Innovators" books and then moves onto specific industry application of these ideas in aviation, higher education, semiconductors, and healthcare. The industry analysis is particularly helpful in seeing the nuances of the theory and its application.

For those looking to disrupt the competition and think about how to avoid disruption, this is the book for you. It should be read by your Product Management, Marketing, IT and Business Strategy groups for different reasons. Product management should use these tools to understand current products in relationship to non-consumers, overshoot customers, and underserved customers. Marketing should read the book to understand the fact that markets have these different customers and incorprate these as part of their ideas on segementation. IT need to read this to understand the role it can plan in bringing technologies and information to products and sevices. Finally business strategy groups need to understand the forces of disruption to either create it or respond to it.

This book is not for the causal business reader. If you are looking to apply these ideas -- then read "Seeing What's Next". If you want to be up on the ideas and concepts, then consider reading Innovators Solution first, then this book.

This book is not only a logical extension of the Prof Christensen's previous two books, but is also a book that excels on its own. The first few chapters reinforce the theories on Innovation and quickly leads us to a framework for analysis in line with the title. Sensing Change, Competitive Battles, Non-market forces and Strategic Choices are the four dimensions of this framework that apply the principles of Disruptive Innovation. Using this framework it is not only interesting as to how the authors are able to explain the outcomes in the past but also enable us to forecast the future of competitive battles and technology trajectories with reasonable accuracy. The authors do mention at the end of the book that there will be exceptions that may not fit into this theoretical framework, but the aim of all theories is to improve our understanding of the phenomenon under study. If this is the definition and objective of a sound theory, this book meets this goal.

Is it possible to evolve a quantitative model that can be used as a tool for answering important questions on technology and competition based on this theory ? In my opinion it worth attempting one even if such a tool lacks perfection in the first attempt. This model by itself might be disruptive in nature and can quickly climb the path of improvement in accuracy.

Five industries are analyzed in detail in this book - Education, Health Care, Aviation, Semi Conductors and Telecom in addition to a chapter on global competitiveness of companies and countries. These chapters and detailed, and explain the technological issues with simplicity for a non-technocrat to understand. At the end there is a quick summary of concepts used in this book , which can be termed as an executive summary of The Innovator's Dilemma and The Innovator's Solution in one chapter.

One Industry that is conspicuous by its absence in the detailed analysis of this book is the Automobile Industry. In the earlier books there were references to disruptive technologies in this sector - the electric car for example. The recent abrupt rise in oil prices, international concerns on the politics and shortage of this fuel, and the vast demand for meeting transportation needs in developing countries at low cost makes this industry a fertile ground for disruptive innovation. Has this industry overshot the needs of mass users ? What would be the structure of this industry in a scenario of imminent modularization ? Which companies are likely to adopt disruptive strategies in un-served markets ? What will be the technologies and how will incumbents respond ? What strategies would auto component suppliers adopt ? Is the under $ 2000 car a possibility ? Will there be free standing value networks for such products that will be ignored by incumbents in large developing markets ?. This book certainly provides us a good framework to answer such questions and is bound to generate such debates in many other industries not covered in the book.

A stunningly good book. If you were disappointed at The Innovator's Solution, Christensen and team certainly deliver in Seeing What's Next. This is an intensely theoretically book so it is not to all tastes, and it takes a long time to digest. The analytics and case studies used are rudimentary, but the conceptual frameworks will have true strategists buzzing. Departing from his usual formula, Christensen and co-authors Scott Anthony and Erik Roth, aim Seeing What's Next at those who watch industries from the outside and must make important decisions based on what they see. By contrast The Innovator's Dilemma and The Innovator's Solution were aimed at managers inside firms who wanted to defend against or attack with a disruption.

In this book, the authors proclaim that good theory provides a robust way to understand important developments, even when data is limited. And theory is even more helpful when there is so much data that it is tough to discern what information really matters. Theory helps to identify signals of change amongst a deluge of meaningless "noise". Three big theoretical frameworks are brought together in this work, as outlined in previous Christensen's books.

Firstly the Disruptive Innovation Theory - refers to how new entrants to an industry can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents. Disruptive innovation can be of two types: one) low end disruptions which deliver a low priced alternative to customers who are overshot by existing offerings or two) new-market disruptions, which create new growth by making it easier to for people to do something that historically required deep expertise or wealth.

Secondly the Resources, Processes and Values Theory - that helps to explain why existing companies have such difficultly in grappling with disruptive innovations. The theory holds that resources (what an organization has), processes (how work is done), and values (the criteria by which resources are allocated) collectively define the organization's strengths as well as its weaknesses and blind spots.

Thirdly the Value Chain Evolution Theory - this framework helps to assess whether an organization has made the organizational design choices to compete successfully. The golden rule underlying this theory is that companies ought to control any activity or combination of activities within the value chain that drive performance along the dimensions that matter most to customers. In other words, they should integrate to improve performance along dimensions that are "not good enough" for what customers need and outsource what is "more that good enough" (those features and improvements that customer don't need and won't pay more to use).

Combining these three models will achieve a process for "looking ahead, and working backwards", as ManyWorlds CEO Steve Flinn would say. Combine this approach with the StrategySpace™ model, to ensure that your organization is not trying to inhabit the same "strategyspace" as current or future players in your marketspace and you have an excellent recipe for success. Of course it all comes down to execution, and theories are impotent until they are used, but if you can see what's next, you are half way there.

Theories of innovation and industry change all too often lie in back rooms and in schoolrooms: that's why Clay Christensen, Scott Anthony and Eric Roth's practical model is so important. Decision-makers will find Seeing What's Next: Using Theories of Innovation to Predict Industry Change is directly applicable to business forecasting, from understanding the initial signals of industry change to determining the effects of competition and future success. Chapters will teach a range of readers, whether they be mutual fund managers, senior executives, or business owners. The in-depth industry case studies cement theory with fact.

I picked up this book on whim, mostly because I recognized the authors and I flipped through the book and found the topic interesting.

I do not have a business background, so I did worry that this book would be over my head. In realty, I found the book both compelling and easy to follow. Rare for a business oriented book, I found it a very good and interesting read.

I don't know where the political spectrum centers in Australia, but this book is FAR from "right-wing." I found it politically unbiased and very throughly researched. Whoever wrote that review must not have reviewed the right book because all of his statements are widly inaccurate.

Overall I would say that Seeing Whats Next is a interesting and informative read!! I enjoyed it so much, I have gone backwards and begun to read the author's first books.