broken CD
Hazy picture: Blockbuster’s film rental model was swept aside by Netflix — but the reality is more nuanced © Dreamstime

Clayton Christensen brought the word “disruption” to the corporate and managerial world in 1997 with the publication of his book, The Innovator’s Dilemma. Today, every start-up proclaims themselves to be a “disruptor”, shaking up markets and reducing stodgy old corporates to rubble. The innovator’s dilemma is the quandary an established company faces when dealing with technological change or innovation — to continue with their good management practices or let them get in the way of their business’s survival.

Joshua Gans, professor of strategic management at the University of Toronto’s Rotman School of Management, agreed that managers must be on the lookout for threats of disruption and shaken out of their comfort zones. But he started to think the pendulum had swung too far: many were “seeing disruption everywhere and used it to justify managerial decisions that were risky and not, ultimately, in their interests.

“It is great to challenge your beliefs,” he writes in The Disruption Dilemma, “but that doesn’t necessarily mean you should hold none”.

Gans suggests that the term has been swallowed uncritically by journalists and professors, perhaps because higher education and the media have experienced upheavals. He is not the first to criticise the woolly thinking that has ballooned from Christensen’s “disruption”. Two years ago, Jill Lepore, a historian, wrote a rebuke to her Harvard peer, arguing in the New Yorker that disruption “is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It’s not a law of nature . . . It makes a very poor prophet.”

This book sets out to clarify the meaning of disruption but also to identify why some established businesses such as Fujifilm and Canon have successfully navigated change while others, such as Blockbuster, have not.

With the benefit of hindsight there was an inevitability that Netflix, the film streaming service, would displace Blockbuster’s DVD rental stores. But of course, the story is more complex, as Gans shows. When Netflix emerged, it too rented out DVDs, though it delivered them by post rather than through the high street. Blockbuster in fact offered the same business and it too was experimenting with on-demand viewing. Perhaps it could have completely reshaped its model anticipating changes in technology and customers’ evolving tastes. But at the time it feared cannibalising its own business.

Hindsight is, the adage goes, a wonderful thing. As Gans points out, “there is a paradoxical sense in which, if disruptive events can be predicted, they cannot really be disruptive events”. As Christensen highlights, the dilemma is really which innovation should be perceived as the critical threat.

Gans identifies two kinds of disruption. Demand-side, where successful businesses underestimate innovations that change what customers want; and supply-side, where those focused on their existing competencies are incapable of developing new ones. He insists that these two frameworks should nuance our understanding of threats.

Ultimately, Gans’ message is not that corporate leaders can relax and let go of their paranoia but rather to understand that disruption is more nuanced than a blind panic that it is imminent and inevitable. Managers can be proactive or reactive in dealing with demand or supply-side disruption.

This is an interesting and well-written, pithy book dealing with one of the buzziest concepts in business. However, it is strange that Gans omitted to include Lepore’s criticisms and Christensen’s counter-argument that she had ignored his subtle points and evolving theories. There is a sense in doing so that Gans has created a straw man argument — that he is the first to unpick these ideas. However, for those who have tired of being told every product or service is disruptive, this is a good — and nuanced — book.

Get alerts on when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section