Wednesday, April 4, 2007

Clayton Christensen and Chet Huber at Sloan

Clay Christensen and Chet Huber co-presented today on the topic of disruptive innovation and GM's OnStar. With Sloan's strong connection to the automotive industry, many students were there to hear from Chet while others were just interested in seeing Clay. Professor Christensen, who is well known for his books on innovation, is practically a celebrity around Cambridge. As it turns out both men were classmates at HBS.

I found the presentation to be interesting although much of Professor Christensen's talk was on material from his first book, Innovator's Dilemma. I was unfamiliar with the OnStar business which turned out to be fascinating. Chet recalled how the set up the OnStar business within GM while maintaining its independence. Little did they know that many of their strategies would align with Professor Christensen's future bestseller.

Later in the day I had the opportunity to join a small group of students for a Q&A with Professor Christensen. Here are a few thoughts from that discussion:
Think about the job the product is being hired for not the market segment/demographic it is being marketed to. Too many companies are missing the reasons people use specific products.
Financial analysis is ill suited to foster innovation. DCF, NPV, and shareholder maximization frequently lead to companies sticking with the status quo. The costs of setting up a new business will always look unattractive in comparison to the marginal costs associated with an existing business.
Competing down market requires speed to market and customization. These customers do not need more features they need a lower cost product that better serves their needs.
Christensen has a rapidly growing consulting practice to help other companies improve innovation. Check out there website for some good reading:

There is also a new article in the Sloan Management Review called "Finding the Right Job for Your Product."

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