Clayton Christensen Wants to Transform Capitalism

Sixteen years ago a book by Clayton Christensen changed business thinking forever. The Innovator’s Dilemma looked at industries ranging from disk drives to steel to mechanical excavators and exposed a surprising phenomenon: When big companies fail, it’s often not because they do something wrong but because they do everything right. Successful businesses, Christensen explained, are trained to focus on what he calls sustaining innovations—innovations at the profitable, high end of the market, making things incrementally bigger, more powerful, and more efficient. The problem is that this leaves companies vulnerable to the disruptive innovations that emerge in the murky, low-margin bottom of the market. And this is where the true revolutions occur, creating new markets and wreaking havoc within industries. Think: the PC, the MP3, the transistor radio.

This insight—that managers might actually scuttle the ship by following the navigational chart laid down in business school—shifted the way people thought about innovation. Christensen’s book soon became required reading in Silicon Valley, where it has been championed by the likes of Steve Jobs, George Gilder, and Andy Grove. Christensen has since applied his theories to industries ranging from health care to higher education, always attempting to teach people how to think about business rather than what to think. “I don’t have an opinion,” the Harvard Business School professor and devout Mormon often says, “but the theory has an opinion.”

In the meantime, Christensen has faced some major disruptions of his own. In July 2010 he suffered a debilitating stroke that left him unable to speak. But within weeks he was using Rosetta Stone to reteach himself the English language, and within months he had begun writing again. His recent book How Will You Measure Your Life? came out last year, and a new work, The Capitalist’s Dilemma, is due out in 2014.