The Bulletin

Clayton Christensen: the one big mistake startups make

Posting in Design

Success in business is all about understanding and catering to the whims of the customer, right? Not necessarily -- too much focus on the customer is where startups and seasoned businesses alike fall off the track.

That's the counter-intuitive view expressed by Clayton Christensen, Harvard professor and author of the watershed book on disruption, The Innovator's Dilemma. TechCrunch's Rip Empson caught Christensen at the recent BoxWorld event, and the professor didn't fail to disappoint in his trademark clash with conventional business wisdom:

"Naturally, when building a growth product, businesses commit tons of time, energy and resources to getting to know their customers better and building something that solves their problem. But Christensen said that many businesses and startups often make a mistake here, one that may, at first glance, appear counterintuitive. 'Understanding the customer is the wrong thing to do — it’s confusing,' he said, before citing Peter Drucker’s assertion that customers rarely buy what companies think they are selling. Instead, what’s really important is understanding the job that customers are trying to accomplish, and only once an entrepreneur truly understands the need that a product or service fulfills for the buyer can they optimize their business or product."

Christensen has been studying the innovation space for a number of years, and his observations -- encapsulated in his book -- is that market advantage often eventually goes to those who come in and disrupt existing markets from the bottom up. In a classic example he cites, Toyota entered the auto market in the 1960s with a cheap car that appealed to people who could not afford cars from the big three US automakers -- GM, Ford and Chrysler. Toyota did not attempt to compete with the big three head-on, but rather, built a following in unserved and underserved markets, and moved up from there.

This upward disruption has been a hallmark of the tech industry for years as well, and is ultimately the driver of job creation, Christensen believes. “Disruptive innovations create jobs, whereas efficiency innovations destroy them," he said.

The key is designing products that solve problems that have not been adequately addressed, Christensen said. “Products that aren’t the best, but are affordable and usable, disrupt markets,” In his talk, Christensen cited the case of IKEA, the home and office furniture maker, which has thrived for three decades across the globe with out major competition. "That’s because, Christensen says, of its true understanding of the job that their customers want to do: 'I want to furnish this place today.' Once they understood that, simple as it may be, they optimized their entire store flow, their shopping experience around that."

(Photo: Twitter, @claychristensen)

— By on October 12, 2012, 2:19 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure