Uber Is Not Genuinely Disruptive - Says Clayton Christensen, Creator of Disruptive Innovation Theory

The question as to whether Uber is genuinely disruptive seems relatively inconsequential when compared to an analysis of the factors driving its success.

Those tend to focus more on whether it is driven by technology or is merely a traditional service enabled by an easily replicable mobile overlay. And whether much of its economic advantage comes from illegal flouting of laws, regulations and oversight which its competitors have felt obligated - so far - to obey and thereby incur additional costs.

So the real challenge is whether Uber can maintain its lead given that its technology is easily copied and the financial benefits it derives from disobedience can be either overruled or offered to competitors. JL

Andrew Hill reports in the Financial Times:

Uber, which is often touted as an example of disruption, fails because it does not come from the low end of a market, which incumbents have neglected, or created a market where none existed.
Ride-hailing app Uber, which is undermining established taxi businesses worldwide, is not “genuinely disruptive”, according to the architect of the theory behind “disruptive innovation”.In a defence of the controversial 20-year-old concept, Clayton Christensen of Harvard Business School says the approach often hailed by tech entrepreneurs is “widely misunderstood” and often misapplied, and is “in danger of becoming a victim of its own success”.But he says the theory still has the power to help “predict which fledgling businesses will succeed”.
In the latest edition of Harvard Business Review, he and co-authors Michael Raynor and Rory McDonald write that “essential refinements in the theory over the past 20 years have been overshadowed by the popularity of the initial formulation”.

They write that Uber, which is often touted as an example of disruption, fails because it does not come from the low end of a market, which incumbents have neglected, or created a market where none existed. The article argues that the company is more genuinely disruptive in its attack on the lower end of the limousine market through its “UberSELECT” service.

The authors also believe Tesla Motors, Elon Musk’s electric car manufacturer and another Silicon Valley company lauded as an example of a nimble start-up taking on an incumbent industry, is not truly disruptive because it is tackling the high end of the car market. “If disruption theory is correct, Tesla’s future holds either acquisition by a much larger incumbent or a years-long and hard-fought battle for market significance,” they write.

Prof Christensen’s latest article comes a year after his theory was attacked by fellow Harvard academic Jill Lepore. In an article for The New Yorker magazine, she described the logic of the theory and Prof Christensen’s bestselling book The Innovator’s Dilemma as “questionable”, and his sources as “often dubious”.

Prof Christensen in turn accused Prof Lepore of perpetrating “a criminal act of dishonesty”.

The new HBR article tries to clear up some common misperceptions. For instance, the authors say the mantra “disrupt or be disrupted” — blamed by critics for encouraging established companies to tear themselves apart — can be misleading.
Many central lessons from the original book, which is one of the biggest business bestsellers, are still valid, they write. For instance, companies facing disruption should set up a unit separate from the core business to focus on growth, even if it may eventually cannibalise the core. But they add that “corporate leaders should not try to solve this problem before it is a problem”.

Last month, Andrew King of Tuck School of Business and Baljir Baatartogtokh of University of British Columbia, added to the questioning of Prof Christensen’s thinking. They published research that indicated that a number of experts in the sectors he analysed disagreed with his explanation of the causes of disruption. “The full theory of disruptive innovation should only be applied when specific conditions are met,” they wrote in MIT Sloan Management Review.