After recapping the theory of disruptive innovation, Clay turned his attention to the macroeconomic implications of this theory. Incidentally, if you haven’t heard the famous steel mill example, its a cracking good yarn (the better for being true). You can catch the whole lecture here:
For those too lazy time pressured to watch the whole video I will summarise:
1. Disruptive, Sustaining and Efficiency Innovations work in a ‘virtuous cycle’ all things being well.
2. Inapproporiate financial metrics (ie short term RoI) tends to turn this cycle into a line (ie you ‘stick’ at efficiency innovation, thus reducing costs but with no – or even negative – economic growth and job creation).
3. You can make a case for nations (as well as companies) being disruptive – eg Japan as the disruptor gets disrupted in turn by Taiwan – > which gets disrupted by China -> which gets disrupted by India …
The first assertion I find very plausible, having seen the same logic at work in industry. The second is a also useful but there is a danger into sinking into the familiar ‘there is no innovation any more’ story frequently heard by people of a certain age. (see The Economist on this). All innovative and exciting developments, whether technology, musical, political or cultural, happened during a golden age. That age being somewhere between 16 and 24.
The third notion – disruption of nations – was intended, I think, as a stimulus for thought rather than a rigorous theory of reality.
What is interesting though, is how a simple theory (and disruptive innovation is quite easy to understand, as long as it is explained carefully – see video!) can be so useful as a lens to look at, describe and think about a whole range of phenomena.