January 18, 2009

Solutions for the educational and medical sector

In 2001, I came across the work of Clayton Christensen. He is one the world's leading authorities on innovations. Here the review I wrote back then of his book The Innovator's Dilemma. In this book introduced the concept of disruptive technologies. In every industry the focus tends to lie on improving their best selling products because they can generate the best highest profits. But then some smart people (usually working at a large and leading company) develop a disruptive technology. This is a technology which makes the product smaller, simpler, more accessible and cheaper. During the early stages of the development of a disruptive technology, its performance cannot compete with the traditional product. Therefore existing clients are hardly interested in the product which makes it impossible to sell high volumes and achieve high profits at first. This is why these disruptive technologies are often discouraged. What tends to happen then is that the developers of the new technology step out, start their own firm and start selling the product and step by step improve it. At a certain point, the product is not only simple, small and accessible but also its performance has become competitive or superior. This is when a whole industry tends to get disrupted.

After Innovator's Dilemma, Christensen wrote The Innovator's Solution: Creating and Sustaining Successful Growth, and Seeing What's Next: Using Theories of Innovation to Predict Industry Change, in which he applied his framework to many industries and showed how disruption of industries can be very well predicted. Recently, Christensen has (together with several co-authors) applied the disruptive innovation framework to analyze two sectors which are considered to be in trouble: the educational sector (Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns) and the medical sector (The Innovator's Prescription: A Disruptive Solution for Health Care). Both books are impressive and very well argued. They offer convincing solutions for both sectors. They are highly recommended reading for policymakers.

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