3 Key Lessons from History of Disruptive Change for Healthcare

Clayton Christensen defines disruptive innovations as “Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches”. Christensen also argues that “Disruptive technology provides an example of an instance when the common business world advice to “focus on the customer” (or “stay close to the customer”, or “listen to the customer”) can be strategically counterproductive.” His book the Innovator’s Dilemma highlights this very same conundrum that many large corporations, who are leaders in their market face. He recommends that they create their own disruptive technology silo’s that initiate disruption that are not part of the main company so that they can be part of the own disruption. (Like IBM has done with many of its new product lines). I personally think that Christensen is really on to something! His analysis of the of the three key lessons from history really breaks down the problems and in some sense provides a solution for the established large companies who are leaders in their respective markets and are dealing with a very fluid and dynamic environment and lack the nimbleness to react to those changes.

I do think, that his illustration of comparative business competition driving costs up, felt counter intuitive and is not always be borne out. The examples he used in his talk illustrate his theory, however there are many instances where we have seen competition between comparable business drives costs down. On the other hand, I did find his explanation of how disruption leading to decentralization and eventually leading to lower prices extremely valuable.

We have all personally witnessed the disruption of the music industry. The music industry was running on a high whenNapster came along and the industry reacted very poorly. They hired a team of lawyers that bullied napster and shut it down. Then came along bittorrent and the rest has been history. This example is a testament to the Christensen’s three lessons from history of disruptive change.

Other such examples are the many peer to peer sharing economy models have been disrupting industries that had not changed how they conduct business for decades. Airbnb, Uber are classic examples of where an innovator has seen an innovation which an industry leader would not have seen. These disrupters saw an opportunity to utilize underutilized capacities in the economy as a whole makes us more efficient and less wasteful. Here like Christensen says, for the disruption to succeed -the new product is simpler, has less friction; the disrupters have been able to create a business process so that it is accessible to customers in a cost effective way and finally like Christensen says the disruptive innovation had to be embedded into a new value based network of consumers, distributors and suppliers whose economies are consistent with the new low cost model. These are all innovations where the industry getting disrupted did not taken the disruption seriously and were taken by surprise.

In healthcare Christensen talks about precision medicine being a disrupter that will simplify diagnosis and make the process of treating patients rules based and not intuition based. It is an exciting time for healthcare. We are seeing many changes in how healthcare is delivered and hopefully we will all be part of these changes.

The next wave will be where these disruptive technologies too will face disruption. Technologies like block chain threaten to do away with the central authority and move us to a true peer to peer model in many of the industries’ where we pay for the service of the central authority (insurance, banking, healthcare are prime targets for this next wave of disruption)