Clayton M. Christensen (1952–2020) was a towering figure in the world of innovation, business strategy, and management theory. A Harvard Business School professor and former consultant, he is best known for developing the theory of “disruptive innovation,” which explains how smaller companies with fewer resources can successfully challenge established industry incumbents. His 1997 book, The Innovator’s Dilemma, remains one of the most influential business books of all time and introduced a new lens through which entrepreneurs and executives worldwide now view technological change and market dynamics.
Christensen’s insights reached far beyond the business world. His theories have influenced healthcare reform, education systems, journalism, and even global economic development. He was a Rhodes Scholar, an engineer at Boston Consulting Group, and an advisor to some of the most powerful leaders in both government and corporate sectors. What set him apart was not just his academic prowess but his humility and clarity—his ability to break down complex systems into language that decision-makers could act on. In this Oxford talk, he distills decades of research into a sweeping lecture on why so many great companies fail—and how you can build institutions that last generations.
Disruptive innovation refers to a process where a product or service starts in simple applications at the bottom of a market—offering lower performance but at lower cost—and gradually moves upmarket, displacing established competitors. Christensen illustrates this with examples from industries like steel, automobiles, and computing. “The trajectory of sustaining innovations,” he explains, “eventually overshoots what customers can use or are willing to pay for.” That’s when disruption happens—when companies focused on profitability ignore smaller markets, giving disruptors the space to grow.
This theory explains why industry giants like Kodak, Blockbuster, and Nokia—once leaders in their field—could collapse in the face of new entrants like Netflix or digital photography startups. Christensen’s insight was not that companies didn’t see change coming; it’s that their systems and incentives made it impossible for them to respond to it. “It’s not about bad managers,” he said. “It’s about good managers following the wrong metrics.”
One of Christensen’s most profound insights is the idea that companies fail not because they’re bad, but because they’re good—too good. These companies listen to their best customers, optimize their processes, and double down on what works. But when a new market begins to emerge—one that initially seems unprofitable—they ignore it. “Good management,” Christensen says, “is the root cause of failure in the face of disruption.”
The dilemma is this: if you listen to your current customers, you’ll never invest in the lower-end solutions that will eventually redefine the market. Disruption doesn’t announce itself—it creeps in slowly, through overlooked or underserved markets. “You’ve got to create a space inside your company that’s free from the metrics of the core business,” he says. That’s why startups often succeed where giants fall—they have nothing to protect and no legacy to preserve.
Christensen raises a provocative critique of modern capitalism in the second half of his Oxford lecture. He argues that managers today are incentivized to deploy capital efficiently—not to build things. “Capital,” he says, “is no longer scarce. It’s abundant. But our managers act like it's scarce.” This mindset drives companies to focus on return on net assets (RONA) or internal rate of return (IRR)—metrics that reward shrinking investment rather than expanding it.
In a stunning reversal of classical economic theory, Christensen proposes that it’s labor and innovation—not capital—that are truly scarce. And yet, executives behave as though people and ideas are expendable. “Our system teaches MBAs to outsource, divest, and spin off—not to invent,” he laments. The result? Declining domestic innovation, rising inequality, and corporations that retreat from the long-term investments that real innovation requires.
For Christensen, innovation is not just a business strategy—it’s a moral imperative. He talks passionately about how poor nations can only become prosperous through the kind of disruptive innovation that drives down cost while scaling up productivity. “You cannot consume your way into prosperity,” he warns. “You have to build, to create.” This philosophy ties closely with his later work on “prosperity paradox,” co-authored with Efosa Ojomo and Karen Dillon.
In places like Kenya, India, or Brazil, he argues, the focus must be on market-creating innovations—not just aid or charity. Products that are affordable, accessible, and scalable can transform societies by creating entirely new industries and employment opportunities. “If you want to help the poor, don’t just give them money. Build businesses they can use.”
One of Christensen’s more surprising ideas is that scarcity—not abundance—drives innovation. “When resources are scarce,” he explains, “we’re forced to be creative.” That’s why many of the world’s greatest innovations have come from startups, garages, or under-resourced countries. Abundance often leads to complacency, while constraint breeds invention.
He uses the example of steel minimills, which began by producing rebar—an unattractive low-end product that big steel companies were happy to abandon. But as minimills improved and moved upmarket, they eventually destroyed the incumbents. The lesson? Scarcity sharpens focus and accelerates the climb up the value chain.
In one of the most reflective moments of his Oxford talk, Christensen discusses how to build companies—and institutions—that last beyond a single generation. “You have to design with modularity in mind,” he says. That means creating systems where parts can evolve independently without breaking the whole. It’s the only way to stay adaptable in fast-moving environments.
He also emphasizes the role of culture. “If you don’t deliberately create the culture you want, a culture will emerge—and you might not like it.” Great companies, he insists, are not defined by their strategy but by the values they institutionalize in their people. Values that emphasize listening to weak signals, rewarding experimentation, and serving customers no one else wants to serve.
Clayton Christensen’s legacy goes far beyond a single theory. He taught us that success can blind us, that good intentions can lead to failure, and that real innovation requires more than capital—it requires courage. In a world obsessed with growth hacks and short-term wins, he offered a blueprint for patient, principled, and lasting change.
His final words at Oxford remind us of what’s at stake: “It’s not just about being right. It’s about making the right things happen.” Disruption, for Christensen, wasn’t chaos. It was a pattern. One that could be understood, anticipated, and even designed for—if we’re willing to see what others dismiss.