The Innovator's Manifesto: Deliberate Disruption for Transformational Growth [Hardcover]

Frankly, I was unable to fully understand (much less appreciate) the significance of what Joseph A. Schumpeter shares in his masterwork, Capitalism, Socialism and Democracy, when I first read it in 1975. Only much later, after several re-readings, have I begun to "get it" in terms of what "creative destruction" is and isn't. I mention all this by way of introducing my gratitude to Michael E. Raynor for what I have learned from him in The Innovator's Manifesto as well as from books written or co-authored by Clayton Christensen, who wrote the Foreword to this book. For me, one of the most valuable "lessons" is that "creative destruction" is the means and "creative creation" is the ultimate objective. Whereas Charles Darwin explains evolution as a process of natural adaptation and elimination, what Raynor examines in this book are deliberate efforts to survive and then thrive. He asserts, and I agree, that "deliberate disruption" is the key to "transformational growth" by both individuals and organizations.

As he explains, "The first objective of this book is to demonstrate that Disruption has true [begin italics] predictive power [end italics]...Second, I will make the case for Disruption's unique and superior [begin italics] explanatory power [end italics]...Finally, I will offer some thoughts on how one can go about [begin italics] applying [end italics] these concepts to greatest effect at the least expense." Raynor carefully organizes and then presents his material as follows:

In Part I: Prediction (Chapters 1-2), Raynor describes the design and results of carefully controlled experiments testing "the predictive power of Disruption's central claims" while explaining why, for a theory that seeks our allegiance, "there must be evidence that it improves our ability to predict future outcomes."

In Part II: Explanation (In Chapters 3-5), he makes the case for "generalizing beyond the experimental sample and suggests that Disruption can be used to do more than merely `pick a winner,'" although that is obviously a substantial benefit.

And in Part III: Application (Chapters 6-8), he discusses how and why non-Disruptive innovations can succeed and some revolutionize an industry; then in the final chapter, takes a process perspective on the application of Disruption. By now, Raynor has made a compelling case for the unique power of deliberate Disruption, explaining how it fully utilizes creative destruction to achieve creative creation, "the how, if, when, and how long of the kinds of innovations that have repeatedly remade the economic landscape in the service of the general weal."

Few authors of business theory are willing, or for that matter able, to test their theories in light of real world cases. The Innovator's Manifesto is the unique test of Disruption Theory. This is Michael Raynor's analysis of the predictive ability of Disruptive Theory for selecting the winners or losers. He does this in a clever way - using a known sampling of businesses that were started by Intel and that had run their course. He then provides the results of MBA student predictions for these same businesses, before and after learning Disruption Theory, to demonstrate the improvement over chance in picking winners. While the results are intriguing, they are not stellar. Nevertheless it is the rest of the book that is enlightening as he discusses Disruption Theory and its application. He presents cases for more detailed consideration of whether these businesses are in fact disruptive or sustaining business models. So while I have read both prior Disruption books from Clayton, Michael better brings to life what is and what is not a Disruptive play - details that are enlightening to anyone wanting to better understand how the principals can be better applied and understood. So if you want to hone your skill at picking business winners, or understand Disruptive Theory better...this is the book.

I was given this book as a gift, and could not have--in a million years of planning--gotten a better book relevant to OccupyWallStreet (OWS)than this book. I read it this morning while my MGB was in the shop recovering from my trip to NYC OWS 6-7 October (shredded the generator). Halfway through my notes, advanced here, I observe that the book is a pleasure to read and a substantial advance on the earlier disruption explorations.

While I sympathize with those who do not "get" this book and downgrade it, I gave it a solid five and seriously considered a six star plus (only 10% of my reviews go there) but kept it at five because any book that considers Walmart disruptive (which it is) without observing the "true cost" to society, the environment, government, and small businesses, is completely missing the big picture.

This book does go beyond the earlier book that I have also reviewed, The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business, and while Clayton M. Christensen has been churning books out with variations on the theme, I do see in this book very important, useful, immediately applicable insights and would recommend buying the first Christensen book and this book (to which he writes a Foreword).

I am less interested in the emphasis that the author places on Disruption Theory being able to build a bridge from the art of successfully guessing what innovations with succeed to the science of increasing by 5% or more which innovations will succeed, but that is, as the author points out, very significant when you consider that the percentage improvement is on hundreds of billions of dollars of investment.

QUOTE (5): Disruption's central claim is "that an innovation has the best chance of success when it has a very different performance profile and appeals to cusomters of relatively little interest to dominant incumbents, and the organizaton commercializing it enjoys substantial strategic and operational autonomy."

Could that be a description of OWS and the 99% that have been screwed over by the two-party tyranny that has shaken down Wall Street and the military, intelligence, health, energy, and prison complexes for political contributions (bribes) while discounting the public treasury by 95% (the going rate for an earmark is 5%). The 99% are of no real interest to Wall Street or the two-party crime family that has hijacked democracy, and OWS is demonstrating substantial strategic and operational autonomy. What neither the left or right "get" right now about OWS is that it is a manifestation of a broad view that we need to dismantle both parties and end institutionalized politics while restoring the sovereign individual.

QUOTE (11): "The claim here is that the existing paradigm of innovation is evolutionary (variation, selection, retention) and despite the exhortation to 'fail fast,' is unavoidably profligate.

It is at this point that I connect Buckminster Fuller (don't try to fix a broken system, create a new system that displaces it) and Russell Ackoff (stop doing the wrong thing righter, do the right thing). I see OWS as being on that track. Their two books that I especially like are below:

Ideas and Integrities: A Spontaneous Autobiographical Disclosure
Redesigning Society (Stanford Business Books)

It is while reading this book that I conceptualize another new book for myself that I am pitching to Evolver Editions as soon as I finish this, with a working title of 99%: Disruption for Democracy - From Stovepiped Corrupt Institutions to Blended Open Networks.

I have a diagram central to the new book I have conceptualized, inspired by OWS and this Innovator's Manifesto, that shows OWS, a Big Bat for democracy (picture half the eligible voters in the US, 150 million, paying $10 each a year as a subscription for the truth and for true democracy--that is $1.5 billion a year. Spread that to the rest of the world, and we just put the banks, dictators, and the US military-industrial complex out of business. Combine that with Citizen Voice and citizen line item veto, and with WikiNet (my own invention) where true costs are itemized by individuals and aggregated in the cloud, and you get to Panarchy. WOW. Perhaps it is just me, but I find this book by Raynor, in the context of OWS, to be deeply inspiring.

CRITICAL INSIGHT FROM THE BOOK: Disruptive enterprises cannot thrive if held to metric and expectations of incumbents. This is of course a corollary to the more general insight that paradigms tend to kill their young--until the young that survive get big enough to put the outdated paradigms in a retirement home. In OWS terms, a third party is idiocy, that is just playing along with existing corrupt paradigm that puts party (and profits) before people.

QUOTE (30 "A disruptive solution makes materially different trade-offs than the existing solutions purchased by mainstream customers."

In OWS terms, "exploding the customer" (or as Goldman Sachs now likes to say, "exploding the entire economy" of any given government, say Greece, or Ireland, or the USA) is not acceptable. True cost economics matters. People before profits. Principle before party.

I think of the human megaphone that was conceived when NYC refused to allow professional audio equipment, and I suddenly envision the transfer of the human megaphone into the mobile space -- perhaps Tumblr, certainly not Google or Facebook, Twitter is not proving agile enough about back office processing and pattern illumination. I conceive of two slogans for OWS in the context of this book:

Give 1% Get 99% (instead of Bribe 5% Steal 95%).

That may be too obscure for many, here is the bottom line: for 1% of our income, even counting the 22% of us including myself who are unemployed, we can BURY the Republican and Democratic parties forever. I'm big on Truth & Reconciliation, but I allow myself a momentary pleasure, imagining both party headquarters demolished and plowed over with salt.

The book picks up from where the earlier books left off:

First, target customers incumbents do not want.

NEWS FLASH: There are five billion poor people whose aggregate annual income is FOUR TIMES the annual income of the one billion rich. C. K. Prahalad is among the few to really get that, see his still relevant The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits.

Second, make something worse or cheaper than the current market demands, and sell it to those that will settle for less.

NEWS FLASH: I have an immediate marketplace for OpenBTS at $2 a month, with a global distributed world brain as the virtual back office educating and supporting the five billion poor "one cell call at a time. I have not been able to break through to Sir Richard Branson with my one-pager on The Virgin Truth, search for < The Virgin Truth One Page > to see what his corporate development people refuse to consider. He needs to change his sheets, those folks are still working the old paradigms and have NOT read this book.

QUOTE (49): The predictive power of disruption seems instead to lie in its focus on the underlying strategy, and technology -- not on 'implementation issues' surrounding planning, organizational design, and so on.

Put another way, be righteous, be holistic, love your customer, break from the Industrial-Era models where corruption and information asymmetries are inherent (see Lionel Tiger, The Manufacture Of Evil: Ethics, Evolution, and the Industrial System and more recently, The Real Cost of Cheap Food and discover what others call Infinite Wealth: A New World of Collaboration and Abundance in the Knowledge Era and The Hidden Wealth of Nations

QUOTE (69): "Disruptors do not merely pick a different spot on the frontier of an existing business model. Instead, they create a new business model with an entirely different frontier."

NEWSFLASH: the social business or B model is NOT as disruptive as it is a variation on the existing theme of capitalism as institutions and centralized control with hierarchy. A really disruptive model is connect everybody to everybody, give everybody access to all relevant information in all languages, offer aggregation and monetization in the cloud, give away the "dump" cell phones for free. [Rare earths for smart phones has not been cracked to my satisfaction--give the five billion poor free dumb cell phones, they will figure out the answer faster than we can.]

I am reminded of Earth Intelligence Network co-founder Mark Smith (author of Auras: See Them in Only 60 seconds and his vision, I believe it worth quoting--it was decades ahead of its time and we still cannot find a Branson or Soros or whatever to seed it:

ONE MAN, ONE CELL PHONE, ONE GAME, ONE WORLD

With the cell phone, there is NO degree of separation. It's the wireless version of "hard-wired." Ohm's law reminds us that a "perfect amplication circuit" is "straight wire, with gain" and no resistors in the circuit. According to Ohm's law, as voltage increases, resistance drops. Ultimate voltage equals zero resistance.

In Auric terms, and as we are human beings infused with electro-magnetism ourselves, this is denoted as a white, clear or golden aura, which is exactly what you see depicted in every religion's pictures of "holy ones, the "ones" with the "straightest wire" and least "resistance" to the "ultimate voltage." The halo is never colored, always clear and bright.

THIS IS WHAT OCCUPY WALL STREET IS ALL ABOUT, IN MY VIEW, AND IN THE CONTEXT OF THIS BOOK OWS IS THE GREATEST DISRUPTOR POSSIBLE.

Mike's words continue, and I use this to tie OWS to the five billion poor to OpenBTS/$2 a month and The Virgin Truth:

Our concept of "one man, one cell phone, one game, one world" has scientific underpinning, and will amplofy the aura of the world. if we add universal translation, and social networking without borders, we get closer to heaven on earth, or at least "straight wire(less) with GAIN.

Halfway through the book I write down my take-aways:

01 See/create new frontiers, deliver NON-PRICE VALUE
02 Do not overshoot, provide "just enough, just right" capability and access
03 Diversify to meet local needs, do NOT try to scale "one size fits all"
04 Scale from the poor to capture the middle
05 Optimize all feedback loops, be agile in responding
06 Autonomy is vital [one reason why I think The Virgin Truth is a world-changing idea]

Although the author focuses on selecting a market and disrupting it, I prefer to focus right now on markets that are not served. I will never forget Steve Case blowing off concerns about Compuserv, pointing out in 1994 that he was going after the 90% of the market that did not exist yet (was not connected to the Internet). Jeff Bezos has it right, we are at the beginning of the innovation curve, but in my view, Kindle is a non-disruptive innovation, however painful that might be to Borders. REAL DISRUPTION in my view is free books online via voice in any language to all five billion poor, and free YouTube videos to the five billion poor via dumb cell phones, teaching anything and everything in five minute increments.

I have a note:

DUMB Cell phones

DISTRIBUTED Human Network

FREE cloud processing (personal PC surplus, never mind the cloud "providers" and oh yes, the surplus can have physical locational attributes, e.g. only use computers in India for India-specific storage).

I put this great book down with two thoughts:

First, that Buckminster Fuller's emphasis on TIME/ENERGY needs to be related to the ideas in this book. The author talks about the MinuteClinic that is disruptive in the sense of understanding that people place a value on their time that traditional doctors do not, but if we really think huge scale, global scale, we go to another planet in terms of consciousness.

Second, I wrote down the following as the five stages of capitalism, with the thought that this book did not quite make the leap into Stage Four, but it certainly helps.

Stage One: Entrepreneurship
Stage Two: Technology
Stage Three: Client Niche
Stage Four: True Cost
Stage Five: Prosperous World at Peace

I view the predatory capitalism of the 1920's and the 1980's to today as an aberration, in which corrupt individuals leveraged technology and information asymmetries to loot the world. Mark Lewis wrote about "exploding the customer" in Liar's Poker and recently spoke about his surprise that they not only continued to get away with it, but also took it to the level of killing entire national economies (e.g. Greece) and indeed the global economy.

This is a very fine book, absolutely worth reading by anyone at any level. It is a manifesto; it is spiritually connected to OccupyWallStreet time time and energy if not intent, and I personally believe that within five years there is every possibility of displacing both predatory capitalism with moral individual capitalism, and inverted totalitarian democracy with true democracy.

BRAVO.

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