Library
The Innovator's Solution: Creating and Sustaining Successful Growth · 4 of 11
The Innovator's Solution: Creating and Sustaining Successful Growth
Entrepreneurship CRITICAL

Implementation Playbook -- The 14 Executive Directives

The Innovator's Solution: Creating and Sustaining Successful Growth Clayton M. Christensen & Michael E. Raynor
decision-checklist execution initial-conditions directives launch-sequence

Key Principle

The Epilogue reframes the entire book as a theory of initial conditions: powerful, predictable forces (up-market migration, commoditization, process rigidity, growth mandates) will shape managerial choices regardless of intent. Success comes from setting starting conditions that harness these forces rather than fighting them. The 14 directives below are the operational expression of this principle -- a decision checklist for launching disruptive ventures. "None of this requires strategic brilliance -- it requires getting initial conditions right" (Epilogue).

Why This Matters

Many founders of successful disruptive companies had the wrong initial strategy. What they got right were the starting conditions: a cost structure profitable at low price points, a position competitors were motivated to flee, nonconsumer customers satisfied with modest products, and capital patient for growth. With these conditions set, the predictable forces documented throughout the book push the venture toward viable markets rather than away from them. Managers who copy the attributes of successful companies without understanding the causal mechanisms are "fabricating feathered wings and flapping hard" (Epilogue). This playbook converts causal understanding into a sequential decision process.

Good Examples

Honda's U.S. motorcycle entry: Honda entered with $250K total ($110K cash), which forced emergent strategy. Unable to subsidize losses on large bikes, Honda pivoted to 50cc Super Cubs through sporting goods shops -- discovering the off-road recreational new-market disruption. Had Honda entered with ample capital, it would have persisted with its failing deliberate strategy of selling large bikes through motorcycle dealers (Chapter 9). Honda's initial conditions -- tiny budget, nonconsumer customers, novel channel -- were right even though its initial strategy was wrong.

J&J's MDD group: Acquired four disruptive businesses (Ethicon Endo-Surgery, Cordis, Lifescan, Vistakon) growing at 43% annually since 1993, reaching approximately $10B. Non-disruptive MDD businesses grew at 3%. Consumer group's sustaining acquisitions grew at 4% (Chapter 9). J&J succeeded by applying many of these directives: autonomous units, patient capital, disruptive footholds.

Wal-Mart: Twelve years from its first discount store to $1 billion in today's dollars, eventually reaching $220 billion by 2002. The runway came from launching early, starting small, and maintaining a cost structure profitable at discount prices (Chapter 10).

Counterpoints

Apple Newton: $350M spent implementing a deliberate strategy before viability was known. Violated directive 11 -- no plan to accelerate emergent strategy, no testing of critical assumptions before decisive investment (Chapter 8).

Pandesic (Intel/SAP joint venture): Over $100M spent staffing with managers who had stellar records in large global organizations but zero experience with emergent strategy discovery, new-channel building, or managing corporate parent expectations. Shut down February 2001 with minimal sales. Violated directives 10 and 11 (Chapter 7).

AT&T: Destroyed approximately $50 billion over a decade through successive failed growth acquisitions (NCR, McCaw, TCI/MediaOne). Violated directive 1 by targeting markets already occupied by powerful incumbents, and directive 12 by tolerating years of losses (Chapter 1).

The 14 Directives as a Decision Checklist

Phase 1: Competitive Positioning (Directives 1-3)

  1. Insist on a disruptive foothold: Never approve a strategy targeting markets attractive to incumbents. The venture must compete where incumbents are motivated to ignore or flee.
  2. Target nonconsumption first: Redirect teams from existing consumers of good-enough products toward people who lack the money, skill, or access to get a job done.
  3. If no nonconsumers exist, try low-end disruption: Build a business model profitable at discount prices. If neither nonconsumption nor low-end disruption is viable, do not invest expecting significant growth.

Phase 2: Product and Market Definition (Directives 4-6)

  1. Kill "If we can just get the customer to...": "If the project leader ever uses the phrase, 'If we can just get the customer to...,' terminate the conversation" (Epilogue). Find jobs customers are already trying to do.
  2. Segment by jobs-to-be-done: Re-segment markets around the circumstances in which customers hire products, not organizational boundaries or standard data categories.
  3. Watch the low end for competition shifts: Monitor whether the basis of competition is shifting from functionality to reliability to convenience to price -- this signals when modular architectures will win.

Phase 3: Architecture and Capabilities (Directives 7-9)

  1. Do not modularize prematurely: If the product is not yet good enough for mainstream customers, premature outsourcing destroys competitive advantage. Integration wins when performance gaps remain.
  2. Stress-test "core competence" claims with RPV: Any claim about what is or is not core must survive three questions: Do we have the right resources? Do we have processes designed for this task? Do our values (cost structure, size thresholds) permit it?
  3. Apply the RPV test to channel partners: Every entity in the value chain must see the disruptive product as fuel for their own up-market movement. If your channel partner makes more money selling something else, they will.

Phase 4: People and Strategy Process (Directives 10-11)

  1. Distrust the best sustaining-innovation track records: Evaluate managers by which problems they have solved, not by the scale they have managed. Management skills come from specific schools of experience, not innate attributes.
  2. Demand a plan to accelerate emergent strategy: In early years, halt decisive implementation before evidence. Over 90% of successful new businesses pursued a strategy substantially different from founders' original plan (Chapter 8).

Phase 5: Capital and Growth Discipline (Directives 12-14)

  1. Impatience for profit is a health signal: Years of losses indicate a sustaining-shaped plan that is trying to compete head-on with incumbents. Profitable disruptive ventures force learning and insulate against corporate cutbacks.
  2. Keep the company growing to afford patience: Forced rapid scaling pushes ventures into established markets and triggers the death spiral. Launch while the core is healthy.
  3. Get initial conditions right, not strategy: None of this requires strategic brilliance. Set up the right cost structure, the right competitive position, the right customers, and the right capital profile -- then let the predictable forces work for you.

Key Quotes

"Blindly copying the best practices of successful companies without the guidance of circumstance-contingent theory is akin to fabricating feathered wings and flapping hard. Replicating their success is not about duplicating their attributes; it's about understanding how to generate lift." -- Christensen & Raynor, Epilogue

"If the project leader ever uses the phrase, 'If we can just get the customer to...,' terminate the conversation." -- Christensen & Raynor, Epilogue

"If this were a book for mariners, it would be filled with discussions of sailing with or against tides and currents, and how to set sail in order to take advantage of the prevailing winds." -- Christensen & Raynor, Epilogue

"There is nothing like profitability to ensure that a high-potential business can continue to garner the funding it needs, even when the corporation's core businesses turn sour." -- Christensen & Raynor, Chapter 9

Rules of Thumb

  • Walk the directives in order: positioning before product definition, product definition before architecture, architecture before people, people before capital structure. Later directives assume earlier ones are satisfied.
  • If you cannot pass directives 1-3, stop. No amount of execution excellence fixes a sustaining competitive position.
  • Directive 4 is a kill switch: any sentence containing "get the customer to change" signals the team is pushing a product rather than solving a job.
  • Directive 12 is a diagnostic: persistent losses in a new venture almost always mean the venture has been shaped into a sustaining competitor in an established market.
  • Use discovery-driven planning (Chapter 8) to operationalize directive 11: state required financials, rank assumptions by criticality, test the most critical ones first.
  • Review all 14 directives at each stage gate. Ventures drift toward sustaining positioning continuously; the checklist is not a one-time exercise.

Related References