The Innovator's Solution: Creating and Sustaining Successful Growth

After introducing a champion product at the top of his game six years ago, garnering huge markets, magisterial prestige, devoted students, and a double chair at the Harvard Business School, Christensen triumphantly flouts his own chilling odds against renewing a stalled franchise. Written with colleague Michael Raynor, his second book is a whopper of a further innovation: The Innovator's Solution: Creating and Sustaining Successful Growth, even more gripping and compelling than his first work. His famous core concept of disruptive innovation, launched in his now classic prize winner The Innovator's Dilemma, has begotten a scintillating sequel, full of powerful business ideas that continue spinning in the mind long after you put down the book.

Using an insight of my partner Nick Tredennick, I would like to sum up Christensen's initial theory as a form of Tredennick's law: "Seek performance first and you forgo volume. Seek volume first and you get performance."

Catchy isn't it? The essence of it is the learning curve. Creating a high performance product is only the first step. If you make one brilliant prototype of a magical Silicon Wonderchip XXX, and then embark on an agenda of costly performance improvements, you will restrict yourself to a sparse population of elite users. In the end, this small market of demanding buyers-whether of high-end cameras or high-end routers or specialized business communications-will not be able to pay for the early rate of improvement. Meanwhile your rival-Intel, perhaps-incorporates an inferior ripoff on some underused corner of a Pentium and makes billions of units. Moving down the learning curve of the semiconductor industry with Moore's law, the Pentium will soon be doing the job more cheaply and better than your Silicon WonderchipXXX."

Now in The Innovator's Solution, Christensen offers a broader, more far reaching, but less quantitative, discourse on business strategy. He tells executives why "core competence" shouldn't necessarily be your core business; when to outsource and when not; how to avoid the grim reaper of business-"commoditization"; how to develop products by asking the question "What job needs to get done?"; why large mergers almost never work; and how to counter disruptive threats-and even become the disrupter yourself-by forming autonomous organizations.

Christensen is full of sagely contrarian advice: he argues that it is usually better to give a new project to an executive who has previously failed at a similar undertaking, rather than one who has been highly successful in an unrelated field. The learning curve, in other words, applies to management not just manufacturing. He also shows how, depending on the circumstances, technologies can be disruptive for some firms but sustaining for others. The Internet, for example, sustained Dell's low-cost direct-to-customer marketing and distribution model but disrupted the retail models of Compaq, HP, IBM, and others.

Perhaps most importantly, Christensen and Raynor demolish the myth that young companies should be impatient for growth and patient for profits. Just the opposite, they argue. Demands for early profitability are good because they force new companies to adjust their business models based on feedback, rather than assuming the model is perfect from the outset, only to find out years later that the initial business plan was fatally flawed.

Christensen and Raynor's chapter endnotes-substantial, pithy, provocative-add further relish to a feast of business ideas.

-George Gilder & Bret Swanson

Wall Street Meat
by Andy Kessler
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But unlike most of the inebriated cast of this rollicking tale, Kessler never lost his head or sense of proportion. He got out on top, with his humor, writing flair, integrity, and portfolio intact. And he is about to get even richer on this self-published book, which has already leapt high at Amazon, where it tops the list at Morgan Stanley and Lehman Bros, is number 19 in New York and is moving up everywhere else.

This book may have begun in the boutique insider cult trade but it will be a bulge bracket paperback soon and then--I have a heart-felt feeling here, a Meeker moment--it will be a major motion picture. Read it before Kessler goes Hollywood and becomes too famous to talk to you anymore. — George Gilder

The Advent of the Algorithm
by David Berlinski
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Don't be put off by the author's vagaries and discursions. They are sometimes poetic and funny, sometimes distracting, but if you press on, you will encounter a unique tale of the real meaning of the science and technology of the twentieth century-the overthrow of the materialist superstition in the heart of mathematics physics, biology, and computer science. Berlinski was a student of Alonzo Church, who was the most fruitful protÈgÈ of Kurt Godel, who defined the limits of mathematics and tutored Einstein. This contrarian tour de force is a gripping adventure in the ideas that matter in the 21st century as it transcends and surpasses the 20th. —George Gilder

The Holy Grail of Data Storage Management
What Every Enterprise Needs to Know to Solve Its Data Deluge

An excellent primer on network storage-perhaps the only in depth, book length treatment of the subject. The book does, however, suffer from conventional thinking. In particular, Toigo buys into the flawed notion that the number one reason for SAN architectures is to save network bandwidth. Recommended as good background reading on enterprise storage.