video-steve-jobs-icloud-1997-0This post was originally published at HBR.org and it is co-authored with Eric von Hippel.

Recent corporate history is littered with successful established firms who failed to manage disruptive innovation even with full knowledge that it was coming. Kodak is a poster-child. They knew digital photography was the future and invested heavily in hybrid technology in the hope of managing the transition from physical photo printing. It didn’t work.

For Clayton Christensen, this is a basic flaw of incumbency. Successful firms have an established customer base, most of whom are satisfied with the products they are purchasing. Unfortunately, however, customers for firms serving the mass market, by definition, have largely of middle-of-the-road needs. They are not “lead users” — users who today want new solutions to leading-edge needs that will disrupt firms serving the middle of the market tomorrow.

Incumbent displacement has happened so often that established firms are well aware of the potential for disruption. But it is hard to advise precisely what to do about it. One option is to set up a firm to compete with yourself. Another, we suggest here, is to put lead users into your top management team and rely on them to force change onto the main organization from inside.

Steve Jobs, influenced by Christensen, was keenly aware of the innovator’s dilemma. Walter Isaacson’s biography quotes him talking about the then-current transition to cloud services that Apple had managed poorly:

It’s important that we make this transformation, because of what Clayton Christensen calls “the innovator’s dilemma,” where people who invent something are usually the last ones to see past it, and we certainly don’t want to be left behind.

But Apple has a good track record when it comes to its consumer products, and that’s because of how they define “insanely great products.” To quote Jobs again:

It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do.

In other words, Apple makes products that they themselves want to use. They are their own leading-edge customers.

Perhaps the greatest example of a user innovation at Apple was the iPhone itself. In 1997, speaking just before his return to Apple at the WWDC, Steve Jobs ranted in response to a question about whether he used a Newton as a wireless device:

To me, what I want, is this little thing I can carry around with me that’s got a keyboard on it. Because to do email you need a keyboard. And you need to be connected to the ‘net. So if somebody would just make a little thing where you’re connected to the ‘net at all times, had a little keyboard with a modem in it, I’d like to buy one. But I don’t see one of those out there. And I don’t care what OS it has in it. So, I don’t want a little scribble thing. But that’s just me.

That description should sound familiar because he was basically describing a lackberry. But by the mid-2000s, it was clear Steve Jobs wasn’t happy with the Blackberry either, finding them neither smart nor easy to use. He was annoyed by keyboards and by how email looked. As a user, he wanted something more and pushed his design team toward what became the iPhone.

This is a pattern for Apple. They make products that they want to use. In other words, they are user innovators — religiously — and their needs are ahead of the market. Indeed, as Tim Schweisfurth and Christina Raasch define it, they are the ultimate “embedded lead users,” lead user employees working for a producer. Firms guided by embedded lead users cannot be disrupted in the Christensen sense. Why? Because as long as they themselves are developing the leading-edge products they want to use and are willing to abandon previous ones to do so, there won’t be a traditional Christensen blind spot.

That is not to say that Apple will succeed just because they continue to be user-innovators. The key to being a very successful self-disruptor is that some members of your leadership team — people with clout — are lead users with needs that are ahead of the market. Management can create these circumstances on purpose. And so we can propose a principle: A key indicator of whether you might have a chance in managing disruption as a market leader is whether the lead users in your management team want to use your own products above all others. Apple, we believe, fits this bill. Samsung, it was revealed recently, does not appear to do so.

And so the question we pose to other consumer tech leaders of today (Google, Facebook, Amazon, and the like) and to you too is: Are there “embedded lead users” in your top management team? If not, how are you going to get them there?

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