Professional Documents
Culture Documents
Clayton Christensen
Michael Raynor
Disruptive innovations introduce products that are not as good as currently available
products but offer other benefits – simplicity, convenience, and less expensive to appeal
to new or less demanding customers.
Instead connect with specific jobs that people are trying to get done in their lives. For
example, Blackberry’s job is to help people be more productive in small snippets of time.
Typical segmentation will view it as a tool for the traveling salesperson. This results in a
completely different set of features.
When functionality and reliability become more than adequate, companies with modular
architecture, non-integrated companies have advantage and beat competitors with speed,
responsiveness and convenience
Strategies:
- Launch business by providing one piece of a modular product’s value
Wayne Gretzky – skate to where the money will be made in the future
Commoditization:
- As a new market develops, company has proprietary product that, while not good
enough, comes closer to satisfying customer needs.
- Company strives to keep ahead of the competitors and eventually overshoots what
customers can utilize
- Basis of competition changes to convenience and speed.
- Companies evolve architecture to be modular to compete at better margins.
- Modularity enables dis-integration of the industry. A population of non-integrated
firms can now out-compete the integrated firms.
- Makes it difficult to differentiate cost or performance since industry has access to
the same components and processes
De-commoditization:
- Low cost strategy of modular product assemblers is only viable if they are
competing against higher-cost components. As soon as higher-tier suppliers out
of market, they must move up-market in order to continue to earn attractive
profits.
- Moving up-market is constrained by performance-defining subsystems, these
elements become not good enough.
- Competition among subsystem suppliers causes engineers to design proprietary
interdependent architectures. This results in differentiation with attractive
profitability.
Values – how people prioritize opportunities. How big a business has to be in order to be
interesting. Make them autonomous. An organization cannot disrupt itself.
Cycle:
- Companies succeeds and faces a growth gap
- Becomes impatient for growth so invest in big expense initiatives with high
promise
- Executives temporarily tolerate losses. But mounting losses precipitate.
Strategy:
- Launch new growth businesses regularly while the core is still healthy
- Start small. Divide business units to maintain patience for growth.
- Demand early success. Impatience for profit.
9) Summary Advice:
- Never say yes to a strategy that targets customers and markets that look attractive to an
established competitor. Find a foothold in a product your competitors will be happy to
ignore or relieved to walk away from.
- Find a way to compete against nonconsumption instead of targeting customers who
already are using pretty good products.
- If there are no non-consumers available, find a low-end disruption. Devise a business
model to make attractive profits at discount prices.
- Do not segment along known dimensions. Find a way to mirror the jobs that customers
are trying to get done.
- In the beginning years, development team remains convinced that they aren’t sure what
the best strategy is.