by Clayton Christensen

ISBN:1578518520

some of it reminds me a great deal of Crossing The Chasm

ch2

The 3 elements of disruption:

• there is a rate limiting how much product improvement customers can absorb

• companies generate improvements at a higher rate than this, therefore they will inevitably innovate faster than customers can absorb/value those improvements

• distinction between Sustaining Innovation and Disruptive Innovation

  • sustaining targets high-end demanding customers

    • established competitors win this battle: they have the motivation and the resources

  • disruptive products/services are not as good as existing offerings (in some perceived-as-primary criterion), yet offer other benefits (cheaper, simpler, more convenient - see Crossing The Chasm's Whole Product concept) (Worse Is Better)

    • since disruptive products head up that same steeper-than-customers trajectory, they will eventually catch up with more-demanding customers' requirements (be "good enough"), while being better in those "side" dimensions.

    • existing competitors are motivated to go up-market (explained in later chapters), not to go after new lower-end markets that are less well defined. Ergo these innovations are typically introduced by new entrants. This is the Innovators Dilemma.

Implications for new companies

• this doesn't mean a new company shouldn't be started on the basis of a sustaining innovation; but it does mean that once the viability of that offering/market has been proven, they should sell out to the established competitors.

• If you want to build and keep a high-growth business, you need to focus on disruptive innovation.

• innovation must be disruptive to all established competitors (e.g. online purchasing of computers was disruptive to Compaq, but not to Dell Computer, so that would be a bad market for a post-Dell startup to go after)

Three dimensions of disruption

• performance (along main functional criteria)

• passage of time

• category change - new ConText-s for consumption, new [Value Network] (Business Web)

Two types of disruptions

• new-market disruption: compete with non-consumption (significantly more affordable, convenient, simple Whole Product - makes consumption reasonable to whole new group of people)

• low-end disruption: be good-enough for existing customers who are over-served, at a better price/convenience

  • established competitors tend to flee up-market, but eventually they run out of room

• (many disruptions are hybrid - pull both types of customers)

Three sets of questions defining whether an innovation is disruptive

• can it become a new-market disruption?

  • is there a large market of non-consumers?

  • is current consumption seriously inconvenient?

• can it be a low-end disruption?

  • are there a significant number of existing customers who would be satisfied with lower performance in return for lower price?

  • can you make a profit at that lower price?

• is the innovation disruptive to all established competitors?

ch 3 - what products customers will want to buy

Market Segmentation is a process of predictive theory building.

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