Disruptive Technologies:

Transcription

1 Disruptive Technologies: A driver of leadership failure and the source of new growth opportunities Incumbents nearly always win Sustaining innovations Pace of Technological Progress that customers can utilize or absorb Disruptive technologies Entrants nearly always win 1/25/06 Copyright Clayton M. Christensen 1

2 The Innovator s Dilemma Sustaining innovations to minicomputers 45% on $250,000 60% on $500,000 Disruptive technology: personal computers 40% 20% on $2,000 1/25/06 Copyright Clayton M. Christensen 2

3 7% 12% 4% 1/25/06 Copyright Clayton M. Christensen 3 Quality of minimill-produced steel % of tons 25 30% 55% 18% 22% 8% Rebar Quality of integrated mills steel Angle iron; bars & rods Sheet steel Structural Steel Steel Quality Beat competitors with asymmetry of motivation

4 Brands can be disrupted Brands create value when marketing to customers who are not yet well-served Store brands Brands create little value when marketing to customers who are over-served 1/25/06 Copyright Clayton M. Christensen 4

5 occasions Two strategies for asymmetric competition 1/25/06 Copyright Clayton M. Christensen 5 Non-consumers or Non-consuming New-market disruption: Compete against nonconsumption Different measure Of Low-end disruption Address over-served customers with a lower-cost business model Bring a better product into an established market

6 How Transistors Disrupted Vacuum Tubes Tabletop Radios, Floor-standing TVs Different measure Of Non-consumers or Non-consuming occasions Hearing Aids Pocket radios Portable TVs Path taken by vacuum tube manufacturers 1/25/06 Copyright Clayton M. Christensen 6

7 occasions 1/25/06 Copyright Clayton M. Christensen 7 Non-consumers or Non-consuming Toy robots Standard phrases Chat rooms Different measure Of Voice Recognition as Disruption Word Processing Path taken by IBM

8 Disruption among Healthcare institutions Complexity of diagnosis & treatment General Hospitals Outpatient Clinics Doctors Offices 1/25/06 Copyright Patients Clayton homes M. Christensen 8 Cost of venue

9 Disruption among healthcare providers Complexity of diagnosis & treatment Specialist physicians General practice physicians Nurses 1/25/06 Patients Copyright and Clayton families M. Christensen 9 Cost of provider

10 Tertiary hospital General Hospital Outpatient Clinic Office Home Simple Clarity of the rules Ambiguous Little Skill required to follow the rules Deep Scientific understanding, built upon the ability to diagnose unambiguously, shifts the method used to diagnose and treat disorders from an unstructured, experimental problem-solving process, towards a rules-based regime. Simple Clarity of the rules Ambiguous Little Skill required to follow the rules Deep Sick child Parent Nurse Family doctor Specialist 1/25/06 Copyright Clayton M. Christensen 10

11 Integrated firms have the advantage when products aren t good enough. Focused firms overtake over-served markets. Compete by improving functionality & reliability Interdependent Architectures Modular Architectures Compete by improving speed, responsiveness and customization 1/25/06 Copyright Clayton M. Christensen 11

12 Changes in integrality/modularity have profoundly changed the structure of the computer industry Present Equipment Materials Components Teradyne, Nikon, Canon, Applied Materials, Millipore, etc. Monsanto, Sumitomo Metals, Shipley, etc. Intel, Micron, Quantum, Komag, etc. Product design Assembly Operating system Applications software Sales & distribution Field service IBM Control Data Digital Equipment Apple Computer Micro- Center Compaq, Dell, Gateway, Packard Bell Compaq Microsoft Word Perfect, Lotus, Borland, etc. CompUSA Contract assemblers Independent contractors Microsoft Dell 1/25/06 Copyright Clayton M. Christensen 12

13 Integrated companies with proprietary products typically commoditize their suppliers Commoditizer IBM Commoditizee Applied Magnetics General Motors Dana Corp. P&G Dow Corning Interdependent Architectures Modular Architectures 1/25/06 Copyright Clayton M. Christensen 13

14 When an industry s value chain dis-integrates, assemblers of modular products must begin outsourcing. Their suppliers then can commoditize their customers Interdependent Architectures Modular Architectures Commoditizer Flextronics Implant makers Bloomberg HBS Publishing Infosys, Wipro Tier-One Suppliers Commoditizee Compaq Orthopedic Surgeons Wall Street analysts Business Professors IT Departments Auto Assemblers 1/25/06 Copyright Clayton M. Christensen 14

15 Products find a certain market only when they help customers get done the jobs that they already have been trying to do Milk shakes Internet appliances / simputers Digital cameras Electronic learning 1/25/06 Copyright Clayton M. Christensen 15

16 Structuring the market in terms defined by data that are easily collected obfuscates the right targets for innovation. Define the Market as a class of products (wireless hand-held) Competition: Palm, Sony, Hewlett Packard, Nokia Define the market in demographic terms (the business traveler) Competition: wireline telecom and notebook computers Define the market in terms of jobs that customers need to get done Competition: Nokia, Wall Street Journal, CNN Airport News, boredom Digital camera Word Excel Handwriting recognition Wireless Phone CRM software E-books, e- magazines Stock trading Travelocity Voice Voice phone News summaries Always on Simple, mindless games 1/25/06 Copyright Clayton M. Christensen 16

17 When companies segment their markets by job, they find The market is much larger Their share is smaller Their real competitors aren t in their product category Growth potential is greater, because non-consumption is usually a major competitor Methods for discovering job segments Catch customers right after they hired a product Don t ask why. Understand & write a case about the situation. Ask what the customer hired or did when in that same situation, but didn t hire your product 1/25/06 Copyright Clayton M. Christensen 17