Clayton M. Christensen: How to Create New Growth Business in a Risk-Minimizing Environment. Download here. Disruption is the mechanism by which great companies continue to succeed and new entrants displace the market leaders. Disruptive innovations either create new markets or reshape existing markets by delivering relatively simple, convenient, low cost innovations to a set of customers who are ignored by industry leaders. One of the bedrock principles of Christensen’s disruptive innovation theory is that companies innovate faster than customers’ lives change. Because of this, most organizations end up producing products that are too good, too expensive, and too inconvenient for many customers. By only pursuing these “sustaining” innovations, companies unwittingly open the door to “disruptive” innovations, be it “low-end disruption” targeting overshot-less-demanding customers or “new-market disruption”, targeting non-consumers.
- Many of today’s markets that appear to have little growth remaining, actually have great growth potential through disruptive innovations that transform complicated, expensive products into simple, affordable ones.
- Successful innovation seems unpredictable because innovators rely excessively on data, which is only available about the past. They have not been equipped with sound theories that do not allow them to see the future perceptively. This problem has been solved.
- Understanding the customer is the wrong unit of analysis for successful innovation. Understanding the job that the customer is trying to do is the key.
- Many innovations that have extraordinary growth potential fail, not because of the product or service itself, but because the company forced it into an inappropriate business model instead of creating a new optimal one.
- Companies with disruptive products and business models are the ones whose share prices increase faster than the market over sustained periods