1. The document discusses disruptive innovation and how new technologies can disrupt existing markets over time by creating new markets and value networks. 2. It provides examples of how VOIP disrupted landlines, online video disrupted cable TV, and medical stents disrupted heart surgery as a treatment for clogged arteries. 3. The examples show disruptive innovations starting by targeting the least profitable customers of an incumbent and then gaining a foothold in the market before eventually disrupting and replacing the incumbent.

1. Andrew Eifler
March, 29 2013

2. Disruptive Innovation
A disruptive innovation helps create a new market and value network,
and eventually goes on to disrupt an existing market and value network
(over a few years or decades), displacing an earlier technology.
In other words: Things that change our lives.

3. Adoption Curve – Low End Market Disruption
Looking back over time, it turns out that the adoption of these new
technologies has a pattern

4. Goal of this presentation
Teach you how to identify low end market disruption

5. How it begins…
1. New technology enters
2. Captures a very small portion of the low end market

6. VOIP vs. Land Lines
Land Lines
- Expensive and sometimes cost prohibitive
VOIP
- Infomercials: questionable, unreliable
- Inexpensive: free calling between US and Canada
- Today, better technology, now good enough for corporate use

7. Adoption Curve

8. Online Video vs. Cable Television
Cable TV
- Expensive and subscription based
- Advertising heavy
Online Video
- Free video content providing mindless entertainment
- Less ads
- Some are subscription based, but much cheaper than cable

9. Adoption Curve
?

10. New Medical Devices: Stents
Clogged Arteries
- Major health concern/high risk of heart attack
- Heart surgery was most common solution
Stent
- Medical device used to open up clogged arteries
- Less invasive procedure than heart surgery
- Accessible to both cardiologists and heart surgeons

11. Patterns
Disruption started with least profitable customers
- VOIP: Non-consumers
- Online video: Casual views looking for short distraction
- Stents: Non-surgical cardiologist
Disruptors
Lower performer → exceeds requirements → market foothold
Incumbent
Retention → move up market → more attractive customers
Result
Incumbent squeezed into smaller markets while disruptive technology
rises to the top

12. Disruptions are all around us
Cell phone → home phone
Online Video → Cable TV
Mini Mills → Integrated Steel Mills
VOIP → Long Distance Calling
Downloadable Media → CD’s, DVD’s
Cloud computing (e.g. DropBox) → USB drives
Digital Photography → Film Photography
LEDs → Light Bulbs
Wikipedia → Traditional Encyclopedias (used to cost >$1000)

13. Advertising Disruption - RTB
Someday

14. The Takeaway...
How to Innovate Disruptively
- Don't compete for the same customers of an established brand
- Compete against non consumption
- Change economics of process for a brand new demographic
- Gain foothold in that market and move up

15. Questions?