2. Agenda
• Agenda
• Strategic Market, Technology and Industry
Analysis Tools
• Theory of Integrative Innovation
• Combining These Into An Overall Process
2
IndustryMarket Technology
Cost vs.
Benefit
Leaders
Jobs to be
done
Disruptive
innovation
Theory
Disruptive
Enablers
Value
Chain
Evolution
Introduction
Theory of
Integrative
Innovation
End-to-End
Process
3. INNOVATION STRATEGY
ANALYSIS TOOLS
Cost Versus Benefit Leadership
Jobs to Be Done
Disruptive Innovation
Value Chain Evolution
3
Source(s): Michael Porter, David Besanko, Anthony Ulwick,
Clayton Christensen, et al
4. Strategy 101: Choose An Approach
To Your Value Proposition
4
Benefit Leadership Strategy
Cost Leadership Strategy
Engineering, design and marketing competencies
Operations, business process and supply chain competencies
5. K-MART Pontiac
SEARS
Pick A Path And Stay On It – Don’t
Get “Stuck In The Middle”
“Stuck In The Middle”
• Unclear value propositions
• Confused Customers
5
6. Analyze Markets In Terms of People
Needing To Get A Job Done
6
MARKET = PEOPLE + JOB
TO BE DONE
People Hire Products To Get
A Job Done
Source(s): Anthony Ulwick, Clayton Christensen, et al
7. Disruptive Innovation Theory: Start
At The Low End And Work Upward
Incumbents Objective:
Sustain existing business model
and meet the needs of the most
demanding customers who are
willing to pay a premium
Time
Performance
Entrants Objective:
Target overshot customers
with a simple product and
a lower-cost business
model
7Source(s): Clayton Christensen, et al
8. Innovation Enablers Include New
Technologies & Business Models
• The internet
• Big data Algorithms
• Cloud Computing
• Mobile apps
• 4G Wireless
• Wifi/Bluetooth/Z-Wave
• Gigabit fiber internet
• SaaS
• Freemium
• Service Subscriptions
• Ad-Supported
• Direct sales
• Pay as you go
8Source(s): Clayton Christensen, Jake Nielson, et al
9. One Current Example Of Disruptive
Innovation: Chromebooks
Time
Performance
Chromebook Share of Laptop Sales in 2012 = <1%; Share in 2013 = 21%
9Source(s): Clayton Christensen, Jake Nielson, et al
Price: $800-1500
Price: $200-400
10. Industries About To Be Disrupted, All of
Which Are Enabled By The Internet…
• Home Security
– 24/7 Live Monitoring,
$50/month
– Self Monitoring Over Internet,
$200-300 (Cost of Equipment)
• Cable Television
– $50-90/month to pay for
hundreds of channels
– $7-15/month to pay only for
what you want
• Education
– $50k For Four Year Degree
– >$10k For Online 4-Yr Degree
10Source(s): Clayton Christensen, Jake Nielson, et al
11. Value Chain Evolution: Overcoming
Innovation Complexities
Vertical To Horizontal: Cost Leader Innovations
“To develop products more quickly, companies standardize interfaces between
various parts of the product. These standards eventually allow product
architecture to become modular.”
– Clayton Christensen, Seeing What’s Next
Horizontal To Vertical: Benefit Leader Innovations
“To improve products, companies often put existing technologies together in
new ways…Integrated firms are best suited to coordinate [these] complexities.”
– Clayton Christensen, Seeing What’s Next
11Source(s): Clayton Christensen, et al
Moto G starts at
$179 off contract
iPhone started at $499
on contract
Apple
Intel/Others
Microsoft
Palm
Verizon
Apple
ARM
Motorola
Google
Carriers
12. Value Chain Evolution Theory
Summary
Disruptive
Innovation Theory
Describes This Well
I Will Propose A New
Theory That
Describes This
12Source(s): Clayton Christensen, Jake Nielson, et al
14. Two Innovation Strategies: Disruptive
Innovation And Integrative Innovation
Integrative Innovation
iPhone
Job A: Store, Organize,
Listen to Music
Job B: Voice Communication
Job C: Internet Communication
Disruptive Innovation
X
X
14
Job A: Advanced Productivity
Job B: Internet Communications
Job C: Everything Else (3D Gaming, Video Editing, etc.)
15. iPhone Is An Anomaly To Classical
Disruptive Innovation Theory
“Apple won't succeed with the
iPhone…the probability of
success is going to be limited.”
– Clayton Christensen,
BusinessWeek 2007
Prediction
small
segment of
ultra premium
users
Actual
Integrative Innovation Explains iPhone’s Success With Reference To The Base Market
15
16. Integrative Innovations Create
Market Shifts Upward
Integrating Multiple Jobs In A Way That Allows Consumers To Accomplish Those Jobs Simply Is Key
Christensen’s Classical Theory
Predicted A Small Market For
iPhone
Nielson’s Theory of Integrative Innovation
Explains iPhone’s Success
16
AnIntegrationThatIsSimpleAndEasyToUse
Store, Organize,
Listen to Music
Voice
Communication
Internet
Communication
Time
Performance
$299 w/ 2 yr
contract
$199
18. A Process For Creating Disruptive
or Integrative Ideas
Customer Analysis Business Analysis
Industry Trend Analysis And Choosing The
Optimum Innovation Strategy
Analysis of Innovation
Enablers
Brainstorm Solutions
Using Ideation Tools
18
NeedsDistribution
Low-End Disruption
Over served customers wanting
lower cost solutions
High-End Integrative
Under served customers wanting
higher performance solutions
Are your customers over or underserved? What are you really good at? What new enablers are relevant to you?
What innovation strategy is ideal for your customers (and industry)? Your next big idea!
19. HOW WILL YOU DISRUPT OR
SHIFT YOUR MARKET?
19
Disrupt Shift
“Before a product or service is good enough to meet mainstream customer needs, integrated firms are best suited to coordinate the complexities developers will confront when trying to improve the product. Companies that solve these problems are rewarded with a disproportionate share of industry profit. To improve products, companies often must use new and unproven technologies or put existing technologies together in new ways, creating new patterns of interaction and new problems. Pushing the frontier of what is possible requires proprietary, interdependent architectures, and in this circumstance, integration gives firms a full platform to run engineering experiments to wring out continued improvements. Stitching together a system with a series of partner companies is next to impossible when there are complex interactions across the boundaries of what the firms provide…Integrated firms tend to earn the lion’s share of industry profit in circumstances in which a product’s functionality and reliability are not yet good enough.” – Clayton Christensen, Seeing What’s Next
“Before a product or service is good enough to meet mainstream customer needs, integrated firms are best suited to coordinate the complexities developers will confront when trying to improve the product. Companies that solve these problems are rewarded with a disproportionate share of industry profit. To improve products, companies often must use new and unproven technologies or put existing technologies together in new ways, creating new patterns of interaction and new problems. Pushing the frontier of what is possible requires proprietary, interdependent architectures, and in this circumstance, integration gives firms a full platform to run engineering experiments to wring out continued improvements. Stitching together a system with a series of partner companies is next to impossible when there are complex interactions across the boundaries of what the firms provide…Integrated firms tend to earn the lion’s share of industry profit in circumstances in which a product’s functionality and reliability are not yet good enough.” – Clayton Christensen, Seeing What’s Next