Enabling disruptive innovations
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How to leverage market, technology and industry trends to create your next big idea.
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Enabling disruptive innovations
- 1. Enabling Disruptive Innovations How To Leverage Market, Technology And Industry Trends To Create Your Next Big Idea Jacob Nielson 1
- 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
- 13. THEORY OF INTEGRATIVE INNOVATION From www.IgnitionFramework.com 13
- 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
- 17. AnIntegrationThatIsSimpleAndEasyToUse iPod Is Another Example of Integrative Innovation Organize music Store music Listen to music 17
- 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
- 20. COMMENTS/QUESTIONS? Email me at jake@ignitionframework.com 20
Editor's Notes
- “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