Disruptive innovation for entrepreneurs


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How can entrepreneurs tread the path of disruptive innovation? Read on and find out..

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Disruptive innovation for entrepreneurs

  2. 2. CHARACTERISTICS OF DISRUPTIVE PRODUCTS  Disruptive products are generally simpler and cheaper, with less margin, not greater profits  Disruptive technologies are typically first commercialized in emerging or insignificant markets  Leading firms’ most profitable customers generally don’t want, and initially can’t use, products based upon disruptive technologies  Initially embraced by the least profitable customers in a market
  3. 3. THE FACTS  Consumers don’t go through life conforming to particular demographic segments.  No-one I know buys a book because of the age group they belong to  People don’t often go around looking for products to buy but they do want something that gets the jobs done  It is only when they have a problem that they consider a solution at which point they will hire a product/service  Therefore, it is the job, and not the customer or the product, that should be the fundamental unit of analysis  Understanding the world through the lens of jobs-to-be-done gives an incredible insight into people’s behaviour  We will look at the ‘Metro’ case study to understand this better
  4. 4. HOW DOES DISRUPTIVE INNOVATION OCCUR?  “In their efforts to stay ahead by developing competitively superior products, many companies don’t realize the speed at which they are moving up-market, oversatisfying the needs of their original customers as they race the competition toward higher performance, higher margin markets.”  “In doing so, they create a vacuum at lower price points into which competitors employing disruptive technologies can enter.”  “Only those companies that carefully measure trends in how their mainstream customers use their products can catch the points at which the basis of competition will change in the markets they serve.”
  5. 5. THE METRO EFFECT  Metro was first launched in Stockholm on 13 February 1995.  Metro newspaper editions are distributed in high-traffic commuter zones or in public transport networks via a combination of self-service racks and by hand distributors on weekdays  The newspaper is distributed free of cost  Remember  Cellphones don’t work underground in subways  When Metro was first introduced, it didn’t try to compete head on with the incumbent papers  Instead it reached out to commuters who wanted to do something to pass time  These are folks who want to reach home quickly and do not want to stop anywhere to buy anything  But if you hand over a paper to them for free, they will most probably take it  The stories are short, punchy and easy to read to allow readers to complete the paper (and expose them to all the ads) within 20 minutes
  6. 6. THE INNOVATION – JOB DONE  For a traditional newspaper, a copy left behind on a seat means the next reader gets it for free, depriving the paper of revenue  A Metro reader who picks up a copy left behind has just saved the newspaper the cost of distributing one more paper  Today, Metro has over 67 daily editions in 22 countries  Its circulation is only rising  So the question you should be asking is…
  7. 7. What is the job that my prospective customers want done?
  8. 8. HOW DO I FIGURE THAT OUT?  See what others have done in that field  How different was that innovation?  How did it work?  How did it transform the existing landscape?  For how long have people sought something like that?  Give people what they want before they ask for it  Steve Jobs and Akio Morita disparaged market research  Consumers are often unable to articulate exactly what they want; bounded by the confines imposed by existing solutions  A craiglist was always needed but no-one articulated the need for it  It is the job of businesses to know what people what want  Successful companies understand the jobs that arise in people’s lives and develop products that do the jobs perfectly
  9. 9. THINK!  Keep changing  Every transition brings with it hundreds of untapped opportunities  Business should challenge assumptions and constantly lookout for new ways to add value  Plan for failure.  Don’t bet all your resources on being right the first time. Think of your initial efforts at commercializing a disruptive technology as learning opportunities. Make revisions as you gather data.”  Build capabilities for a new horizon  Change organizational culture and orientation to embrace disruptive change
  10. 10. THINK!  “Don’t count on breakthroughs.  Move ahead early and find the market for the current attributes of the technology. It will be outside the current mainstream market. You will also find that attributes that make disruptive technologies unattractive to mainstream markets are the attributes on which the new markets will be built.
  11. 11. INNOVATE… Lets connect and share ideas! Figures culled from various data sources as of March 2014