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Clayton Christensen was an amazing observer of business enterprise , and his study on hoo-hah is germinal . His book “ The Innovator ’s Dilemma ” has come to specify how we psychoanalyse companionship that get disrupted by newcomers .
The substance of his dissertation is that companies focalize on their current best customers and improve the product for them while a new entrant comes in with a cheaper product that help the underserved section with an substandard product that is serious enough — and over sentence , the inferior merchandise gets good enough to meet the needs of most client disrupting the incumbent ’s core business .
But has he been prove wrong in the last 10 long time on many major disruptions ? For instance :
What if the bottom - up gaudy product cut off the market is a phenomenon set to commoditized old product category ( think tires and clothes ) ? Although , one could argue even in those categories the real perturbation often starts at the highest last — run flat tires cost more , yoga pants ( Lululemon and Alo Yoga ) be more — not less than the old products they supplant in usage .
The Christensentheory of disruptioncould be promise “ subscript disruption theory ” — substandard , cheaper , good enough product that disrupt incumbents over time . While this clearly pass , there ’s a more potent model for disruption .
In his own words :
Disruptive invention , on the other hired hand , are initially consideredinferiorby most of an officeholder ’s customers . Typically , customer are not willing to exchange to the new offering merely because it is less expensive . Instead , they hold off until its timber rises enough to fulfill them . Once that ’s hap , they assume the new productand mirthfully live with its crushed price . ( This is how disruption drives prices down in a market . )
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I would like to pop the question a different hoo-ha exemplar — one that starts at the exact opposite conclusion : superior mathematical product disruption .
Superior product disruption
An pioneer brings a ranking product at a higher price to the market place and succeed over the top 1 % consumer of the product , who are uncoerced to make up a premium . As the product gets more popular , the innovator is capable to turn down prices due to weighing machine efficiency , cost - effective innovations , and riding cost curve such as Moore ’s law over time .
This hebdomad , Apple starts taking ordering for its Vision Pro , a merchandise priced at $ 3,499 — about 10x high than the Meta Quest 2 and 3x higher than the most expensive Meta Quest Pro . Is Apple destined to give out , or have they figured out a in effect strategy ?
We will find out whether Vision Pro is a come through product and whether the superscript product disruption works in this case .
But over the old age , we have already seen several products start out as ace - expensive , superior or better production come through the in high spirits end of the mart and tardily take market share as the product price come down with scurf , instauration and commoditization .
Tesla
you’re able to now bribe a Tesla for $ 35,000 . The first example be $ 120,000 . As Elon Musk famously laid out in this “ hidden master program ” papers on August 2 , 2006 :
It ’s been 17 years of Tesla doing literally the above . But Tesla is not the only one .
Nvidia
It has consistently produced high last products with high end specification for what they call the “ tech enthusiast . ” It uphold to this day with their high - end H100 GPUs .
Over time , they continually keep innovate at the high remnant .
Jensen’sinsight : Most of the profits are at the high remnant of the securities industry .
It was true for its watershed Riva chip — build the high remainder product , and therefore at the in high spirits cost point the grocery store could afford .
Where was Clayton Christensen right?
I believe Christensen got lots of thing right in his Bible — primarily the leaning of incumbents to cater to the needs of existing customers in existing market at the price points they are familiar with .
If you are selling a mathematical product that is no longer as innovational — think petroleum - powered cars in the 1980s — you are likely to get disrupt by someone who establish a good enough car at a cheaper price . Over clock time , the Japanese car manufacturer who start out with inferior products became better and well at manufacturing — and invention — and now produce some of the dependable cars in the world at any terms point .
Cell phones vs. landline phones
In his original book , Clayton lay out a few examples of disturbance :
It ’s not clear to me at all that cellular phones are worse than landlines . I would contend it ’s a vastly superior product — and clearly sold at a much higher price point .
The PC was sure chinchy than the processor but C.P.U. could be partake and personal computer could not . In fact , most people mocked microcomputer for being too expensive .
In both sheath , it was the novel superior product that deliver the goods out .
What is the right strategy for winning?
I think framework like Innovator ’s Dilemma — and many other commercial enterprise strategy framework like Blue Ocean / Red Ocean that recite you to avoid competitive markets and so on — are capital for learning . If you are a big company CEO or executive director , it may aid you watch your back so you do n’t get disrupted in your core markets .
But when it come to really build a tumultuous new stage business , my advice to father and product managers is simple :
Build a better product .
Steve Jobs was correct — you have to compulsively care about the intersection . Jeff Bezos is right — you have to obsessively care about the client . And Elon Musk is right — you have to question everything from first principles .
If you do these thing and build an amazing product , it may turn out to be a product that is 10x cheaper — digital picture taking is effectively gratuitous compared to film , electric cars total cost of possession is much lower — or it may rick out to be an expensive merchandise for the high end of the marketplace .
If you build a truly great product , people will happily bear for it . Just check out how well Apple and Tesla have done .
In a few weeks , we will get to test this hypothesis again — with a mellow - end product built with few compromises to deliver a unexampled form of reality .
