Doing a little year end file clean-out, I came across a wonderful interview that Inc. did with Clayton Christensen in 2002. Reading it reminded me of the brilliant simplicity of his ideas, and how often we hear someone spout a muddy version that clouds the picture.
On strategies for growth when competing with established leaders:
The leaders in every industry have vast resources at their disposal. If I try to grab a piece of real estate that the established leaders want, where the customers are attractive and the business is attractive ... the leaders will win. So what I want to do is to craft a strategy that takes advantage of what I would call asymmetry of motivation. That is, a situation where I'm motivated to go after the business of the market leaders, but the piece of their business that I can most naturally go after is the one that they're the least motivated to defend.
This wonderfully clear idea, four years before Kim & Mauborgne published Blue Ocean Strategy.
Defining disruptive innovation:
A disruptive innovation is a technologically simple innovation in the form of a product, service, or business model that takes root in a tier of the market that is unattractive to the established leaders in an industry. Very often this occurs at the low end of a market ... Or it takes root by providing a simple and inexpensive product that enables a new population of customers to begin participating in a new application in the market.
I think Nintendo Wii meets a number of these tests, by the way, including being less costly, with lower overall processing horsepower than competitors, and appealing to a market that hadn't before used this type of game. They also developed a distribution system for Wii games that enables them to sell and make money on games at a very low price -- too low for existing distribution channels.
Litmus Test: Is this market suitable for disruptive innovation?
First ... Is there a larger population of less skilled, or less wealthy, customers who could be pulled into that market? ... If there isn't a larger population of less skilled and less wealthy people whom you can identify to pull into the market, it's a strike against the disruptability of that market.
Second ... An innovation will get traction only if it helps people get something that they're already doing in their lives done better....The safest assumption is that people won't change the fundamental things they want out of life... You need to be very observant about what people are trying to do -- not what they say they wish they were doing. If you can facilitate what they're already doing -- maybe make it cheaper, easier, and more convenient to do -- then your disruption has a much better chance of success.
Some good thoughts to take into a new year.
The Disruptive Start-Up: Clayton Christensen On How To Compete With The Best, by Nancy J. Lyons, Inc magazine, Feb 1, 2002. Available online via Sherpa Partners Resources for Entrepreneurs
Nintendo President and CEO Satoru Iwata interviews the Wii development team about their philosophy and approach to the design and technology in Wii here. A fantastic read, and gives a lot of insight into how an innovative process unfolds inside an organization.