A Butterfly in a World of Bulls and Bears

This chapter deals with an interesting question. Who is the best customer for a new product? We have seen that typically new products will replace an existing product or service that is already doing a job for a customer. So the obvious answers would be the top customers for who the existing product is doing the job. But think again. They are top customers because they are happy with what they are getting and the incumbent is striving hard to delight them. If not then, then who? The bottom most customers? Almost there. But not quite. The bottom most customers don't need everything existing products have to offer and are grumbling about the price. And they are probably not attractive customers given the margin one makes on them. But they are still grudgingly getting what they want. They are not going to throw away the bird in hand for two in a bush. So who does that leave? The non consumer. But you may ask if they are the non consumer, then does it not mean they have no job to be do

 This books presents a new way of looking at if a new product will have a market or not as well as the segments it will address. The hypothesis is simple - People need certain jobs done in their life. They will buy something which will do these jobs better at a lower cost.  While this may seem simplistic, it challenges some fundamental notions. A product that is functionally similar may actually be doing two fundamentally different jobs. And for a particular job, the competitor for a product may be totally different category of product or even a service.  For instance consider a hypothetical product similar to a radio being introduced for the first time in a society that lacks any form of distant mass communication. Such a device could take on at lest three jobs - that of entertainment, news dissemination, and education. As a local entertainer, the competition would be against local entertainment groups. A radio will beats them in giving audience flexibility to choose when and where to

  Disruptive Innovation is a term that is used so commonly and probably everyone have their own definition of disruptive. But professor Christensen's definition is quite specific and is the crux of his innovation framework. He thinks of innovation as disruptive versus sustaining. Sustaining innovation is about improving the features of the existing solutions in the market. Whereas disruptive innovation will be a fundamentally new solution that either opens the solution to use by a completely new customer segment or brings a fundamentally new value proposition for an existing customer segment that would not be viable for existing players to match using their existing resources in the space. Let me illustrate with a simple example of offset printing. Sustaining innovation would continue to improve quality of printing and reduce cost of printing.   Now Inkjet printers can't compete for customers requiring large number of copies. However there are customers who require just a coupl

Clayton Christenson's book Innovators' Solution  embarks on the analysis of how managers at companies can come up with the winning strategy required to grow at a pace market wants them to grow emphasizing the importance of characterization to understand the mechanics of what leads to growth. He starts with an interesting example of doctors randomly giving a tablet to a patient just because it cured the previous 2 patients. I would say that approach won't be totally wrong. After all that is how many of the traditional medicine systems worked. Thing that fundamentally improve the health of all humans can improve health of everyone - you know vitamin tablets and stuff. But for a targeted approach to cure a specific disease one needs to understand the patient's specific characteristics. This can again go to the other extreme of every individual is unique and evolving an unique treatment for every individual. This would take the whole process of medication away from the real