Written by Clayton Christensen

Have two innovation incubation models for an established firm.

Observe how customers are actually using the product.

Be creative at finding the right customers who can directly benefit from your innovation, rather than a large, less targeted market.

Expect trial and error so that a new organization can fail early and without great expense.

Don’t develop products and services based on what customers say they would like.

Don’t innovate in a singular quality such as performance oversupply. What does innovation look like in functionality, reliability, convenience, and price?

Established and entrant firms bring different types of innovations to market.

Established firms bring sustaining innovations to maintain market positions and profit margins. However, they still lose market dominance because of their focus on sustaining profits while ignoring new markets brought by disruptive technologies.

Knowing what customers want through surveys, focus groups, and interviews is good at incremental improvement, but not effective at creating the next thing.

A tunnel-vision chasing of profit margin should be moderated with long term expectations. The difficulty of predicting emerging markets means an established company can’t justify the investment. Consequently, they usually miss out on disruptive technologies and the emerging market that comes with it. Disruptive innovations are usually variations on existing technologies that open up a new customer base.

The best way for an established company to take advantage of a disruptive technology is to create or acquire an organization that is small but utilizes flexible processes.


January 1, 2020