THE BOOK. THE INNOVATOR'S SOLUTION

A Game Plan for Would-Be Disruptors:

How to Turn the Innovator’s Dilemma into the Innovator’s Solution

Target only those customers and markets that look unattractive to every established competitor. If an idea is sustaining (an improved version of an already available and popular product) relative to even a single competitor, the idea will not succeed as a disruption.
Try to compete against nonconsumption: customers who are currently unable to use currently available products at all, either because they can’t afford them or are too inexperienced to use them. These markets have the most potential because these customers will compare your product to having nothing at all, and so will be thrilled to buy it even if it’s inferior to currently available products.
If there are no nonconsumers available, explore the feasibility of a low-end disruption instead: customers who can’t use all the functionality they currently have to pay for and who won’t pay premium prices for upgraded products. If this isn’t possible either, and you’re not an industry incumbent, don’t invest in the idea.
When searching for ideas with disruptive potential, look for ways to help customers get done more conveniently and inexpensively what they are already trying to do. Don’t invent new problems for customers to solve—they won’t reprioritize what’s important in their lives just because your product is available.
Don’t segment markets according to readily available data such as product type, price point, or demographic category. Segment the market in ways that mirror the jobs that customers are trying to get done.
Watch the low end of the market for changes in the basis of competition—that’s where the new opportunities usually lie.
Focus on developing competencies where the money will be made in the future, not on the skills that made you successful in the past. Future profits will be made at the point in the value chain where the product or service is not yet good enough.
Don’t rely on your snap judgment about your firm’s core competencies when determining where a new venture should “live” and how it should be structured. The resources, processes, and values that allow your core business to thrive may well prevent great new ideas from succeeding.
Ensure that the channel companies that will distribute your new product also have the processes and values—the right methods and motivations—to enable success.
The managers in your organization who have most consistently delivered results in the past may be the least skilled at delivering success in new-growth businesses. When choosing the new management team for your venture, ensure they’ve already grappled with the same kinds of problems they’re likely to encounter as they guide your new venture.
Don’t assume that your initial strategy is the “right” strategy for a potential disruption. Create a plan to accelerate the emergence of a viable strategy in terms of products, customers, and applications—and don’t invest irrevocably in any strategy before there is evidence that it works.
Be impatient for profits, but patient for growth. Enduring years of substantial losses in the belief that it will help a new business become huge and profitable is a bad idea. Demanding early profitability will save years of losses that come from pursuing the wrong strategy for a long time—and help your team hit upon a truly viable strategy more quickly.
Keep your company growing while it is robust and profitable. Disruption requires a long runway before a steep ascent is possible. Waiting until corporate growth slows down often raises the pressure to grow very fast—which can lead to big and often fatal mistakes.

(Source: The Innovator’s Solution; Harvard Business School Press; 2003)