The Innovator’s Solution
Clayton M. Christensen, Michael E. Raynor
This book is a roadmap for companies with strategies to reach customers. It focuses mostly on existing companies, but will also be useful for start-ups. It will help find niches in the market.
In this book Christensen and Raynor explain how you turn innovative ideas into products and services which leads to growth. Companies with high-end products for profitable customers are distracted by disrupted innovations from competitors. Innovations that target low-end customers seeking cheaper products.
Three elements of disruption:
- A rate of improvement that customers can fully use or absorb
- A rate of improvement that goes beyond what customers can fully use or absorb
- A distinction between sustaining and disruptive innovation
A sustaining innovations targets those high-end customers with better performance than previously available.
Disruptive innovations do not attempt to bring established products into existing markets. They introduce products and services that are not as good as existing product, but are simpler, more convenient and less expensive.
Strategies to Reach Customers
KPN, a Dutch phone company, creates new markets and low-end disruptions. They have several brands with different target audiences and also acquired companies to develop and create different processes around making a phone call.
Their primary umbrella label targets profitable high-end customers with cutting edge technology like 4g internet speed. Simyo targets the low-end customers with simpler, cheaper products and services. You can see the difference in everything, types of phone they offer, upsells they offer in the shopping cart and more. On their website you can find all the brands and who they target audience.
Four patterns to find right audience:
- Target customers that lack money or skill and can’t find a suitable product.
- Consumers who don’t compare your product to another.
- The technology may be complex, but the use and purchase of a product is made simple and convenient. People can start consuming right away without training.
- Disruptions creates an entire new value network. The new consumers buy the product in new channels or venues.
KPN chooses to buy a company to develop services and products in-house. This was a big decision, because IT was not their core-business. It would be cheaper and maybe better quality to outsource it, but KPN choose to create new services for high-end consumers. I think this is great move their core-competence was phone calls but it’s shifted to IT. I don’t think they would be around any more if they didn’t.
KPN is not mentioned in this book, but this was the first company that came to mind. A great example of a company which uses all the strategies in “the Innovators Solution.” Maybe they bought this book as well;)