Understanding and applying
Disruption Theory (Christensen)
Munir Mandviwalla
Fox School of Business
Temple University
What do these have in common?
Porter “Five forces”
SWOT
Financial analysis
“Best practices”
Christensen
Sustaining
Move along a known path such
as improve an existing product.
Low-end
Existing products are “too good”
and relatively expensive such as
Smartphones?
New-market
Change the product to get new
people by changing its nature or
by making it more convenient
(reduce expertise or wealth
requirement)
Source: Christensen, C., Anthony, S., and Roth, E. “Seeing What’s Next: Using the
Theories of Innovation to Predict Industry Change.” Harvard Business School
Press, 2006, p.4.
Resources
What a firm has
Processes
How a firm does its work
Values
What a firm wants to do
Strengths
Source: Christensen, C., Anthony, S., and Roth, E. “Seeing What’s Next: Using the
Theories of Innovation to Predict Industry Change.” Harvard Business School
Press, 2006, p.6.
Weaknesses
(blind spots)
What matters most
to customers?
Control
Integrate
(modularize)
Source: Singh, D. “Porter’s Value Chain”, August 5, 2009. Retrieved from
Wikipedia on September 13, 2010.
http://en.wikipedia.org/wiki/File:Porter_Value_Chain.png
Integrate to improve what is
“not good enough” (e.g.,
speed, customization,
convenience)
Outsource what is “more
than good enough”
Undershot
Up-market sustaining
innovation.
Nonconsumers
New-market disruptive
innovation
Overshot
Low end-disruptive innovation
Modular displacement
Market context
Low end, new market, new
context
Source: Christensen, C., Anthony, S., and Roth, E. “Seeing What’s Next: Using the
Theories of Innovation to Predict Industry Change.” Harvard Business School
Press, 2006, p.2.
Industry
New market
Existing
market
Source: Christensen, C., Anthony, S., and Roth, E. “Seeing What’s Next: Using the
Theories of Innovation to Predict Industry Change.” Harvard Business School
Press, 2006, p.3.
Non-consumers / Not consuming
Undershot
Overshot
•Change
•Simple
•Increase access
•Increase ability
•Reduce financial barrier
•Reduce skill barrier
•Easily
•Effectively
•Signals
•Growth rate
•Specific segments (college
students!)
•Product or service delivery
chain
•RELATIVE low price
•How
•Convenience
•Customization
•Lower price
•Leads to: New market disruptive
innovation
•Change
•Incremental
•More radical
•Signals
•Consumer frustration
•Negative reviews
•Willingness to pay higher prices
•Prosperity of niche integrators
•Specialists struggle
•How – existing customers
•Performance - Reliability
•Performance - Functionality
•Integration - need it for radical
•Compatibility
•Interoperability
•Legacy
•Leads to: Sustaining up-market
(radical or incremental
innovation)
•Change
•Basis for competition
•Make the product “less good”
•Commoditize
•Signals
•Decreasing prices over time
(refusal to pay for more)
•Features not used
•Complaints about ‘complicated’
•How
•Value chain
•Convenience
•Customization
•Low prices
•Ease of use (flexible and
convenience, customizability,
price)
•Leads to
•Low-end disruptions
(convenience/price)
•Specialists displace integrated
players (need modularity)
•Standards based competition
Connecting Systems Thinking to
Disruptive Innovation
The Kindle as a disruptive innovation…
What processes did it
directly affect?
How did it affect the
publishing industry?
What were the secondary
effects on society?
Google Case Study Discussion
 Describe the line of business Google is in.
 What is Google’s revenue model (how do they make
money)? Who are its customers? With this in mind,
what is Google’s real product?
 How would you describe Google’s strategy? Do they
have one?
 What Should Google Do?
Amazon Case Study Discussion
 Why would a company use services from Amazon
instead of maintaining their own infrastructure?
 Is Amazon web services following a disruptive
strategy or a different business model?
Apple Case Study Discussion
 What are the key success factors behind Apple’s
platform strategy with iTunes?
 Develop an argument that a similar platform strategy
can or cannot be used in other products such as cars,
TV, or more traditional products like furniture and
appliances (e.g., pick a side and argue it).
Google vs. Apple vs. Amazon
 Compare the Google, Apple, and Amazon strategy.
Which company do you think will be more successful?
Why?