The Innovator's Solution - Deepstash
The Innovator's Solution

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The Innovator's Solution

by Clayton Christensen, Michael Raynor

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The Growth Imperative

Investors don’t seem to care so much about a company’s assets or how much money it makes in the present, they're most interested in seeing growth. But after the core business matures, growth usually plateaus. This is the time to work on new growth opportunities, but trying new things is risky. 

Innovation doesn’t always make growth happen fast enough for investors, even when money is thrown at the effort.

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  • New-market disruption: this is where disruptive products compete with non-consumption. They create new markets and reach people who previously weren’t consumers. As their performance improves, they run into some existing markets to disrupt. 
  • Low-end disruption: this doesn't create new markets, it just takes over the bottoms of established markets. Traditional competitors usually don't focus on defending the low end of the market (they have the eyes on higher market levels) and they don’t recognize the disrupters as a threat until it’s too late.

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CLAYTON CHRISTENSEN

“Competitiveness is far more about doing what customers value than doing what you think you’re good at."

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Customers "hire" products to do specific "jobs".

Customers - people and companies - have "jobs" that arise regularly and need to get done. When customers become aware of a job that they need to get done in their lives, they look around for a product or service that they can "hire" to get the job done.

Effectively, conveniently, inexpensively as possible.

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Marketers put a lot of emphasis on market segments, dicing up the populace and finding the percentage that will need or want the product. But if you get the process wrong, you can end up without any actual customers. 

To accurately segment the market, don’t focus so much on the attributes of people and things. Instead, look at the circumstances people are in when they make a purchase decision. There are many tasks that people do routinely; people are always looking for things that will do those jobs or help them do those jobs. 

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Instead of asking what their company does best today, managers should ask, "What do we need to master today, and what will we need to master in the future, in order to excel on the trajectory of improvement that customers will define as important?"

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Three classes or sets of factors that define what an organization can and can not accomplish:

  • Resources: they include tangible things like people, equipment, and real estate, but things like brands, information, and reputation are also valuable resources.
  • Processes: they turn resources into value and include patterns of interaction, coordination, and communication, as well as the way things are developed, manufactured, and marketed.
  • Values: employees at all levels, even those at the bottom of the hierarchy, make decisions. Under the framework, values are standards that determine how employees prioritize these decisions.

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DELIBEDeliberate RATE planning (traditional / for existing-sustaining):

  • make assumptions about the future
  • make a strategy based on those assumptions & build financial projections based on that strategy
  • make decisions to invest based on those financial projections
  • implement the strategy in order to achieve projected financial results

Discovery-Driven Planning: (for disruptions):

  • make the targeted financial projections
  • what assumptions must prove true in order for these projections to materialize?
  • implement a plan to learn - to test whether the critical assumptions are reasonable
  • invest to implement the strategy.

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