TECH TALK: Technology’s Next Markets: Three Tests for Disruptive Business

In an article in the Spring 2002 issue of the Sloan Management Review entitled Foundations for Growth: How to Identify and Build Disruptive New Businesses, Clay Christensen, Mark Johnson and Darrell Rigby propose two strategies for turning ideas into plans for disruptive growth businesses. They write: Companies seeking to create disruptive growth should first search for ways to compete against nonconsumption: peoples inability to use available products or services because they are too expensive or complicated.

As we seek to target technologys new markets, we will need to do both create new markets, and compete against the existing technology leaders from the low-end. To this end, it is, therefore, useful to consider and take the three tests that the authors have proposed:

1. Does the innovation target customers who in the past havent been able to do it themselves for lack of money or skills?

The Authors: If an idea cant be shaped to pass this litmus test, the chances for creating a new growth business diminish considerably. The innovation may succeed in satisfying some customers, but it wont create significant growth.

The Deviant Entrepreneur: Yes. Emerging market customers have had to stay away from new technologies because of lack of money to buy the dollar-denominated technologies. We want to pull in new customers and make them consumers of technology. In that sense, there is no direct competition from the entrenched players whose price points put their solutions beyond the reach of the market we intend to target.

2. Is the innovation aimed at customers who will welcome a simpler product?

Authors: If the innovation enables a new population of customers to consumer for themselves, it can more easily be shaped to pass the second litmus test: The disruptive product must be technologically straightforward, targeted at consumers who will be happy with a simple product.

DE: Yes. A simpler computing environment without having to worry about hardware and software upgrades, and a better and more intuitive desktop would be welcomed by the users in the emerging markets. Since we are targeting users who have had only limited exposure to technology, we are sure we can delight them.

3. Will the innovation help customers do more easily and effectively what they are already trying to do?

Authors: This test requires innovators to keep in mind one essential fact: At a fundamental level, the things that people want to accomplish in their lives dont change quickly. Because of this stability, if an idea for a new growth business is predicated on customers wanting to do something that hadnt been a priority in the past, it stands little chance of success.

DE: Definitely. The computer has been the transformational invention of the past quarter century, and by making it available to the mass markets at prices they can afford, we will definitely help them become more productive at whatever they do just as the users in the developed markets have benefited from the computer-based technologies in the past twenty years.

Next Week: Technologys Next Markets (continued)

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.