Clay Christensen is back with his new book – “The Innovator’s Solution”, a kind-of sequel to “The Innovator’s Dilemma”. Boston Globe writes in an article on the book and the author:
[The book] is intended as an answer to the question Christensen posed six years ago: How can business leaders create sustainable growth for their companies at a time of continuous change and innovation? Christensen and Raynor set out to demystify innovation so that established companies can capitalize on changes and deliberately create disruptions. Among the tactics they recommend:
– Target only customers and markets that are unappealing to established competitors.
– Pursue customers at the low end of a market or, even better, “nonconsumers” who don’t even use a product.
– Help customers find simpler, more cost-effective solutions, rather than inventing new problems for them to solve.
– Be impatient for profits, but patient for growth.
– Work on new ways to keep your company growing while it is still robust .
Financial Times had an article on Christensen recently. A quote from him, which captures the essence of his solution: “The power to capture attractive profits always shifts to the activities in the value chain where the immediate customer is not yet satisfied with the performance of available products.”
Forbes has an excerpt from the book:
How do you create products that customers want to buy–ones that become so successful they “disrupt” the market? It’s not easy. Three in five new-product-development efforts are scuttled before they ever reach the market. Of the ones that do see the light of day, 40% never become profitable and simply disappear.
Most of these failures are predictable–and avoidable. Why? Because most managers trying to come up with new products don’t properly consider the circumstances in which customers find themselves when making purchasing decisions. Or as marketing expert Theodore Levitt once told his M.B.A. students at Harvard: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
Much of the art of marketing focuses on identifying groups or segments of customers that are similar enough that the same product or service will appeal to all of them. Managers need to segment their markets to mirror the way their customers experience life–and not base decisions on irrelevant data that focus on customer attributes. Managers need to realize that customers, in effect, “hire” products to do specific “jobs.” That’s one reason why retail formats like Home Depot and Lowe’s have become so successful: Their stores are literally organized around jobs to be done.