How does one extract growth from nonconsumption? Christensen and Raynor write in their book about the four elements of new-market disruption:
1. The target customers are trying to get a job done, but because they lack the money or skill, a simple, inexpensive solution has been beyond reach.
2. These customers will compare the disruptive product to having nothing at all. As a result, they are delighted to buy it even though it may not be as good as other products available at high prices to current users with deeper expertise in the original value network. The performance hurdle required to delight such new-market customers is quite modest.
3. The technology that enables the disruption might be quite sophisticated, but disruptors deploy it to make the purchase and use of the product simple, convenient and foolproof. Is the foolproofedness that creates new growth by enabling people with less money and training to begin consuming.
4. The disruptive innovation creates a whole new value network. The new consumers typically purchase the product through new channels and use the product in new venues.
Disruptive Innovations are a fundamentally different way of thinking. It is not just about making a better mousetrap, but rethinking the job-to-be-done, and coming with completely different options. For example, if our objective is to provide computing to the non-users in small- and medium-sized enterprises (SMEs), then instead of thinking about thick desktops, one could look at thin clients and server-centric computing, along with open-source software to present a price point which would be 70% or more lower. This is a solution which will not appeal to the power users who are accustomed to having all the processing power and storage on the computer they use. But the solution would be attractive to people who otherwise face the prospect of not using computing at all.
When I started IndiaWorld (Indias first Internet portal) in March 1995, I did not understand the theory of disruptive innovations. But as I look back on the success of our venture, it was in no small measure due to the fact that we targeted a nonconsumption market Non-Resident Indians (NRIs) with our product (news and information about India) via a convenient, alternate distribution medium (the Internet and web browser, rather than print or television). Being able to get India news a couple times a day with a few clicks was a huge change from reading India Today delivered a week late or watching the news roundup on TV on the weekend. Most of the NRIs (especially in the US) had reasonably fast connections to the Internet from work or their university. So,even though our product was not good enough as compared to reading the daily newspaper, it delighted the NRIs because now for the first time they could know almost-immediately what has happening in India.
Creating disruptive innovations are what I think offers entrepreneurs the greatest potential for success. Answering Christensens questions makes entrepreneurs focus on what of their ideas and solutions are actually disruptive innovations.
Tomorrow: for the Bottom of the Pyramid
TECH TALK My Mental Model+T