Disruption_by_design.pdf

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Disruption
by Design
How to Create Products
that Disrupt and
then Dominate Markets
Paul Paetz
For your convenience Apress has placed some of the front
matter material after the index. Please use the Bookmarks
and Contents at a Glance links to access them.
Contents
about the author ix
acknowledgments xi
introduction
xiii
Part i:
Chapter 1:
Chapter 2:
Chapter 3:
Part ii:
Chapter 4:
Chapter 5:
Chapter 6:
Chapter 7:
Chapter 8:
Chapter 9:
the Fundamentals
1
disruptive innovation
3
key Concepts of disruption
39
does Your idea Have disruptive Potential?
55
designed for disruption
73
what should my Product do?
75
segmentation
113
Positioning
129
Pricing strategy
167
messaging
195
a disruptive Business model
205
the Last mile
219
Part iii:
Chapter 10: end Game
221
Chapter 11: staying on top
245
index
257
Introduction
Entrepreneurs are simply those who understand that there is little
difference between obstacle and opportunity, and are able to turn both
to their advantage.
—Victor Kiam
there are four necessary and sufficient conditions that must be present for
disruptive innovation to occur:
•
An addressable market scarcity (see Chapter 1)
•
A unique solution to key jobs customers need to be done
that mitigates the scarcity (Chapter 4)
•
When compared to possible alternatives for accomplish-
ing the job, the price-to-value ratio is significantly lower
than any other solution, often by a factor of two or more
(Chapter 7)
•
execution (Chapters 4 through 10)
the causal connection of these four levers to the pattern of disruptive
innovation is one of the key insights in this book that i learned through years
of working as a disruption consultant and by dissecting my prior experiences
with software companies that had disruptive potential but failed to achieve it.
i have come to think of disruption theory, and the market pattern by which
disruptive innovation is recognized (Chapters 1-3), as being like the ripple
pattern of waves in a pond after a stone is thrown in the water. the ripple is
evidence that a stone was thrown, an artifact of the event that created it, but
if you don’t know that a stone was tossed to create that pattern, you can’t
reverse-engineer it by studying the pattern and trying to recreate it by other
means. that’s the reason i wrote this book.
the patterns observed and documented by Clayton Christensen in
The
Innovator’s Dilemma
are indicators that disruption happened (or possibly
is happening), but they are the visible manifestations of disruption, not
the causes (the ripple, not the rock). these four necessary and sufficient
conditions are the stones that create the ripple patterns, and as simple as
they are, their impact in terms of creating change and economic growth is
truly stunning.
xiv
Introduction
understanding how these factors interrelate gives disruption theory true
predictive value, and gives you the ability to create market disruption by
design. i hope that this book succeeds in conveying how that happens, and
that it becomes one of the key tools used by innovators for planning their
product and market strategies and business models.
My path to studying and applying disruption theory was driven by early
frustrations i had in my career. What struck me as a software marketer,
product manager, and sales executive was how unpredictable success
seemed in our business. you could do everything the way business schools
said product marketing was supposed to work, yet fail. Conversely, you could
come to market with a poor-quality product and so-so marketing, but be
there at the right place and time and, with a bit of luck, succeed spectacularly.
i saw waves of technology products come and go, and the more i knew about
them, the less predictable success seemed.
i first came upon the work of Clayton Christensen in
The Innovator’s Dilemma
about 15 years ago. it was interesting, but i wasn’t ready to absorb its
meaning. i was too busy trying to change the world marketing innovative
software products to pay attention. it was an interesting time in the history of
technology, and especially software, because at the end of the 1990s, we had
just experienced the biggest decade of capital expenditures for technology
infrastructure that we may ever see, largely driven by y2K spending.
Many have misattributed this spending boom to the first wave of excitement
over the internet and dotcom companies. the internet was not the reason
for the boom—just one of the principal beneficiaries. no doubt, the release
of netscape navigator created a big stir and got everyone excited about
the internet, so there was a wave riding a wave. However, the less exciting
reason the capital budgets were there and needed to be spent was y2K
remediation.
if you were in the middle of it, it was a heady time. A rising tide lifted all
boats, and if you were in the tech business, you were making (or raising) a lot
of money, no matter how good or how bad the idea. notwithstanding the
pets.com sock puppet and the colossal amount of money flushed down the
toilet on Webvan and Herman Miller’s iconic Aeron chairs, we all thought we
were changing the world.
of course, the evidence that it was all because of fear of what would happen
to the systems when the clock turned over on the new millennium came,
when suddenly with about three months to go in 1999, almost all spending
suddenly stopped. no one was really sure whether the power grid would
shut down, satellites would fall from the sky, and that we’d instantly revert
to the stone age without heat or water, all because programmers in the
1950s had recorded the year with two digits instead of four in order to save
a couple bytes of precious memory.

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