On producer-consumer interaction / Looking at the Disruptive Innovation complexities related to how a disruptive solution may find multiple segments
Reference
Summary: when reading Tony Ulwick, Jobs to be Done PDF, I found a great explanation related to the Disruptive Strategy (p74), that resonated well the the challenge that I found earlier this year when I was revisiting Clay's framework. At this event, I end up writing to MIT professor Eric von Hippel (User Innovation) because I noticed a complex situation, or perhaps an inconsistency in Clay's framework, that could be partially explained by the subjects such as user innovation. It turns out that Antony Ulwick explanation helped a lot here too.
Reference meeting: "a07-510 — talk — j2bd — part 3 of writeup — the jobs-to-be-done — Employing the 5 growth strategies 71-79 7599f731-25c2-4348-b05a-a41777aaa879 Sunday, February 23⋅10:00 – 11:00am"
- Parent project: Jobs to be done course, Consumer-producer innovation
- Related study material: User Innovation, Free Innovation from Eric von Hippel, Jobs to be Done Ulwick
- Participants: Marcio S Galli
- Text language: en-us
- Tags: User Innovation, Producer-consumer interaction, Platforms, Network Effects, Innovation
- Document status: Copyright, draft; This is highly influenced by and/or may have parts from Clayton Christensen, Eric von Hippel and Antony Ulwick
A letter to Professor Eric von Hippel regarding the complex situation of a disruptive product that may play out in multiple market environments
Letter to Eric Von Hippel — Thoughts Related to User Innovation roles related to Innovator’s Dilemma (23 de fev. de 2019 11:49)
Hi Mr Eric,
This week I engaged in re-reading the book of Clayton Christensen, Innovator’s Dilemma. However, in this fresh attempt I was more tuned to a customer-oriented mindset. Specifically when reading the following note, it made me consider user innovation:
“Third, we must hit a low price point. Disruptive technologies typically have a lower sticker price per unit than products that are used in the mainstream, even though their cost in use is often higher. What enabled the use of disk drives in desktop computers was not just their smaller size; it was their low unit price, which fit within the overall price points that personal computer makers needed to hit. The price per megabyte of the smaller disk drives was always higher than for the larger drives.” Clayton Christensen, Innovator’s Dilemma, p 91%.
It’s interesting to look at how Clayton positioned the viewpoint of “lower price point” and right after he aligned informing that such lower price point was in fact a fit criteria “within the overall price points” related to the personal computer needs.
This made me consider, that, perhaps actually in fact such “lower” was not lower at all. It was just a match under perhaps a “top need” for that emergent growing emerging market that is emerging due to innovative usage by its lead users.
Clayton sort of acknowledges such interpretation when he adds that “the price per megabyte of the smaller disk drives was always higher.” I think that such additional statement is precious, and can be looked from the two views:
First, from the lead user-customer viewpoint:
And here will insert one of my own stories. I remember when my father gave me a 700 USD hard disk made by Seagate, it was a 5 &1/4 inches size. It was like having a Ferrari. We knew it costed a life to us but the point was that it enabled a whole new world for the applications I was doing, thinking, dreaming. As an example, I was able to bring graphical images directly from the hard disk to the VGA display board; and able to record continuous footage from the computer (animation) to the VCR; the equivalent VGA-only board solution for that at the time would cost multiple times the HD price.
And second, from the mainstream market viewpoint, the players using large and cheaper storages such as banks, those small HD were super expensive and would never be applicable or would be far from being a reality.
Looking at these viewpoints it made me notice how strongly the subject of user innovation appears, however quite hidden, in the story presented by Clayton. He himself acknowledged, in other part of the book (chapter 10) that the marketing strategy for going towards an unknown market where a potential disruptive technology is acting; has to do with learning — learning from that initial potential market, following it first with the mindset of understanding how it grows instead of doing research with other existing markets or applying big bets such as what Apple did with the Newton.
Thus, for now, I will conclude that the unclear data points of a potential new market, one that is directly affected by a disruptive technology insertion, is exactly related to the probability of lead user groups, including potential different groups that differ on how to do things, in finding new applicable solutions solving their (unfolding) market needs. And, that companies can have a role in this story as they can cultivate a platform to facilitate the understanding, spread, recombination, scaling potential, or other factors influencing the potential market construct.
Would you think this is too obvious or any point could be added to these thoughts? I wonder if you know of works where user innovation is mixed with early markets, such as from user innovation to product market fit.
Thank you for reading,
Marcio
Mr Ulwick (Jobs to be done) view for Disruptive strategy
Mr Ulwick confirms that his method and process acknowledges Clay's notion of disruptive innovation that "companies can win in overserved segments with products that enable customers to get a job done more cheaply, but not as well as competing solutions." (p.74)
Ulwick points the example of Google Docs vs Microsoft Word, docs being the simpler-cheaper case. (p.74)
Mr Ulwick states the nonconsumers, and indicated that Clay also considered this case when he wrote that "Based on our model, we also agree with Christensen that a disruptive strategy successfully serves two customer segments: highly overserved customers (like users of Microsoft Word who switched to Google Docs) and nonconsumers — people who do not buy currently available products." (p.74). It's a bit unclear from this statement if Clay framework really considered the nonconsumers case — which may be the subject that I brought to professor Eric.
Mr Ulwick, in page 75, adds that "A disruptive strategy works in both situations, but for different reasons. It works for current consumers who are overserved, as Christensen's theory suggests, and are willing to make some sacrifices to get the job done more cheaply. And second case Nonconsumers, on the other hand, are underserved: they simply can't afford any of the solutions that are currently available. If a product comes along that they can afford, it will allow them to get the job done better than they can currently." (p.75) This seems to be totally related to the above statement that I wrote to professor Eric because I remembered that my old 700USD hard disk was like a "Ferrari" for me — a young kid playing with the personal computer. I was underserved big time.
Ref Mr. Ulwick Jobs to be Done https://jobs-to-be-done-book.com/
Conclusion
Marcio remembered his "Ferradi HD" and after reading Ulwick Marcio realizes he was an underserved. The 700 USD hard drive was beyond expensive. It was like a car cost in Brazil.
Marcio was not part of any overserved market.
Yes, that expensive HD for other industry/market was perhaps correctly a cheaper product not needed to for example a bank.
Mr Ulwick added an amazing chart to show the situation that Clay was concerned, in page 76, that a disruptive product (cheaper and worse thus non-interesting to the overserved customers) is applicable to the other underserved customers, and may find a sustainable path to evolve to become a cheaper and better, thus acessing the overserved customers too. Mr Ulwick showed a shift of a product across strategies quadrants from disruptive to dominant.
Some elaboration with Marcio's story of the hard disk