Disruptive Innovation: Small-Scale Markets and Thoughts on Customer Motivation

By July 09, 2013
innovation de rupture

In order to drive sustained innovation, entrepreneurs should in the first place launch their products into small-scale markets and think more about what exactly their customers want to do with them.

In April this year French President François Hollande set up the ‘Innovation 2030 Commission’ tasked to focus on ‘disruptive’ innovation, a project which has been allocated a budget of €150 million. In doing so, the government has demonstrated a real desire to stimulate creativity within companies. It is worth remembering that disruptive innovation, which is the central focus of this new initiative, first and foremost denotes “a process whereby advanced, expensive products are made both more affordable and easy to use, and thus become available to a mass-market public,” explains Harvard Business School professor Clayton Christensen, an expert in this field who actually coined the term in the 1990s. During the lecture on the theme of "Can Disruptive Innovations Still Be Created in France?” which he delivered on 24 June at the Ecole polytechnique in Paris, Christensen advised French entrepreneurs to aim lower, focusing on small target markets, and to aim better, focusing hard on what the product is to be used for, if they want to achieve sustained success in their field.

For long-term results, start with a narrow market

Clayton Christensen believes that when a disruptive technology is not yet working very well, the best way forward is to target it initially at a niche market. Major players will hesitate to adopt it if it is not functioning 100%, and will be especially wary if it does not deliver the performance that the more traditional technology is currently providing, thus limiting the competition. “Established firms have every reason to leave these small markets to startups, where profitability is almost zero compared with their traditional markets,” Clayton Christensen pointed out.  However, as the technology gradually improves, it could start to gain greater market share and might even dislodge major companies from the market. Christensen argued that it would for example be a good strategic move for Renault to target its new electric car, the Twizy, at the young adult market at an affordable price, because “these customers have very little disposable income to spend on cars, and a town car designed to travel short distances isn’t really suitable for the traditional automobile market where vehicle manufacturers make most of their turnover.”

Adopt a ‘get things done’ approach

Around 95% of new products launched on to the market never succeed. “This is because their creators think in terms of market segmentation,” says the Harvard Business School professor, who believes that firms should stop thinking about the socio-economic profiles of their customers and focus on what the customer is looking to accomplish when s/he buys those products and services. This is what he means by ‘getting things done’. He cited the example of a fast food chain which became aware that its customers were buying their milkshakes not because they particularly liked the taste but because they wanted to fill their stomachs with something light, and at the same time wanted something to hold in their hand during long boring car journeys. “What startup companies often find it hard to grasp is that customers are rarely buying what the firm thinks it has sold them,” underlined Christensen.

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