Customer Preference Array based Distruptive Innovation

In an earlier post, I explained why I think Clayton Christensen’s classic description disruptive innovations is just a special case of a more general theory of disruptive innovation.

Today, I will sum in an even more succinct and, in my opinion, spot-on way what disruptive innovation actually is and how to design a business to be disruptive.

The idea came to me while I was reading MJ DeMarco’s excellent book Unscripted, which I can highly recommend (no-bullshit truths in there). In the chapter about Need, MJ describes how your business delivers a “benefit-array”, i.e. an array of benefits, and that different businesses deliver different such arrays of benefits, where different customers value different “benefit arrays”.

This made me understand something fundamental about what Disruptive Innovation actually is.

A disruptive innovation is something that fulfills the following conditions:

  • Your product provides a “Customer Preference Array” that is not interesting for the incumbents’ best customers.
  • The delivery of your Customer Preference Array is incompatible with the incumbents’ delivery of their best customers’ preference array. (Or in other words, the Strategy Map that is required to deliver this Customer Preference Array is incompatible with the one that the incumbents must use, lest they straddle and fail at both.)
  • Your strategy map that is used to deliver this customer preference array optimally is based on some fundamental technology that will improve over time, in such a way that the values in the array you deliver will grow in such a way that it will also “engulf” the values in the incumbents’ customer preference arrays.

If you fulfill these conditions, your strategy map becomes impossible for the incumbents to compete against, and you will overtake them over time.

The reason for this is that they cannot deliver your customer preference array simultaneously as their own in an optimal way, lest they straddle and lose to other incumbents. (I.e. you take away their greatest strength – their existing processes and resources. Sure, they can form a new company, but they will need to start from scratch, just like you. Their “incumbent advantage” simply vanishes.)

Therefore, a better way to describe “disruption” would be to call it “a strategy of delivering a product that neutralizes the ‘imcumbent advantage'”

How come fixed mindset people can also get to the top?

The book Mindset by Carol Dweck is a phenomenal book explaining how Growth Mindset is a necessity for success. The opposite of it – a Fixed Mindset – makes you believe that success or failure is based on talen, hence trying to do something outside of your comfort zone becomes a risk: If you fail, it might confirm that your talent is limited.

Yet – there are plenty of Fixed Mindset people in the world of sports and other fields who are the best at what they do. How did they get to the top, if their Fixed Mindset doesn’t allow them to believe in the power of practice to improve?

The answer lies in Narcissism and Maslow’s Hierarcy of Needs.

Simplified, the Hierarchy of needs state that there is a ladder of needs that you need to satisfy, one after another:

  • Physiological
  • Safety
  • Belonging
  • Self-esteem
  • Self-actualization

A healthy person can move through these needs up to self-actualization. If they are of a Growth Mindset, they will believe in the possibility of improving themselves, which will fuel their quest for endless Self-actualization.

But some people can never move past the Self-esteem need. These are the narcissists. They have an endless ego, and can never satisfy their self-esteem – they never feel good enough.

Such a person doesn’t need a Growth Mindset to try. The drive to prove themselves worthy will motivate them to continue trying their best to win. Thus, a Fixed Mindset person can become the best in the world not because they’re driven to improve themselves, but to prove themselves worthy.

This is obvious looking at the Fixed Mindset people who are at the top of their respective fields. If they lose, they are sore losers and often blame their losses on external circumstances.

If they win, on the other hand, they seem want to avoid any potential challenge to their throne that comes in their way. This is because their mindset is fixed, hence they don’t believe in trying to improve themselves further by taking on a new challenge. Rather, they’re fuelled by their need for self-esteem, and being at the top gives them a way to tell themselves that they’re good enough. A new challenge presents no upside, only the downside of potentially losing their source of self esteem. Until they can no longer hold onto the belief that they are the best, or if others start questioning their abilities. Then, they feel the need to prove that they are indeed the best again.

Hence, a Growth Mindset champion is driven by the positive motivation to self-actualize, while the Fixed Mindset champion is necessarily a narcissist, driven by the fear of not being good enough. Being a Fixed Mindset champion is a miserable existence of constantly trying to flee from pain, rather than the positive pleasure of achievement.

The below table summarizes the phenomenon:

Fixed mindsetGrowth mindset
NarcissistDon’t believe that they can grow,
but highly driven to prove that they’re
good, hence fight their utmost to
prove their talent. Life’s purpose is
to prove their talent to everybody so
that they can prove everybody
Never get past the esteem / recognition need
and try their utmost to practice to become the
best they can be in order to show that they can
also do it and satisfy their endless need for
recognition. Life is a miserable existence because
they always fight to improve themselves to get
what they sorely miss – recognition.
HealthyDon’t believe they can grow and
hence stop trying after they’ve
fulfilled their need for Esteem /
Recognition (either satisfied or
dissatisfied with the talent they
believe they’re born with).
Try their best to self-actualize and
become the best they can be – and
measure their accomplishment by
breaking records and winning. Losing
doesn’t mean they’re bad, it just
means they need to try harder.

What is math and how can it predict reality?

I’ve long contemplates what math actually is. How can manipulating symbols on a paper according to some rules tell us how to manipulate atoms that we cannot even see, or send rockets to the moon, or create phones, and everything else we’re able to do today?

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How we tinker with mental models of reality to create hypotheses

In Zen and the art of Motorcycle Maintenance, Phaedrus contemplates where hypotheses come from. Phaedrus says that in the scientific method, hypotheses creation is the biggest mystery. Hypotheses just appear, out of nowhere.

I don’t agree. I think there is a clear explanation as to how hypotheses seem to suddenly appear from nowhere. It is a step by step process. Continue reading

porter activity map

Innovator’s Strategy: An alternative description of disruption theory

Raynor’s definition of a Disruptive Business Model

In Innovator’s Manifesto, Michael Raynor describes a model of Disruptive Innovation that expands upon Porter’s concept of Strategic Differentiation. This is better than previous descriptions, but it still gets the categories somewhat wrong. Continue reading

disruptive technology diagram

Did Clayton Christensen get it wrong about Disruptive Innovation?

According to the standard definition by Clayton Christensen, a disruptive innovation is a product that is lower quality from the viewpoint of existing value networks, AND offer lower margins to those vendors. The application, from existing value networks’ perspective, should not satisfy their customers’ needs and not be attractive from a financial point of view due to the lower margins and smaller markets.

But is “low margin” really a necessary part of the equation? Or can the definition of a Disruptive Innovation be even more pure without it? Also, there are some anomalies that may explain why Christensen got it wrong in some instances due to the “low margin” requirement being part of it.

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Why Trump won’t be able to stop America’s decline

While Trump’s efforts to make America great again are admirable, and will probably lead to short-term results, the reasons for America’s decline are more systematic and cannot be affected by a single president.

America suffers from the problems that Michael Porter describes in his book The Competitive Advantage of Nations. In it, Porter characterizes the rise and fall of nations’s competitiveness in four stages.

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Humans are currently being disrupted by intelligent robotics

There is a fierce debate about what AI and improved robotics are going to do to humans’ productivity and the future of work.

Opponents are afraid that humans will be out of work. Proponents say that robots will allow humans to focus on what makes us unique.

Proponents are right.. For now.

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