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’”

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