The Innovator’s Solution

Tuesday, October 30th, 2007

David Foster reviews The Innovator’s Solution, which develops four major themes, “which are amplified using examples ranging from semiconductors to automobiles to milkshakes”:

  1. Disruptive innovations — those destined to change the structure of an industry — tend to attack from below. They usually first appear in a form that is in some ways inferior to the existing dominant technologies, and hence are unlikely to get the attention or respect of industry incumbents.
  2. In a venture dedicated to the introduction of a disruptive technology — whether a start-up business or a division of a larger company — early profitability is more important than early rapid growth. (This is a very contrarian opinion in some quarters.)
  3. When attractive profits disappear in a market as a result of commoditization, the opportunity to earn attractive profits will usually emerge at an adjacent stage of the value chain.
  4. In segmenting a market, the purpose for which the product is being bought (“circumstance,” in the terminology of the authors) is a more useful dimension than the attributes typically used, such as customer demographics or product features.

Read the whole review. The summary points only hint at what he has to say.

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